IN THE SUPREME COURT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA Pramuka Savings and Development Bank Limited, 30/63J, Longdon Place, Colombo 07. PLAINTIFF S.C. (CHC) APPEAL NO. 22/2010 Sri Lanka Savings Bank Limited, HC (COLOMBO) Case No. 110, D S Senanayake Mawatha, HC (Civil) 132/2001(1) Colombo 08 SUBSTITUTED PLAINTIFF -VS-

Habib Bank AG Zurich incorporated In Switzerland and having a registered Place of business at Nos. 148-151 Main Street, Colombo 11.

DEFENDANT Hatton National Bank Limited, 481 T B Jayah Mawatha, Colombo 10.

SUBSTITUTED DEFENDANT AND NOW BETWEEN Pramuka Savings and Development Bank Limited, 30/63J, Longdon Place, Colombo 07.

PLAINTIFF- APPELLANT Sri Lanka Savings Bank Limited, 110, D S Senanayake Mawatha, Colombo 08 Presently of No. 265, Ward Place, Colombo 07 SUBSTITUTED PLAINTIFF-

APPELLANT -VS-

Habib Bank AG Zurich incorporated In Switzerland and having a registered Place of business at Nos. 148-151 Main Street, Colombo 11.

DEFENDANT- REPONDENT Hatton National Bank Limited, 481 T B Jayah Mawatha, Colombo 10.

SUBSTITUTED DEFENDANT-

RESPONDENT Before: Vijith K. Malalgoda, PC, J.

P. Padman Surasena, J.

E. A. G.R. Amarasekara, J.

Counsels: Geoffrey Alagaratnam, PC with Suren Fernando & T. Lader instructed by Sinnadurai Sundaralingam & Balendra for the Plaintiff-Appellant.

K. Kanag-Isvaran, PC with K.M.B. Ahamed, Gayani Adikari, Lakshman Jayakumar, A. Weerasekara &V. Anren instructed by Neelakandan &

Neelakandan Associates for the Substituted Defendant-Respondent.

Argued on: 31.08.2020 Decided on: 08.08.2024 E. A. G. R. Amarasekara, J.

The Original Plaintiff- Appellant (hereinafter sometimes referred to as the Plaintiff or Plaintiff Bank) instituted an action in the Commercial High Court against the Original Defendant-Respondent, Habib Bank AG Zurich, (hereinafter sometimes referred to as the Defendant or Defendant Bank) inter alia stating that;

 It placed with the Defendant Bank deposits on interest from time to time aggregating to approximately Rs. 70 million,  It reinvested deposits aggregating to 70 million from 06.03.2000 to 05.04.2000, then from 05.04.2000 to 05.05.2000 and then 05.05.2000 to 04.05 2001,  The Defendant was obliged to repay to the Plaintiff, Rs.78,400,000 (including interest) on 5^th May 2001,  The Plaintiff, by its letter dated 02.05.2001 (X21), requested the Defendant to credit the maturity proceeds to the Plaintiff’s account at Pan Asia Bank,  The Defendant wrongfully refused to pay and had reinvested the deposits contrary to the instructions relying on the letter dated 05.05.2000 (X24)-vide X23.

 The Defendant bank was not entitled to any lien over the said deposits or any right to set off the said deposits against any monies lent by the Defendant to Vanik Incorporation Limited (hereinafter referred to as Vanik).

Thus, the Plaintiff inter alia prayed for;

 A declaration that the Defendant was not entitled to any equitable remedy of set off in respect of the amount due and payable to the Plaintiff on the Deposit of Rs. 70 million made by the Plaintiff as evidenced by Certificate No.1063.

 A declaration that the Defendant was not entitled to renew the said deposit beyond the period set out in the said certificate No. 1063.

 A judgment and decree for a sum of Rs. 78,400,000/- together with interest at

32% per annum from 5^th of May 2001 till payment in full.

The Defendant filed its answer dated 05.10.2001 praying for a dismissal of the Plaint, inter alia pleaded the following grounds;

 That prior to 06.03.2001, the Plaintiff placed three deposits in its name amounting to 70 million with the Defendant bank on behalf of and/or for the benefit of Vanik Incorporation Limited (hereinafter referred to as Vanik), by way of security for Vanik’s borrowings from the Defendant Bank,  That Vanik by its letter dated 06.03.2000 (R3/ D1) sent to the Defendant Bank agreed to hold the said deposits made in the name of the Plaintiff under the Defendant’s Bank lien till the adjustment of Vanik’s entire liabiliti