BANK OF CEYLON

Vs.

FLEX PORT (PVT) LTD

SUPREME COURT
DE ABREW, J.
MALALGODA, J.
SURASENA, J.
SC/APPEAL/120/2012
SC/HCCA/LA/165/2012
WP/HCCA/MT/58/2008 (F)
DC MT. LAVINIA 4329/03/M
MARCH 3, 2020

Prescription Ordinance, section 7- Overdraft facility-When does prescription begin to run?

An overdraft, which is a loan granted by a bank to the customer is, in the absence of a written contract, prescribed in terms of section 7 of the Prescription Ordinance within three years from the date the cause of action arose. The cause of action will arise only at the time when the demand is made.

In this case the demand to repay the overdraft was made by the bank by letter dated 26.09.2003, and the defendant by letter dated 05.12.2003 replied that the overdraft could be settled. The action was filed on 19.12.2003. The action was held not to have been prescribed.

Cases referred to:

1. Seylan Bank Ltd v. lntertrade Garments (Pvt) Ltd [2004] BLR 41
2. Hatton National Bank v. Helenluc Garments Ltd [1999] 2 Sri LR 365

APPEAL from the Judgment of the High Court of Civil Appeal of Mount Lavinia.

Rajeev Goonathilake, S.S.C., with H.A.C. Caldera for the Plaintiff-Appe