BANK OF CEYLON

Vs.

ASWEDDUMA TEA MANUFACTURES (PVT) LTD

SUPREME COURT
PRIYANTHA JAYAWARDENA, PC,J
ANIL GOONERATNE. J
VIJITHA K. MALALGODA. P.C. J
SC/HCCA/LA/187/2014
Civil Appellate High Court Ratnapura
SP/ HCCA.RAT/29/2012 (FA)
D.C. Rathnapura 16554/Money
14.01.2016

Banking Business - Temporary over draft-Recovery- Debtor- Creditor-Implied contract - Current account - Cheque - Offer and acceptance - Obligation - Best evidence - Secondary evidence - Discrepancy in bank statement.

Plaintiff appellant petitioner is the Bank of Ceylon. Action filed against the Defendant based on a temporary overdraft facility. (TOD) to recover Rs. 4,818,582.52/- with interest. Defendant maintained current account No. 000310209724 in the Ratnapura Super Grade Branch of the Bank of Ceylon.

By letter plaintiff defendant requested for an overdraft facility in a sum of Rs. 4.5 Million for a period of three (3) months. Defendant submitted several cheques and withdrew money from time to time. Defendant defaulted in settling

the dues. District Court dismissed plaintiff action, on the basis of an absence of a written contract and over drawing Account not provided. Civil Appellate High Court affirmed the Judgment of the District Court. Supreme Court granted leave to appeal, on 6 questions of law. Defendant Respondent - respondent absent and unrepresented.

HELD:

1. It is well established that, from a legal point of view, an overdraft is a loan granted by the bank to the customer. When an account is overdrawn, the customer becomes the debtor and the Bank, the creditor. A point is made that a bank is obliged to let its customer overdraw only if it has contractually undertaken to do so. This would not mean only a written contract. The High Court has erred in considering the basic tenets of the law of contracts. The formation of a contract depends an offer and acceptance. There is a meeting of minds. P1 document by the Defendant is a written request for overdraft facility (TOD). Documents P2 and P15 are Bank Memorandums which prove that the customers facility has been approved by the Bank. The defendant made a written request by P1 which is the offer. P2 & P15 are the acceptance of the Plaintiff Bank. What more do you need?

2. Witness willingly answered the question by saying that Defendant was paid on the Cheques. I also note as stated above that the statements of accounts marked and produced in this case were compared with the original ledger by witness No. 2 for the Bank. Section 90A of the Evidence Ordinance has made provisions to deal with bank books, ledgers, statements etc. Courts must consider the proper utilization of the provisions, in the Evidence Ordinance.

APPEAL from the judgment of the Civil Appellate High Court.

Cases referred to :-

1. Peter Royston Voller V. Lloyds Bank Plc No. B3/99/1177
2. Barclays Bank Ltd. V. W.J. Simms son and Cooke (Southern) Ltd and another (1977 B. No. 679)
3. King V. Peter Nonis 49 NLR 16
4. Rodrigo v. St. Anthony's Hardware Stores 1995 (1) SLR 7

1. Shaheeda Barry S.S.C with Sureka Ahamed S.C for the Plaintiff-Appellant - Petitioner
2. Defendant - Respondent - Respondent is absent and unrepresented

Cur.adv.vult.

October 6, 2017
ANIL GOONERATNE J.

The Plaintiff-Appellant-Petitioner is the Bank of Ceylon. This was an action filed in the District Court of Ratnapura by the Bank of Ceylon based on a temporary overdraft facility granted to the Defendant-Respondent-Respondent (Aswedduma Tea Manufactures (Pvt) Ltd - Tea Company) to recover a sum of Rs. 4,818,582/52 with interest at 26% per annum from 22.08.1999.

Plaintiff-Appellant-Petitioner (hereinafter referred to as Plaintiff) had been engaged with the banking business with the Defendant-Respondent-Respondent (hereinafter referred to as Defendant) for some time and the Defendant maintained current account bearing No. 000310209724 in the Ratnapura Super Grade Branch of the Bank. Plaintiff