Sri Lanka Insurance Corporation Ltd vs. Attorney General – sllr 2019 volume 2 page 069

In the case between Attorney-General (for the Project Director, Southern Province Rural Development Project) and Sri Lanka Insurance Corporation Ltd, the court examined whether a performance bond was payable on demand or contingent on proof of default, the applicable prescriptive period for claims under the bond, and the impact of renouncing suretyship privileges on the insurer’s liability. It was held that the bond, interpreted in light of its commercial context and the parties’ conduct, constituted an unconditional “on demand” guarantee, subject to a six-year prescriptive period under Section 6 of the Prescription Ordinance. The findings established that the claim was filed after the expiration of this period, rendering the action prescribed. The decision reaffirmed that renunciation of