Ceylon Commercial Bank vs. Ceylon Tobacco Co. Ltd – sllr 2010 volume 2 page 062

The case between Ceylon Tobacco Company Ltd. and Ceylon Commercial Bank Ltd. addressed the issue of a bank’s liability when debiting a customer’s account based on forged cheques. It was held that the burden of establishing forgery rested initially upon the customer; however, the inability to produce specimen signature cards and strong expert evidence could establish the presence of forgery. The principle reaffirmed was that a cheque bearing a forged signature is inoperative, and a bank may not debit the customer’s account absent valid authorization. This decision relied on authorities such as Kolonnawa Urban Council and National Westminster Bank, underscoring that, without genuine mandate, banks possess no statutory protection or authority to honor forged instruments.

Abdus Salam J. — It