Bank of Ceylon vs Flex Port (Pvt) Limited – SC APPEAL 120/2012-2020

In the case between Bank of Ceylon and Flex Port (Pvt) Limited, the court addressed the issue of whether an overdraft facility provided by a bank should be characterized as a loan and, if so, the precise moment from which the period of prescription (limitation) begins to run. It was held that the overdraft is a loan, and the commencement of prescription is not triggered by the account being in overdraft but rather by the making of a demand for repayment. This principle was reaffirmed in accordance with established statutory law and authoritative precedents. The court emphasized that continuous payments by the defendant and the absence of dormancy in the account shifted the operative date for prescription to 26 September 2003, which was when demand was made. As a result, the previous judgme