Pramuka Savings and Development Bank Limited vs Habib Bank AG Zurich – SC CHC APPEAL 22/2010-2024

Brief
In the case between Pramuka Savings and Development Bank Limited (and Sri Lanka Savings Bank Limited) and Habib Bank AG Zurich Incorporated (with Hatton National Bank Limited as substituted respondent), the court addressed the issue of whether the defendant bank could lawfully withhold and set off matured deposits and interest belonging to the plaintiff by asserting a banker’s lien or equitable right of set-off. It was held that the defendant’s actions were not justified as the evidence indicated clear ownership of the funds by the plaintiff and no written or implied agreement establishing a lien or right of set-off in favor of the defendant was present. The court reaffirmed the principle that a bank’s right of lien and equitable set-off requires either a contractual foundation or un