Seylan Bank Limited Vs. Intertrade Garments (Private) Limited – sllr 2005 volume 1 page 080

In the case between Seylan Bank Limited (as successor to BCCI Ltd.) and Intertrade Garments (Private) Limited, the court addressed the issue of whether the plaintiff’s action for the recovery of a loan was based on an invalid Mortgage Bond and thereby time-barred, or whether it was an action for recovery of a sum payable on demand. It was held that the cause of action accrued on the date of demand, not on the date of execution of the Mortgage Bond, thus allowing the suit within the statutory period under the Prescription Ordinance. The decision reaffirmed the principle that a cause of action for a loan repayable on demand arises when the demand is made and not before. This holding relied upon the construction of “cause of action” under the Civil Procedure Code and the interpretation of sec