The Supreme Court last week ruled that a bank is entitled to institute legal action directly against a guarantor without first proceeding against the principal debtor, where such a right has been expressly waived in the guarantee agreement.

Delivering judgment on an appeal filed by a guarantor, the apex court affirmed a decision of the Commercial High Court holding Vithanage Happawana liable as guarantor for credit facilities obtained from DFCC Bank PLC.

The case stemmed from an action filed by the bank to recover over Rs. 5.5 million, together with interest, from the defendant in his capacity as guarantor for a company’s loan facilities.

The defendant had argued that the principal debtor company, as the beneficiary of the credit facilities, should have been made a party to the action and pursued first before any proceedings were initiated against him.

However, the Supreme Court held that while Roman-Dutch law generally allows a surety to insist that the principal debtor be sued first, such a right may be expressly waived by contract.

Justice Sampath Wijeratne, delivering the judgment, observed that Clause 15 of the guarantee agreement clearly permitted the bank to proceed directly against the guarantor without first taking action against the principal debtor.

The Court also rejected the defendant’s claim that he was unaware of the contents of the guarantee documents and had signed blank papers, stating that such a defence cannot succeed unless the signer was illiterate, blind, or otherwise incapable of understanding the nature of the transaction.

Accordingly, the Supreme Court affirmed the Commercial High Court ruling and ordered costs to be paid to the plaintiff bank in both courts.

The three-judge bench comprised Justices Yasantha Kodagoda, Shiran Gooneratne and Sampath Wijeratne.

President’s Counsel Kushan de Alwis appeared for the bank, while Counsel Harith de Mel with Hasini Rupasinghe, instructed by Chamithri Kaluhennadige, represented the appellant.

The Lakshman Kadirgamar Institute of International Relations and Strategic Studies (LKIIRSS) recently hosted a special guest lecture on ‘15 Years of Dialogue: Sri Lanka–SCO Partnership and the Way Forward’ at the Lighthouse Auditorium of the Institute.

The lecture was delivered by Secretary-General of the Shanghai Cooperation Organisation (SCO), Nurlan Yermekbayev, who outlined the evolution of Sri Lanka’s engagement with the SCO over the past 15 years and highlighted the growing importance of the organisation in regional and multilateral cooperation.

The discussion focused on the SCO’s history, institutional mechanisms and key pillars, including regional security cooperation, economic collaboration, socio-humanitarian engagement and external partnerships. Broader themes of connectivity and multilateral dialogue were also explored during the session.

The event was organised by the Lakshman Kadirgamar Institute in collaboration with the Ministry of Foreign Affairs, Foreign Employment and Tourism.

Members of the diplomatic corps, Heads of Mission, senior government officials, representatives of think tanks, academics, researchers and university students attended the event.

The Indian CEO Forum (ICF) has reaffirmed its commitment to strengthening India-Sri Lanka economic relations, with Kishore Reddy being re-elected President at the Forum’s Annual General Meeting (AGM).

The AGM was attended by Indian High Commissioner Santosh Jha, who commended the Forum’s contribution towards enhancing corporate partnerships and economic cooperation between the two countries.

Addressing the gathering, the High Commissioner underscored the importance of both government-to-government and business-to-business engagement in driving regional growth and investor confidence. During a fireside conversation with Reddy, he also highlighted the need to improve connectivity between India and Sri Lanka, including digital, maritime, energy and land links, while stressing the importance of upgrading the existing Indo-Lanka Free Trade Agreement to unlock fresh investment opportunities.

More than 100 companies, senior government officials, diplomats and corporate leaders participated in the AGM, reflecting the growing influence of the Forum as a platform for bilateral business engagement.

Reddy said the Forum’s strength lay in its membership and collective engagement. He noted that each interaction and initiative undertaken through the Forum contributed not only to individual organisations, but also to the broader economic relationship between India and Sri Lanka.

The ICF currently represents over 70 member organisations and has played a key role in promoting investment, networking and corporate collaboration between the two countries.