Trial Court Cannot Unilaterally Shift Onus of Proof or Award Suo Motu Compound Interest Without Specific Prayer

The plaintiff/respondent maintained a fixed deposit (FDR) of ₹1.30 crores with the defendant/appellant bank.

The bank refused to release the full amount upon maturity on July 2, 2009, claiming it was held as collateral for a "forward contract" transaction that resulted in a loss of ₹1,07,37,500.

The plaintiff denied the existence of any such contract and filed a suit for declaration and permanent injunction.

The Trial Court decreed the suit in favor of the plaintiff, restraining the bank from deducting the money and awarding 9% compound interest.

In the final judgment, the Trial Court unilaterally shifted the onus of proof for Issue No. 1 (existence of the contract) from the plaintiff to the defendant, labeling the original framing a "clerical mistake".

1. Whether the Trial Court could unilaterally change the onus of proof in the final judgment and whether such a change violated principles of fair play.

2. Whether an officer of a corporate entity must produce a specific authorization letter/Board Resolution to be competent to depose as a witness.

3. Whether the Trial Court erred in awarding compound interest in a suit for declaration and injunction without a specific prayer or framed issue.

4. Whether the suit was properly valued for court fees given that it sought to protect a monetary claim of over ₹1 crore.

The Court relied on the procedural principles enshrined in the Code of Civil Procedure (CPC), 1908, regarding the fair trial requirement that parties cannot be taken by surprise by the shifting of the burden of proof at the judgment stage.

Regarding witness competency, the Court applied the Indian Evidence Act, 1872, noting that an officer acquainted with the facts and records is competent to depose for a company without a specific Board Resolution.

It further applied the principle that relief (such as compound interest) cannot be granted absent a specific prayer, reasoning, or framed issue, and that court fee sufficiency must be analyzed based on the "nature of reliefs claimed" under the Court Fees Act.

The High Court found the Trial Court’s proceedings fundamentally flawed. First, by changing the onus of prove on Issue No. 1 in the final judgment without giving the defendant a chance to rebut, the Trial Court violated "principles of fair play".

Second, the Trial Court’s dismissal of the bank official’s testimony due to a lack of an authorization letter was legally "erroneous," as company officers with access to records are competent witnesses.

Third, the High Court noted that the Trial Court awarded 9% compound interest without any justification, prayer, or issue being framed on the matter.

Finally, the High Court observed that the Trial Court failed to provide a reasoned finding on the bank’s objection regarding the insufficiency of court fees, merely stating it was paid without analyzing the monetary protection sought.

The Court held that the unilateral shifting of the burden of proof and the disqualification of the bank’s witness were procedural errors necessitating a de novo adjudication.

The matter was remanded back to the Trial Court to decide afresh based on existing evidence, with directions to adjudicate the court fee issue and the merits of the forward contract claims. The Court ordered the appellant’s deposit to remain with the Registry pending the Trial Court's final decision.