JAMIA HAMDARD

The Code of Civil Procedure, 1908

Assignment Topic
Inter-Pleader Suit

SUBMITTED TO - PROF. AMIT SANDHUJA

SUBMITTED BY - MIRZA SHAQUIB (2019-342-057)
SEMESTER - 8th SEM (2023)
SECTION - A
DEPARTMENT - LAW (HILSR)
INTERPLEADER SUITS:
The meaning of the word Interplead is to go to trial with another person in a result to
determine a right on which the action of a third party depends. It is a civil procedure that
allows a plaintiff or a defendant to initiate a lawsuit in order to compel two or more other
parties to litigate a dispute.

Halsbury’s laws of England define it as “where a person is under liablity in respect to a debt,
money, goods, or chattels or expects to be sued for such by two or more persons making
adverse claims thereto, he may apply to the court for relief by way of Interpleader”.

An interpleader suit is a suit in which the real dispute is not between the defendant and
plaintiff but between the defendants themselves and the plaintiff does not have any interest inthe
subject matter. The defendants here interplead against each other instead of pleading
against the plaintiff as in an ordinary suit.

The defendants interplead as to their claims to the debt or property over which the plaintiff
has no interest and which he is ready to pay or deliver to the rightful claimant. Here the
plaintiff files the suit on behalf of the claimant to get who is the real owner of the property.
The plaintiffs in such suits are referred to as applicants and defendants as claimants

The interpleader suit is based on general principle that a person who is in possession of a
thing and have no interest in such then he should not be compelled to be involved in
multiplesuits filed by the claimant of the property in dispute. He can be relieved of such burdens
by tothe court and putting the thing in the custody of the court. Now the burden shifts to the
courtthat the rightful owner get the property in dispute. These suits were madelegal to protect
theplaintiff in possession of property from any damage and injury.

If the applicant is sued by the claimant in a regular suit then he would have to bear all the costof
the suit. But in the case of interpleader suits, the applicant does not bear any cost to the suitand
whatever cost is incurred by the plaintiff is reimbursed to him by the Court.

Examples
1. Ram had a 3 room BHK in the Eastway society. He has two wives. He died as a
result of some illness. Both his wives adversely claimed the property after his
death. Mukesh who holds the possession of the property filed a suit in the court to
decide the actual owner of the property.

2. Laxman has 7 crores in his bank account. He has two wives and both wives have 1
child. Later after the death of Laxman both the wives claims for the maintenance
and ownership over the sum. Therefore, the bank can file a interpleader suit to get
the rightful claimant.
In an interpleader suit plaintiff’s position must be one of impartiality and non-arbitrariness.
The party filing an interpleader suit should be in a position to walk-out of the suit with a
mereclaim for costs.
The test to determine whether a suit is of nature of an interpleader suit is to check the natureof
the plaint and it would not be an interpleader suit merely because one of the reliefs hasreference
to it.

Sec 88 :
Under Code of Civil Procedure, 1908 section 88 states that when there are two or more
persons that are claiming adversely to one another in respect of some debt, sum of money orother
property (movable or immovable) from another person, who does not has any interest inthe
subject matter except the cost or charges that is incurred by him while instituting aninterpleader
suit or safeguarding the property and is ready and willing to pay or deliver thesum of money or
property to the rightful claimant, then, such another person can file aninterpleader suit. The pre-
condition for filing an interpleader suit is that- on the date ofinstitution of an interpleader
suit there must be no suit pending in which the rights of the rivalclaimants can be properly
decided.

Conditions of Interpleader suit

1. There must be some debt, money, property either movable or immovable in the
dispute.

2. Two or more defendants are there in the suit.

3. Both defendants must claim adversely against each other for the property or
money.

4. The plaintiff not to have any interest in the subject matter except the cost and
charges.

5. The plaintiff is willing to pay the debt, or some amount of money, or property to
the rightful claimant.

6. Suits are not pending in this.

7. This suit cannot be filed twice if the judgment is given in Res judicata.

8. There is no collusion between the plaintiff and any of the defendants.

Who May Institute an Interpleader Suit?
In National Insurance Co. Ltd. vs Dhirendra Nath Banerjee and Anr (1937), it was observed
that a person who has no interest in any debt, the sum of money or property except the charges or
cost and such person is willingly ready to pay or deliver the property to the rightful claimant may
file an interpleader suit.

CASE LAW

In Mangal Bhikaji Nagpase v. State of Maharashtra in the year of 1997, according to the
Bombay High Court, the plaintiff must declare that he has zero interest on the issue other than
expenses and charges. In Asaan Ali v. Sarada Charan Kastagir, the Calcutta HC held that for a
suit to be an interpleader suit, the applicant must be ready to give over the property to the
claimant and have no financial interest in it; nevertheless, if the applicant has a financial interest
in the litigation, the suit will be dismissed once the plaintiff's financial interest in the subject
matter is discovered. Plaintiff: Unless the equity or efficiency of the case demands the presence
of the plaintiff, the court may rule that the plaintiff is absolved from all legal responsibilities,
give him his costs, and discharge him from the claim at the first hearing itself.
Example: X is in possession of the property claimed by Y and Z adversely. X does not claim any
interest in the property and is ready to deliver it to the rightful owner he can file an interpleader.

Object
• The object behind the filling of interpleader suit is to get the rival claims of the
defendants adjudicated. It is here where the claimants are called by the court when the
plaintiffs approach the court, and the claim is decided.

• Another object of Interpleader suit is to indemnify the plaintiff for the cost and
charges for which he is entitle.

Procedure under Order 35

Rule 1 of Order 35 CPC talks about plaint in Interpleader Suits.

It states that the plaintiff to state in his plaint that he does not have any interest in the
subjectmatter of the property, except the costs and charges incurred by him, and the claims that
ismade by the defendants are severally and not jointly. And the interpleader must state in
hisprayer to grant all the costs and charges that is incurred by him as a result of instituting thesuit
or maintenance of the property.

The applicant also needs to specify that there is no collusion between the parties in the suit
(between plaintiff and any of the defendant). The interpleader is also needed to express in
theplaint his willingness, in case of movable property to bring before court.
Rule 2 of Order 35 speaks about payment of things to the court.

It states that the property or thing that is being claimed by the defendants is of such a naturethat
it can be paid into the court or can be bring into the possession of the court, then theinterpleader
is required to pay or place it before the court. Therefore, the code gives
adiscretionary power to the court to make such order and the plaintiff would be bound to
obeysuch.

Rule 3 of the code enacts procedure where the defendant is suing plaintiff.

Talks about power to court to pass an order of stay and it clearly makes an obligation. It is a
mandate law, on the court in which the interpleader suit is pending to inform the Court in
which a suit against such plaintiff is pending by any of the defendant in respect of subject
matter of the suit to stay the suit then and there. The court held in case
Satyanarain v. District Judge, Tonk & Ors that before court uses the power under rule 3,
plaintiff owes a duty to show a prima facie case in his favour.

Rule 4 states procedure that is followed at first hearing

This being not a mandatory provision and the court has discretion to declare the plaintiff to
discharge from all its liability in respect of the thing that is being claimed and award him the
cost and charges that was incurred by him and dismiss him from suit. When suits with the
applicant having an interest in the res are filed then such suits shall be dismissed on the
discovery of the fact that the plaintiff has an interest in the subject matter of the suit.

However, if the court is of the opinion that justice, propriety and convenience requires that
allparties to the suit be retained, then, the court shall not discharge the plaintiff till the final
disposal of the suit. If the court finds it necessary, then, it can direct that certain other issuesbe
framed and tried along with other issues albeit the suit, and that any claimant (that is,defendant in
the interpleader suit) be made a plaintiff in lieu of or in addition to the originalplaintiff.

Rule 5 of Order 35 of the Code of Civil Procedure, 1908 is a negative provision and list
persons who are barred to file an interpleader suits. Therefore, an agent cannot sue
hisprincipal, and similarly, a tenant cannot sue his landlord for the purpose of compelling
suchprincipals/landlords to interplead with other claimants.

This rule prohibits the tenants from questioning the ownership or title of their landlords
during the period when the tenancy is in effect. This rule declares a prohibition and its
concluding part provides an exception. The reason for the rule seems to be that an agent
cannot ordinarily dispute the title of his principal. As also due to the relationship between
theagent and principal under the Contract Law and its Sec182 Regardless of that, there
arecertain circumstances when the tenant can file an interpleader suit during the subsistence
oftenancy. In case of a fight between the legal heirs of the deceased owner or the landlord
overthe ownership of the property, the tenant gets the opportunity of filing an interpleader suit
todetermine the actual owner of the property and the rightful recipient of the rent to be paid

Example
• Alok deposits a box of gold toBhanu as his agent. Chandra alleges that the gold box
was wrongfully obtained from him by Alok, and later claims such from Bhanu.
Bhanu is debarred to institute an interpleader-suit against Alok and Chandra.

• Arvind deposits a box of gold to Bhanu as his agent. He then send a letter to Chandra
with an object of making the box a security for a debt due from himself to Chandra.
Later Arvind alleges that Chandra’s debt is satisfied, and Chandra alleges the
contrary. Both claim the jewels from Bhanu. Bhanu may file an interpleader suit
against both.

It was held in Neeraj Sharma v The District Sangpur Khadi Gram, by the Punjab
andHaryana High Court that an interpleader suit by a tenant will be maintainable if the
otherperson claiming a right over the disputed property is doing so through the original
landlordand such suits will not be maintainable if the person independently claims ownership
over theproperty and rent from the tenant.

In Om Prakash Kapoor v Nirmala Devi, the ownership over the rented property
wasclaimed by the deceased’s nephew and a lady who had purchased the said property from
thedeceased’s wife. The court held that the tenant in this case was entitled to know to which
ofthe two parties rent was to be paid and hence the suit filed by him should be maintainable.

The situations under Rule 5 where the tenants are not allowed to file an interpleader suit
against the landlord do not include circumstances where someone, other than the real ownerby
misrepresentation makes the tenant believe him or her to be the owner. There is no
specialprovision permitting the tenant to institute a suit under such circumstances in a state
ofconfusion about the identity of the true owner of the property.

Therefore it can be concluded that tenant feeling any difficulty in payment of rent can
invokeprovisions of Order 35 and can file an interpleader suit and can make submission in the
samethat two persons are treating themselves as landlords and Court should admit that he is
atenant and he should deposit the rent and the Court will decide who is the landlord.

Interpleader suits by Railway company.

A railway company by accepting goods for carriage does not become the agent
ofthe consignor. It merely enters into an independent contract with the consignor. It
cantherefore file an interpleader suit against the consignor and another party claiming
adverselyto the consignor.
Order 6 of the code deals with charges for the plaintiff’s costs. This being a discretionary
power and where the interpleader suit has been filled properly then the court can provide to
original plaintiff the cost either through giving a charge on the property that is being claimedby
the defendants or in other way as it deems fit.

This rule provides for the award of costs to the original plaintiff. Such costs when awarded
will be deducted from the fund on its being brought to Court or will be a first charge upon
thefund or subject-matter. Thus in an interpleader suit which is not properly instituted or
whichwas instituted mala fide or with ulterior motive the discretion of the Court in awarding
costsas against the plaintiff is not in any way taken away.

But the plaintiff will not be entitled to costs which have been unnecessarily incurred.Appeal.
An appeal lies from an order under this rule. Appeal, where the court has passed an order to
dismiss an interpleader suit, the plaintiff can appeal such an order as per Order 43 Rule 1 of the
code.

Scope
Order 35 is not applicable to the proceedings before Rent Controller as the said proceedingsare
not proceedings in a suit. But where ejectment was sought against petitioner tenant ofJoint Hindu
Family firm by two sets of persons one being sons of landlord to whom thepetitioner paid rent
and another being purchasers who claimed to have purchased propertyfrom widow of the
karta, interpleader suit at the instance of tenant petitioner wasmaintainable and was
obligatory on the Court to stay the ejectment proceedings by the filingof the interpleader suit.

Where in an interpleader suit the original plaintiffs are not claiming any title to the property
and in fact the dispute is between the rival defendants, the rights of tenant
would besafeguarded by holding that he would go on depositing the rent in the Court, till
decision ofthe suit.

Conclusion

The provisions of interpleader suits in India are very simple and they does not take into
consideration the change in demands and need of the society. While making a comparison
with the US on the provision of Interpleader suit it can be clearly seen that our law is seekingthe
absence of the much needed improvement in the provisions and structure of Interpleadersuit.

It can be concluded that the interpleader suit is based on general principle that a person whois in
possession of a thing and have no interest in such then he should not be compelled to beinvolved
in multiple suits filed by the claimant of the property in dispute. In other words itsafeguards a
person right to costs of litigation who claims no interest in property or who isthe plaintiff and to
determine the correct claim over the property or debt. If no such right isprotected or overlooked
by the courts an appeal can filed before the appellate court underOrder 35 Rule 1 of the Code of
Civil Procedure
The provision under the Section 88 and Order 35 stands to be one of the most important civil
laws.

In an interpleader suit, the contest is actually between the defendants. The plaintiff cannot
claim any interest in the subject matter of such suit. He must admit his liability which should
be unconditional, except for his claim for the charges and the costs as admissible to him
under the law.

So the Rule 4,6 of Order 35 also serves as a relief to the plaintiff as he being dismissed from
the suit and getting the cost and charges that was incurred by him either due to filing of suit
or for the maintenance made on the property. Therefore the object of Cpc and the principal
ofnatural justice is also getting fulfilled.

Interpleader suits are an important legal procedure that enable parties to resolve disputes over
money or property in a fair and efficient manner. They offer a number of benefits to parties
involved in conflicting claims, including the avoidance of costly and time-consuming litigation,
the opportunity for all claimants to be heard in a single proceeding, and the assurance that the
rightful claimants will be identified and paid. For these reasons, interpleader suits have become
an essential tool for resolving disputes in a wide range of legal context.