JAGANNATH INSTITUTE OF MANAGEMENT
STUDIES, SCHOOL OF LAW
(Affiliated to Guru Gobind Singh Indraprastha University)
PROJECT ON
“INTER-PLEADER SUIT”
SUBMITTED TO: -
MS. PRIYADARSHNI TIWARI
(Assistant Professor)
SUBMITTED BY: -
HARSHPREET KAUR
SEMESTER: BA LLB- V (B)
ROLL NO.: 35125503819
Introduction:
Apart from suits of ordinary civil nature disputed between the plaintiff and the defendant
there also exists a category of suits by the name of Interpleader Suits which are disputed
between the defendants only. Section 88 and Order XXXV of the Code of Civil Procedure
(CPC) defines and lays down relevant provisions with respect to the Interpleader suit. The
fundamental idea behind the interpleader suit is “A person Confronted with conflicting
demands that he does or pay something ought not to be liable twice.”
Meaning & Concept of Interpleader Suit:
Before dwelling upon the details of the Interpleader suit, the following example may help
get an insight into the very concept. A owes money to B which is due on 1st July. However,
B dies before July 1 and C and D approach A for the payment of the money. Both claims to
be the legal heirs of B. In such a situation where A is ready and willing to make the payment
but has no means to find out whom to pay, he would file an Interpleader suit in the court
where the defendants interplead to establish their respective claims.
The Interpleader Doctrine:
The interpleader suit is based on the Interpleader Doctrine or rule which evolved in Britain.
There were no well-established laws in cases of multiple claimants of some disputed
subject-matter. However, the doctrine evolved through various judgments and eventually
came to be summarized as under.
“A person against whom two or more persons make claim may bring an action for a
determination whether he is liable to one or several of the claimants, and if so to what
extent, whenever:
(a) the claims involve contentions of fact, or contentions of mixed law and fact, such that the
plaintiff may sustain double or multiple liabilities as a consequence of the contentions
being determined inconsistently; or
(b) the claims may exhaust a limited fund to which the claimants look for recovery”.
Definition And Circumstances When an Interpleader Suit Can Be Filed:
Under Section 88 of CPC, if two or more persons lay down adverse claims over a sum of
money, debt, or moveable/immoveable property from another person, such another person
may file an Interpleader suit in the court. The additional conditions which must be fulfilled
are as follows:
Such another person becomes the plaintiff and the former two or more claimants are called
the defendants.
The plaintiff must not claim any kind of interest in it apart from the necessary charges
incurred in filing such a suit or maintaining the property.
The plaintiff should also be ready and willing to make such payment or deliver the required
possession.
On the date of the institution of the suit, no other suit must be pending under which the
defendants’ rights are decided or res judicata.
In Asan v. Saroda, these conditions were re-iterated and the court upheld that the
defendants must lay down adverse claims and the plaintiff, without any interest of his own,
must be willing to pay or deliver the property.
Plaintiff: Who Files the Suit
The Plaintiff as stated above is the person who has to make payment or deliver possession to
the defendants. He or she acts as a neutral party aiming at proper payment or delivery
whatever may and it is for this purpose that he or she must approach the court. As mentioned
in Rule 1 of Order XXXV of CPC, the plaintiff himself must not have any interest in the
subject-matter of dispute, the subject-matter must be severally claimed by the defendants
and there must not be any collusion between the plaintiff and the defendants. In respect of
the Plaintiff’s interest, the Bombay High Court in Mangal Bhikaji Nagpase v. State of
Maharashtra upheld that it is limited to the costs incurred only.
Plaintiff’s Liability:
Rule 4 of Order XXXV of CPC provides that at the first hearing of the suit, the court is
empowered to discharge the plaintiff of all liabilities in respect of the property so disputed
and claimed by the defendants. At the same, for the purpose of justice and propriety, the
court may even retain all parties and not discharge the plaintiff of such liabilities.
Additionally, the court may even provide the necessary costs to the plaintiff and dismiss him
for the suit to prevent further inconvenience to him.
Costs to be paid to the Plaintiff:
The costs to be paid to the plaintiff are the ones incurred by him in filing the suit and other
activities like safeguarding and maintaining the property. This may even be paid at the first
hearing itself. Rule 6 of Order XXXV of CPC, provides that upon the proper institution of
the Interpleader suit, the court may allow such costs to be reduced from the money, debt or
moveable/immoveable property claimed by the defendants. If not this, the court may even
resort to other efficient means for the same.
Plaintiff when sued by the defendant:
Under Rule 3 of Order XXXV of CPC, where the plaintiff was earlier sued by the
defendant with regards the same property, debt or money, such court where the suit is
pending, on being acquainted about the institution of the Interpleader suit, shall stay the
proceedings in the current suit. However, the proceedings are not automatically stayed; the
plaintiff (Interpleader) has to prove a prima facie case in his or her favor.
When and by Whom can an Interpleader suit Not be Filed:
Under Rule 5 of Order XXXV of CPC, the tenant and the agent cannot institute an
Interpleader suit against his or her landlord and principal respectively. This prevents the
tenant from challenging the landlord’s title to the property while the tenancy is subsisting.
In Bharat Bhushan Vij v. Arti Techchandani, the court substantiated that the Interpleader
suit can be filed by the tenant in cases where there is a dispute between the legal heirs of the
landlord.
The purpose of this rule is to prevent the landlord or principal from being compelled by the
tenant or agent to interplead with third parties except those claiming through them.
However, the applicability of this rule is prima facie limited to tenants and agents only.
Therefore, an Interpleader suit filed by a bank with regards to multiple claims over a deposit
by the customer and a third party does not fall under the prohibition of this rule.
Additionally, the proviso to section 88 also lays down that if a suit based on the rights of all
parties is disputed is already pending in some court, the Interpleader suit cannot be filed.
How to file an interpleader suit?
The suit can only be filed by the plaintiff and the plaintiff can be a bank in any subject-
matter of interpleader suit. No landlord can sue to his tenant or no family member can sue
the defendant.
All the things are kept in the custody of the court
There were many defendants in the interpleader suit
An Interpleader suit is filed in the subject-matter of debt, money, property, movable or
immovable property.
The plaintiff from whom the property is claimed, must not claim other charges or cost who
is ready to pay or deliver it to the rightful claimant.
First hearing
In the first hearing court involved in the proceedings to know the contention of the parties.
In an interpleader suit plaintiff only is allowed to file a suit against the defendant when the
defendant claims the debtor property from the plaintiff. Plaintiff is not in the direct
possession of the property. He filed the suit on behalf of the defendant. After the suit is filed
the plaintiff gets free from all liability of the suit. He gets the substantive relief. The plaintiff
pays the court for the suit which is filed in the court. That amount never comes into dispute.
After paying the court plaintiff gets free from all liability. Where the decision is given in
favor of both parties then the opening of the packet becomes more important for the interest
of both parties.
Non-appearance of claimant
In any case, any party fails to come on the date of proceeding even his statement gets
recorded already then also proceeding to get adjourned. He will be dismissed from the suit.
And also his amount gets deducted. The plaintiff can raise an issue in case one of the parties
fails to give the payment.
Sub Rule 3
Once suit proceeding has started with the provisions of rule 10 and rule 17 then the court
can allow the amendment of the plaintiff by the inclusion of any property in the subject-
matter of the suit and by adding certain parties in the suit as a defendant. According to rule
10 of orders, 1 says that if the suit is filed in the name of the wrong plaintiff and if the court
doubted about the wrong plaintiff. The court can consider the mistake as a bonafide mistake
in any stage of the trial. The court can add new parties in the suit as a plaintiff or defendant.
Procedure where the defendant is suing the plaintiff
When the defendant sues the plaintiff in the same subject-matter, even the previous suit is
pending the other suit will be filed in the court and suit is against the plaintiff in the previous
suit also. Cost may be the same as for the plaintiff which he has to pay to the court.
Who cannot file an interpleader suit?
Defendants cannot file the interpleader suit because defendants are the claimant who claims
the property or debt from the plaintiff. The plaintiff is only allowed to file a suit in the court.
And the plaintiff only pays the cost of the suit in the court. But defendants only litigate in
court in the subject-matter. Defendants are free from all liability after filing the suit in the
court.
Interpleader suit by agents
An Agent cannot file an interpleader suit against his owner or the party. He cannot even
claim anything from the tenant and landlord.
Case law:
Smt. Mohan Devi V. SH. Gokal Chand And Anr
Facts of the case:
The tenant filed a case against the landlord in court under an interpleader suit for threatening
them to pay the rent of the house. But according to the tenant, he is paying the rent
according to the date and time. Defendant 1 claimed that he lowers the rent as the rent is
250/- per month but he lowers the rent to 200/- per month. But after the relevant fact, it has
been noticed that defendants tried to threaten the tenant to pay the rent. When the written
statement is given by the defendant he admitted that tenant is paying 250/- per month. But
according to order 33, rule 5 of CPC the suit is not maintainable. The RC and E officer
observed that the tenant did not give any evidence related to his shop and it is clearly
mentioned in the evidence that the tenant is not the owner of the shop and had let it out to
one Alladia. He accordingly declared that the shop was vacant.
Interpleader suit by Railway Company
Railway company can file a suit against agent and third party under order 35 of rule 5.
Case law:
Chhaganlal Himatlal vs. the Bombay, Baroda and Central India Railway
Facts of the case:
The railway company has filed a suit in the interpleader suit against the agent and third party
claiming consignor that the company is not an agent of the consignor. According to the
provisions of the railway act, the company is in direct contract with the consignor for the
carriage of goods. So the railway company has claimed that the company is not an agent of
the consignor but they are in contract with the consignor for the carriage of goods. The court
gives the decision that in virtue of Order XXXV, Rule 5 of the Civil Procedure Code,
railway company is not competent to constitute an interpleader suit as it was an agent of the
consignors.
Interpleader suit by tenants
No agents can sue their principles and no tenants can sue their landlords in the interpleader
suit for compelling him to interplead with other person makes a claim related to the tenants
through the landlord. If the other person is claiming the property with the old landlord who
has no direct possession of the property and tried to ask for the rent with the tenant. Then
tenant can file an interpleader suit.
Case law
Neeraj Sharma vs. The District Sangpur Gram
Facts of the case:
Shanti Devi who died in the year 1922 is the owner of the premises. After the death of the
owner of the premises the petitioner, Neeraj Sharma claimed that he is the owner of the
premises. The respondent takes the premises in dispute from Smt. Shanti Devi who is
already dead. Then the petitioner filed a petition for the application for ejectment of the
respondent society on the ground of non-payment of rent. After that, the petitioner filed a
second petition based on the same ground. In judgment, the provisions of Order 35 Rule 5 of
C.P.C are not applicable to the case because the plaintiff does not pointed out to anyone
defendant to be his landlord.
Charge for plaintiff cost
Where the thing claimed is capable of being paid into court or placed in the custody of the
court, the plaintiff may be required to pay or place it before he can be entitled to any order in
the suit.
Interpleader suitcases
Rajan Sharma And Others vs Labh Singh And Others 6th may 2011
Facts of the case
The court finds no merit in the appeals. According to Order 35, Rule 5 of the Code of Civil
Procedure, which prohibits the tenant to file a suit against his landlord for the purpose of
compelling him to interplead with any person other than making claim through such
landlord.
Car and Universal Finance Company Limited v. Caldwell
Facts of the cases:
The respondent is the owner of the Jaguar car. The third person has forced Mr. Caldwell to
sell the car for a cheque amount of 965 dollars and a deposit of 10 dollars. Respondent
agrees to sell the car and he sold the car and got the cheque and when he tried to convert the
cheque into cash. The cheques got dishonoured. The respondent goes to the police about the
whole incident and also informed this incident to the Automobile Association.
The respondent told that Mr. Norris has sold the car to different dealers. The judgment is
given by the high court. The court said that the contract was validly rescinded. It was so
without communication, but through an unequivocal act of election, demonstrating Caldwell
no longer wishes to be bound.
N.M.N. Duraiswami Chettiar v. Dindigul Urban Co-operative Bank Ltd
Facts of the case
The first has deposited the money of Rs 2000 in the bank in his savings account. After that,
he fulfilled the form of the bank to recover the amount of money he deposited in the bank in
his savings account. But his brother the second defendant has given notice to the bank that
the money should not be recovered of the 1st defendant because that money is the share of
the family members also. Then the suit has been filed by the bank against the defendant’s
related to the debt. The council dismissed the petition saying that Interpleader Suit is not
maintainable and the second ground for dismissal of petition is in regard to this deposit the
relationship between the bank and the first defendant was that of principal and agent.
Satyanarain v. District Judge, Tonk & Ors
Facts of the case
The petitioner has filed a suit against the respondent. But the case gets dismissed by the civil
judge. Then the third petitioner has filed a case against petitioner to recover the rent along
with the profit He filed an interpleader suit. In the judgment of this case the judge dismissed
the application of the petitioner under Order 35 Rule 5 of CPC.
Conclusion:
Thus, the Interpleader suit serves as an efficient mechanism to not only aid the plaintiff but
also the courts in reducing the burden of unnecessary suits over the same matter. As already
stated, section 88 and Order XXXV of the CPC are fundamental provisions in this regard.
The Interpleader suit serves as a significant measure to protect a bonafide person from future
condemn in terms of non-fulfillment of his or her obligations due to unnecessary confusion
arising due to multiple claims.
