Interpleader Suit

Meaning of Interpleader Suit

To interplead” means “to litigate with each other to settle a point concerning a third party. ” An interpleader suit is a proceeding by which a person from whom some persons are claiming same property, debt or money and who does not himself claim such property debt or money and neither dispute such debt, such person can file a suit claiming that he is ready to pay or deliver the said property or money to rightful claimant and can protect himself from legal proceedings by calling upon such claimants to interplead, that is to say claim against one and other so that title to the property or the debt may be decided. Meaning thereby, an ‘interpleader suit’ is a suit in which the real dispute is not between the plaintiffs and defendants but between the defendants only and the plaintiff is not really interested in the subject-matter of the suit.

Section 88 of the Code of Civil Procedure, 1908 provides that,–

Where two or more persons claim adversely to one another the same debts, sum of money or other property, movable or immovable, from another person, who claims no interest therein other than for charges or costs and who is ready to pay or deliver it to the rightful claimant, such other person may institute a suit of interpleader against all the claimants for the purpose of obtaining a decision as to the person to whom the payment or delivery shall be made and of obtaining indemnity for himself:

Provided that where any suit is pending in which the rights of all parties can properly be decided, no such suit of interpleader shall be instituted.

Conditions to institute Interpleader Suit

The following conditions must be satisfied to institute an interpleader suit:

(a) there must be some debt, sum of money or other property movable or immovable in dispute;

(b) two or more persons must be claiming it adversely to one another;

(c) the person from whom such debt, money or property is claimed, must not be claiming any interest therein other than the charges and costs and he must be ready to pay or deliver it to rightful claimant; and

(d) there must be no suit pending in which the rights of the rival claimants can be properly decided.

Procedure of filing Interpleader Suit

Order XXXV lays down the procedure relating to an interpleader suit. Rule 1 says that:

“Plaint in interpleader suit – In every suit of interpleader the plaint shall, in addition to the other statements necessary for plaints, state–

(a) that the plaintiff claims no interest in the subject-matter in dispute other than for charges or costs;

(b) the claims made by the defendants severally; and

(c) that there is no collusion between the plaintiff and any of the defendants.”

Rule 2 provides for the procedure of payment of thing claimed into court. It says:

“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.”

In Syed Shamshul Haque v. Sitaram Singh[i], it was held that, when the dispute relates to a thing payable the Court may require the same to be paid or placed in the custody of the Court as per rule 2 of Order XXXV.

Rule 3 lays down the procedure where defendant is suing plaintiff in the following words:

“Where any of the defendants, in an interpleader-suit is actually suing the plaintiff in respect of the subject-matter of such suit, the court in which the suit against the plaintiff is pending shall, on being informed by the Court in which the interpleader-suit has been instituted, stay the proceedings as against him; and his costs in the suit so stayed may be provided for in such suit; but if, and in so far as, they are not provided for in that suit, they may be added to his costs incurred in the interpleader-suit.”

Procedure at first hearing is being provided under rule 4 as under:

“(1) At the first hearing the court may-

(a) declare that the plaintiff is discharged from all liability to the defendants in respect of the thing claimed, award him his costs, and dismiss him from the suit; or

(b) if it thinks that justice or convenience so require, retain all parties until the final disposal of the suit.

(2) Where the Court finds that the admissions of the parties or other evidence enable it to do so, it may adjudicate the title to the thing claimed.

(3) Where the admissions of the parties do not enable the Court so to adjudicate, it may direct–

(a) that an issue or issue between the parties be framed and tried, and

(b) that any claimant be made a plaintiff in lieu of or in addition to the original plaintiff, and shall proceed to try the suit in the ordinary manner.”

In Edwyn Anthony Fereira v. R.K. Kuppuswamy Iyengar[ii], at a particular stage since the opening of the packet was considered to be essential in the interest of both parties, the counsel representing the revision petitioner/first defendant also reported no objection if the Court permits the same and in view of the same, the impugned order was passed. The same defendant, i.e., first defendant, who is no more, again raises an objection to the procedure adopted by the Court below. This is totally unjustified and unwarranted. Evidently, the deceased first defendant was not interested in the disposal of the matter and that is why the present revision was thought of with a view to stall the further proceedings. It is no doubt true that the said petitioner is no more and at present the legal representatives are prosecuting the present petition. The Court, therefore, rejected the objection for opening of sealed cover by defendant at the stage of recording evidence on the ground that the court has not adopted proper procedure Order XXXV, rule 4.

See also Draft of Interpleader Suit

Who cannot file Interpleader Suit (Order XXXV, Rule 5)

An agent cannot sue his principal, or tenant his landlord for the purpose of compelling them to interplead with any persons other than the persons claiming through such principal or landlords. Rule 5 reads as under:

“Nothing in this Order shall be deemed to enable agents to sue their principals, or tenants to sue their landlords, for the purpose of compelling them to interplead with any persons other than persons making claim through such principals or landlords.”

[i] Syed Shamshul Haque v. Sitaram Singh, AIR 1978 Pat 151.

[ii] Edwyn Anthony Fereira v. R.K. Kuppuswamy Iyengar, AIR 2004 AP 165.

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