Interpleader Suits – Section 88 read with Order XXXV of the Code...

Interpleader Suits – Section 88 read with Order XXXV of the Code of Civil Procedure, 1908: Analysis

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This article is a comment on the ambit, scope and the area of operation of Section 88 read with Order XXXV of the Code of Civil Procedure, 1908 dealing with interpleader suits.

Preface: An interpleader suit is one in which the real controversy/dispute is not between the plaintiff and the defendant, but is rather between the defendants only, who inter-plead against each other. The hallmark of an interpleader suit is the fact that, in an interpleader suit, the plaintiff is not really interested in the subject-matter of the suit. The primary and the foremost object of an interpleader suit are to have the claims of rival defendants adjudicated, for, in an interpleader suit, there must be some debt, or, some money, or, other property in dispute between the defendants only. The plaintiff in an interpleader suit must be in a position of impartiality/ non-arbitrariness.

The Halsbury’s Laws of England: The Halsbury’s Laws of England (Fourth Edition), Volume 37, Para 264 (at p.200) states that, “Where a person is under liability in respect of a debt or in respect of any money, goods or chattels and he is, or expects to be sued for or in respect of the debt or money or those goods or chattels, by two or more persons making adverse claims thereto, he may apply to the court for relief by way of interpleader”.

Section 88 of the Code of Civil Procedure, 1908: Section 88 of the Code of Civil Procedure, 1908, states that, where two or more persons claim adversely to one another some debt, sum of money or other property (moveable or immoveable) from another person, who in fact does not claim any interest in that sum of money or property except the cost or charges incurred by him in instituting an interpleader suit and/or safeguarding the property and is ready and willing to pay or deliver the sum of money or property to the rightful claimant, then, such another person can file an interpleader suit. The pre-condition for filing an interpleader suit is that- on the date of institution of an interpleader suit there must be no suit pending in which the rights of the rival claimants can be properly decided.

In the case of, Asan v. Saroda[1], it was held that, where defendants do not claim adversely to each other, nor does the plaintiff admit the title of one of the defendant or is willing to pay or deliver the property to him, the suit is not interpleader.

Plaint in an Interpleader Suit: Order XXXV, Rule 1 of the Code of Civil Procedure, 1908 require the interpleader to state in his plaint that, the plaintiff claims no interest in the subject-matter of suit and the claims put forth by the defendants severally. The interpleader must also categorically state that, there is no collusion between the parties to the suit, that is, the plaintiff and any of the defendants. The interpleader must specify in the plaint, the claims made by the defendants severally, and should express his willingness to bring the property (if it is moveable) before the court. The interpleader in the prayer clause of his plaint must pray the Hon’ble Court to grant him the cost incurred by him in instituting the suit and also, any other charges incurred by the interpleader in maintaining and/or safeguarding the property in dispute, which the defendants claim adversely to one another.

Payment of the thing claimed into Court: Order XXXV, Rule 2 of the Code of Civil Procedure, 1908, provides that where a thing claimed is such that, it is capable of being paid into the court, then, the plaintiff/interpleader may be required to pay such amount or thing before the court. Thus, the court has discretion to make such orders as regards the subject matter in dispute and the party concerned will be bound to obey the order before it can ask for any relief in the suit.[2]

Procedure where Defendant is suing the Plaintiff: Order XXXV, Rule 3 of the Code of Civil Procedure, 1908 states that, 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, on being informed by the court in which the interpleader suit is pending, shall stay the proceedings in that suit as against him.[3]

In the case of, Satyanarain v. District Judge, Tonk & Ors[4], it was held that, it is not as if that once the suit for interpleader is filed, the other civil suit has to be stayed automatically; in order to invoke the power under Order XXXV, Rule 3 of the Code of Civil Procedure, 1908, the plaintiff (or interpleader) is duty bound to establish a prima facie case in his favour.

Procedure at First Hearing: Order XXXV, Rule 4 of the Code of Civil Procedure, 1908 empowers the court to declare at the first hearing itself, that the plaintiff is discharged from all liabilities and as a necessary corollary the court can award the plaintiff his costs and dismiss him from the suit. However, if the court is of the opinion that justice, propriety and convenience requires that all parties 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 issues be 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 original plaintiff.

Who cannot file Interpleader Suit? : Order XXXV, Rule 5 of the Code of Civil Procedure, 1908 states that, an agent cannot sue his principal, and similarly, a tenant cannot sue his landlord for the purpose of compelling such principals/landlords to interplead with persons other than the ones claiming through them.[5]

In the case of, N.M.N. Duraiswami Chettiar v. Dindigul Urban Co-operative Bank Ltd[6], it was held that, on a dispute as to the ownership of the deposit arising between the customers and the third person, an interpleader suit filed by the bank, would not come within the prohibition of Order XXXV, Rule 5 of the Code of Civil Procedure, 1908.

Charge for Plaintiff’s Costs: Order XXXV, Rule 6 of the Code of Civil Procedure, 1908 states that, when an interpleader suit is properly instituted, then, the court can provide for the costs to be given to the original plaintiff either by giving him a charge on the thing claimed by the defendants/claimants, or, in some other equally efficacious way.

Appeal: An order dismissing an interpleader suit is appealable. An appeal can be preferred under Order XLIII, Rule 1 of the Code of Civil Procedure, 1908.

Takeaways:

  1. To interplead means “to litigate with each other to settle a point concerning a third party”.
  2. In an interpleader suit the real dispute is not between the plaintiff and the defendants, but amongst the defendants themselves.
  3. In an interpleader suit plaintiff’s position must be one of impartiality and non-arbitrariness.
  4. An interpleader suit will not lie if the plaintiff has any interest in the subject-matter of the suit or is in collusion with one of the claimants.[7]
  5. The party filing an interpleader suit should be in a position to walk-out of the suit with a mere claim for costs.[8]
  6. In order to determine the exact nature of the suit regard must be had to all the prayers in the plaint; it is not an interpleader suit merely because one of the reliefs has reference to it.

[1] AIR 1922 Cal 138

[2] See: Syed Shamshul Haque v. Sitaram Singh & Ors, AIR 1978 Pat. 151

[3] See: Sir Dinshaw Fardunji Mulla, The Key to Indian Practice, Lexis Nexis, 11th Edition, p.217

[4] See: S.B. Civil Writ Petition No. 15587/2009, High Court of Rajasthan, Date of Decision: 18.08.2010, Coram: R.S. Chauhan, J.

[5] See: Jugal Kishore & Anr v. Bhagwan Das, AIR 1990 P&H 82

[6] AIR 1957 Mad 745

[7] See: Sambayya v. Subba Reddi, AIR 1952 Mad 564

[8] See: National Insurance Co. v. Dhirendra, AIR 1938 Cal 287

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