Section 88 & ORDER 35 OF CPC- INTERPLEADER
SUIT
The Section 88 of Code of Civil
Procedure as well as Order XXXV of the said Code contains the provisions
relating to Interpleader suits.
Whereas, Section 88 contains the criteria and conditions laid down in this
regard and also specifies the essential elements of an interpleader suits, Order XXXV contains the procedure. In nutshell,
the interpleader suit is a legal
safeguard to a debtor and aimed at protecting the rights of individuals and
entities who may find themselves caught in the midst of conflicting claims and
seeking their due discharge from liability. The details in this regard shall be
further delineated below.
A suit cannot be considered an interpleader suit under the Code of
Civil Procedure, if the defendants do not assert conflicting claims against
each other. The essential ingredients of it thus shall be that the plaintiff
must acknowledge the title of one of the defendants or be willing to make
payment or deliver the property to the said defendant.
The principles as contained in Section 88 of
Code of Civil Procedure may be referred to before proceeding further.
Section 88 of Code of Civil Procedure
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.
The
criteria are as under:
(i)
Subject matter:
There must be some property
involved and may relate to similar nature and may include sums of money or
moveable /immoveable property capable of being handed over.
(ii) Multiple Claims:
There are more than one party who must assert competing claims
against each other regarding the common property.
(iii) Disinterested Claimant:
Generally,
the plaintiff who brings out a lis before a competent court shall be interested
party, however, it is not so, in interpleader
suit, who may be initiating the suit, but shall have no claim in the suit property and
the plaintiff shall merely seek to ascertain as to who will be the claimant so
as to enable the plaintiff to deliver the property or sums to such claimant on
proper discharge. No doubt, what is inherent in it is that plaintiff must be in
a capacity to deliver the goods to
the rightful claimant.
(iv)
Interpleader Action:
A person claiming property may
commence an interpleader action
against all the claimants involved. While, the plaintiff shall be seeking to
determine as to which claimant is entitled to receive payment or possession of
the property and proper discharge of plaintiff from any liability.
ORDER 35 OF CODE OF CIVIL
PROCEDURE
The Order 35 of
Code of Civil Procedure may also be referred to in this context, since the
principles and procedure of interpleader
suit is also contained in it.
Order 35 CPC
1. 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.
2. Payment
of thing claimed into Court
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 so pay or place it before the he can be entitled
to any Order in the suit.
In the interpleader suit the
procedure of hearings are contained in Rule 4 of CPC.
4. Procedure at first hearing
(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
issues 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.
The Rule 6 is as under:
6. Charge for plaintiffs costs
Where the suit is
properly instituted, the Court may provide for the costs of the original
plaintiff by giving him a charge on the thing claimed or in some other
effectual way.
Clearly, in terms of the proviso
of Section 88 of CPC, in case any
legal proceedings are ongoing relating to title or interest between the
parties, then, till such determination, interpleader
suit cannot be instituted.
LAW
(i)
In one of the earliest case captioned
as Asan
Ali Vs Sarada Charan Kastagir SA No. 1625 & 1686 of 1919, Calcutta
High Court has held in para 11 that:
“11. In case of Nanji Koer Vs Unatul Patul 13 IND CAS 40 in the year 1911 “A”
brought a suit against “B” for rent. The defence was that she held the land as
tenant of “C”. “B’s defence was
investigated & overruled on merit and a decree was passed in favor of “A”. “B” then
brought a suit for declaration that “C” and A” was her landlord. It was
held that the suit being interpleader suit was not maintainable”.
(ii)
The Bombay High Court in a matter reported as Mangal Bhikaji
Nagpase vs. State of Maharashtra (1997) 99 BOMLR 91A
“7.
It will have, therefore, to be seen as to whether, firstly, the suit as filed
was maintainable. It will be seen that in the present suit, the plaintiff is
not an outsider. In an interpleader suit, the contest is between the defendants
for title and the plaintiff has got nothing to do with that contest. In this
respect, Rule l(a) or Order 35 of the Code of Civil Procedure mandatorily
requires the plaintiff to state that he claims no interest in the subject
matter in dispute other than for charges or costs. Now, if we were to see the
plaint in the present matter, such statement is very conspicuously absent and,
indeed, even if there is any trace of such a statement by stretching the
averments, the subsequent application made vide Exhibit 32 gives a complete
goby. In that application, the plaintiff displays a marked interest in the suit
property. This position is obtained from Rule 4 also where, in the very first
hearing, the Court can grant a declaration discharging the plaintiff from all
the liability of the defendants and ask the defendants to interplead, by
framing necessary issue/s. Where, therefore, the plaintiff claims any interest
in the concerned property, the interpleader suit has to necessarily fail”
(iii)
The
Patna High Court in a matter captioned as & reported as Syed Shamshul Haque v. Sitaram
Singh & Ors. AIR 1978 PAT 151
“In our view, the only option given to the court
in Sub-rule (2) and Sub-rule (3) of Rule 4 is either to decide the question of
title on the basis of admissions of the parties or on the basis of evidence
adduced in ordinary manner in any suit, after framing issues and transposing
any of the claimants as plaintiff. In the instant case, the plaintiff,
respondents 1 to 3 had been transposed to the category of plaintiffs from which
it is obvious that the court was not in a position to adjudicate on the basis
of admissions of any of the parties and it proposed to proceed under Sub-rule
(3) of Rule 4 of Order XXXV of the Code. The trial Court had even framed issues
on the basis of the pleadings saying as to whether plaintiffs Nos. 1 to 3 or
defendant No. 2 are entitled to the paddy crops in dispute. Of course, it
further added as to which of the two sides had been in possession of the
disputed land. In the instant case, the dispute relating to the paddy crops
from the land which itself was being claimed by both the parties, cannot be
decided without deciding title to the land in question. In our opinion, in view
of the mandate under Sub-rule (3) of Rule 4 of Order XXXV, it was incumbent
upon the trial court to try the suit in the ordinary manner, which means it had
also to decide the question of subsisting title in respect of the land from
which the crops in question have been harvested”.
(iv) The Punjab & Haryana High Court in
a matter reported as Jugal Kishore & Anr. v. Bhagwan Das AIR 1990 P&H 82 on closer analysis of
Order XXXV Rule 5 of CPC has held as under:
“According
to the said provisions, the tenant could not sue his landlords for the purposes
of compelling them to interplead with any persons other than persons making
claim through such principals or landlords. Admittedly, in the present case
defendants Nos. 4 to 19 are not claiming through the landlords defendants Nos.
1 to 3. They claim themselves to be the owners of the shop in dispute and have
denied the rights of defendants Nos. 1 to 3. In these circumstances, the said
provisions of O.35, R. 5, CPC, were clearly attracted and the tenant here could
not maintain the suit against the landlords i.e. defendants Nos. 1 to 3
compelling them to interplead with defendants Nos. 4 to 19. In Yeshwant Bhikaji’s case (AIR 1940 Bom
414) (supra), it was held that "a tenant is not permitted to deny his
lessor's title at the commencement of the tenancy and, therefore, in order that
an inter-pleader suit may lie, the claim of the party other than the landlord
must be consistent with the title of the landlord at the commencement of the
tenancy in question".
(v)
The Punjab & Haryana
High Court in a matter captioned as Neeraj Sharma v. The District
Sangrur Khadi Gram Civil
Revision No. 3973 of 2001 (O&M) have clarified that agents and tenants are not allowed to file interpleader suits against
their principals and landlords, as per the principles of Order XXXV Rule 5 of
the Code of Civil Procedure. Thus, what follows is that any claim, right
and interest in the property without reference to the landlord and demanding
rent, shall not be maintainable.
(vi)
The Supreme Court in a matter reported as Rohit
Singh Vs State of Bihar ( Now state of Jharkhand) (2006)
12 SCC 734, has held that a counter-claim directed solely against the
co-defendants cannot be maintained. The Apex Court has further stated that by
filing the counter-claim, the litigation cannot be converted into some sort of interpleader suit. The Apex Court stated
in para 21 as follows;
“21. Normally, a counter-claim, though based
on a different cause of action than the one put in suit by the plaintiff could
be made. But, it appears to us that a counter-claim has necessarily to be
directed against the plaintiff in the suit, though incidentally or along with
it, it may also claim relief against the co-defendants in the suit. But a
counter-claim directed solely against the co-defendants cannot be maintained.
By filing a counter-claim the litigation cannot be converted into some sort of
an interpleader suit. Here, Defendants 3 to 17 had no claim as against the
plaintiff except that they were denying the right put forward by the plaintiff
and the validity of the document relied on by the plaintiff and were asserting
a right in themselves. They had no case even that the plaintiff was trying to
interfere with their claimed possession. Their whole case was directed against
Defendants 1 and 2 in the suit and they were trying to put forward a claim as
against the State and were challenging the claim of the State that the land
involved was a notified forest in the possession of the State. Such a
counter-claim, in our view, should not have been entertained by the trial
Court.”
The
aforesaid discussion if seen in a broad
canvas, then, what emerges is that whereas principles of interpleader suit is contained in section 88 of Code of Civil Procedure,
while procedure is entailed in Order XXXV of CPC The object of the provision is to accord a
safeguard to the such honest individuals who seeks to discharge their liability
without being condemned in as much as such persons does not claim any vested
interest in the property and the payment
to the claimant itself may be in dispute. It is thus imperative that such
persons are accorded leverage and protection from likely excessive costs due to
delay. The appellate remedy is also available to any person under Order XLIII
of CPC, in case he does not succeed in the court at the first instance.
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Anil K Khaware
Founder &
Senior Associate
Societylawandjustice.com
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