Interpleader Suit CPC

Where conflicting claims and uncertainties often reign supreme, the

interpleader suit stands as a beacon of clarity and fairness. This legal
mechanism, often overlooked in the broader spectrum of civil
procedures, serves as a vital instrument for resolving disputes over
property, debts and assets.
An interpleader suit is not merely a legal safeguard; it is a powerful
tool designed to protect the rights of individuals and entities who find
themselves caught in the crossfire of conflicting interests.

Contents hide
1. What is Interpleader Suit?
2. Section 88 and Order XXXV of CPC: Interpleader Suits
3. Order XXXV Rule 1 – Plaint in an Interpleader Suit
4. Order XXXV Rule 2 – Payment of the Thing Claimed into Court
5. Order XXXV Rule 3 – Procedure where Defendant is Suing the Plaintiff in an
Interpleader Suit
6. Order XXXV Rule 4 – Procedure at First Hearing in Interpleader Suit
7. Order XXXV Rule 5 – Who cannot file Interpleader suit?
8. Order XXXV Rule 6 – Charge of Plaintiff’s Cost
9. Essentials of an Interpleader Suit
10. Who may File an Interpleader Suit?
11. The Reinstitution of Interpleader Suit
12. The Object of Filing Interpleader Suit
13. Procedure for Filing Interpleader Suit
14. Landmark Cases on Interpleader Suit
14.1. Neeraj Sharma v. The District Sangrur Khadi Gram
14.2. Hanumanth Vajhula Jagannadha v. Vajhula Annapurna Rajesswaramma
15. Conclusion

What is Interpleader Suit?

An interpleader suit is a legal action initiated by a person or entity

holding property, funds, or assets that are claimed by two or more
conflicting parties. An interpleader suit is filed when the party holding
the property has no interest in it, except for potential charges or costs
and seeks to avoid liability or multiple lawsuits.
The primary dispute in an interpleader suit typically arises among the
defendants who interplead against each other, rather than involving
the plaintiff and the defendant of a case. An interpleader suit is
distinguished by the fact that the plaintiff is not directly involved in the
subject matter under contention. The fundamental and most significant
objective of an interpleader suit is to resolve conflicting claims among
rival defendants. This situation arises when there is a disputed debt,
capital, or other property solely between the defendants. Essentially,
an interpleader suit is initiated to adjudicate a matter concerning a
third party.
In an interpleader suit, it is essential for the plaintiff to maintain
impartiality and avoid arbitrariness. For instance, consider the scenario
where ‘A’ holds a total of Rs. 10,000, which ‘B’ and ‘C’ both claim
against each other. ‘B’ and ‘C’ are brought to court by ‘A’ in an
interpleader suit. During the proceedings, it is revealed that ‘A’ had
previously reached an agreement with ‘B’ before filing the suit,
stipulating that if ‘B’ were to win the case, he would accept only Rs.
9,000 from ‘A’ as full settlement of his claim. Since ‘A’ has an interest
in the subject matter of the suit due to this arrangement, he is not
eligible to initiate an interpleader suit. Consequently, the complaint
should be dismissed.

Section 88 and Order XXXV of CPC: Interpleader Suits

Section 88 and Order XXXV of the Code of Civil Procedure, 1908
encompass the provisions governing Interpleader suits.
Section 88 delineates the criteria and conditions under which an
interpleader suit can be initiated. It specifies the essential elements of
an interpleader suit as follows:

 Similar Property: There must be property involved that is of a

similar nature, which can include a mortgage, a sum of money, or
any movable or immovable property.
 Multiple Claims: Two or more parties must assert competing
claims against each other regarding the said property.
 Disinterested Claimant: The person initiating the suit (plaintiff)
claiming the property must not have any interest in it, except for
potential charges or expenses. This disinterest is crucial, as the
plaintiff must be in a position to deliver or transfer the property to
the rightful claimant.
 Interpleader Action: A person claiming property may
commence an interpleader action against all the claimants
involved. The objective is to determine which claimant is entitled
to receive payment or possession of the property. Additionally,
the plaintiff seeks indemnity for themselves in this process.
The Hon’ble Calcutta High Court, in the case of Asan v.
Saroda, established that a suit cannot be considered an interpleader
suit in CPC if the defendants do not assert conflicting claims against
each other. Furthermore, the plaintiff must either acknowledge the title
of one of the defendants or be willing to make payment or deliver the
property to that defendant.
The proviso to Section 88 further stipulates that no interpleader suit
shall be instituted when there is an ongoing lawsuit in which the
interests of both parties can be adequately determined.

Order XXXV Rule 1 – Plaint in an Interpleader Suit

Order XXXV Rule 1 of the Code of Civil Procedure, 1908 pertains to the
Plaint in an interpleader suit. This rule mandates certain key elements
that must be included in the plaintiff’s complaint:
 Lack of Interest: The plaintiff, in the interpleader suit, must
explicitly state that they have no interest in the subject matter of
the suit or in the individual claims made by the defendants.
 Absence of Conspiracy: The plaintiff must unequivocally assert
that there is no collusion or conspiracy between the claimants
and any of the defendants throughout the course of the case.
 Listing Defendant’s Claims: The plaintiff is required to include
all the arguments and claims presented by the defendants in the
complaint.
 Willingness to Present Property: If the property in dispute is
movable, the plaintiff must express their willingness to place it
before the court for resolution.
The Hon’ble Bombay High Court’s ruling in the case of Mangal Bhikaji
Nagpase vs. State of Maharashtra emphasised that the plaintiff
must affirm, in accordance with Rule 1, that they possess no interest in
the disputed subject matter apart from potential charges or costs.

Order XXXV Rule 2 – Payment of the Thing Claimed into Court

Order XXXV Rule 2 addresses the situation where the disputed property can be
paid into court or placed in the custody of the court. In such cases, the plaintiff
may be obligated to take this action before being entitled to any order in the suit.
The Hon’ble Patna High Court, in the case of Syed Shamshul Haque v. Sitaram
Singh & Ors., clarified that the court has discretion to issue orders concerning the
disputed property and the concerned party must adhere to these orders before
seeking relief from the court.
Order XXXV Rule 3 – Procedure where Defendant is Suing the Plaintiff in an
Interpleader Suit
Order XXXV Rule 3 outlines the procedure to be followed when a defendant in an
interpleader suit is also suing the plaintiff regarding the subject matter of the suit.
In such instances, the court in which the suit against the plaintiff is pending must
stay the proceedings upon being informed by the court where the interpleader
suit was initiated. The costs incurred by the defendant in the stayed suit should be
provided for within that particular suit.
Order XXXV Rule 4 – Procedure at First Hearing in Interpleader Suit
Order XXXV Rule 4 addresses the procedure at the first hearing of an interpleader
suit. This rule provides the court with certain powers and options:
Plaintiff’s Release from Liabilities: The court has the authority to release the
plaintiff from all liabilities at the first hearing. Consequently, the court may grant
the plaintiff their costs and dismiss the case. This means that if the court
determines that the plaintiff has no further role or responsibility in the matter,
they can be discharged from the suit.
Retention of Parties: However, if the court believes that it is necessary for the
sake of justice, propriety, or convenience to retain all parties to the suit, the
plaintiff may not be discharged until the suit reaches its final resolution. This
discretion allows the court to determine whether it is appropriate to release the
plaintiff or to keep them involved in the proceedings.
Framing and Trying Other Issues: If the court deems it suitable, it may also order
that additional issues be framed and tried concurrently with the suit.
Furthermore, the court may allow any complainant (i.e., the defendant in the
interpleader suit) to be made a plaintiff, either in place of or in addition to the
original plaintiff, if deemed necessary.
Order XXXV Rule 5 – Who cannot file Interpleader suit?
Order XXXV Rule 5 outlines who is ineligible to file an interpleader suit. In the case
of Jugal Kishore & Anr. v. Bhagwan Das, the court clarified that certain parties
cannot initiate an interpleader suit in CPC. Specifically, agents cannot sue their
principals and tenants cannot sue their landlords with the intention of compelling
these principals or landlords to interplead with individuals other than those
claiming through them.
Order XXXV Rule 6 – Charge of Plaintiff’s Cost
Order XXXV Rule 6, the final rule in this order, deals with the charge of the
plaintiff’s costs. When an interpleader suit is appropriately initiated, the court will
determine how the original plaintiff’s costs will be compensated. This
compensation may be obtained by charging the plaintiff a fee equivalent to the
amount in dispute or by utilising a similar method that proves to be equally
effective and successful.
Essentials of an Interpleader Suit
Before initiating an interpleader suit in CPC, the following conditions must be met
as per Section 88:
 Disputed Debt or Property: There must be a disputed debt, sum of money,
or other property, whether movable or immovable.
 Multiple Claimants: Two or more persons must be making adverse claims
to this debt, money, or property.
 Disinterested Claimant: The person from whom the debt, money, or
property is claimed should not have any interest in it, except for charges
and costs. They must be willing and ready to pay or deliver it to the rightful
claimant.
 No Pending Suit: There should be no other pending suit where the rights of
the rival claimants can be properly adjudicated.
Who may File an Interpleader Suit?
As per the case of Robinson v. Jenkins (1890), a person who has no interest in the
debt, money, or property except for the charges and costs incurred by them and is
prepared to pay or deliver it to the rightful claimant, may file an interpleader suit
in CPC.
The Reinstitution of Interpleader Suit
Where interpleader suit may be reinstituted and Power to state case for the
opinion of the Court is defined under Section 88 and 90 of the Code of Civil
Procedure 1908. An interpleader suit may be reinstituted when multiple
defendants blame each other for claiming the same property, debt, or sum of
money from the plaintiff, who is not in direct possession of the property, does not
claim any interest and is willing to deliver the property. However, if a suit related
to res judicata (a matter already adjudicated upon) is pending in one court, a
similar suit cannot be instituted in another court.
The Object of Filing Interpleader Suit
An interpleader suit in CPC is typically filed with the following objectives:
 Adjudication of Claims: The suit aims to adjudicate the competing claims
made by the defendants, thereby determining the rightful claimant.
 Property Distribution: In cases where a person passes away without
transferring property to other family members, a family member may need
to claim the property or money from a bank. The bank, in turn, may initiate
an interpleader suit to decide who should receive the property. This type of
suit is filed in the court where the doctrine of res judicata applies.
Procedure for Filing Interpleader Suit
The procedure for interpleader suits is governed by Order 35, Rules 1 to 4 of the
Code of Civil Procedure, 1908. Here is a summary of these rules and two landmark
cases related to interpleader suits:
Rule 1: In every interpleader suit, the plaintiff must include the following
statements in the plaint:
 The plaintiff claims no interest in the subject matter in dispute except for
the charges and costs.
 The claims have been made by the defendants separately.
 There is no collusion between the plaintiff and any of the defendants.
The court may also order the plaintiff to deposit the disputed amount or place the
property in the custody of the court, providing the plaintiff with a charge on the
thing claimed to cover the costs incurred.
Rule 4: According to this rule, the court has the authority to declare that the
plaintiff is discharged from all liability, award them costs and dismiss them from
the suit at the first hearing. Based on the available evidence, the court may also
adjudicate the title to the property in dispute. If adjudication is not feasible, the
court may direct that issues be framed and tried between the parties and one of
the claimants may be made a plaintiff either instead of or in addition to the
original plaintiff. The suit then proceeds in an ordinary manner.
Landmark Cases on Interpleader Suit
Neeraj Sharma v. The District Sangrur Khadi Gram
In this case, the Punjab and Haryana High Court clarified that agents and tenants
are not allowed to file interpleader suits against their principals and landlords, as
per Order XXXV Rule 5 of the Code of Civil Procedure, 1908. A tenant cannot sue
their landlord when the dispute does not involve parties who have claimed
through the landlord. Interpleader suits are intended to resolve claims made
through the person initiating the suit. If someone is claiming a right and interest in
the property without reference to the landlord and demanding rent, such claims
are not maintainable.
Hanumanth Vajhula Jagannadha v. Vajhula Annapurna Rajesswaramma
This case deals with excess execution questions, where property not covered by
the decree is delivered in execution of the decree. The court clarified that in such
situations, an appeal under Section 47 of the Code of Civil Procedure is the
appropriate recourse for the judgment debtor to recover the property that was
delivered in excess of the decree. It emphasises that a separate action is not
necessary in such cases.
Conclusion
Section 88 and Order XXXV of the Code of Civil Procedure, 1908 deals with
interpleader suit. These provisions serve to safeguard individuals who act in good
faith from facing condemnation due to their non-fulfillment of certain duties,
particularly in cases where they have no vested interest in property or where they
are the complainants seeking resolution of disputes over property or debt.
By providing protection for a person’s right to legal costs in such scenarios and by
facilitating the determination of rightful claims, interpleader suit help ensure
fairness and justice in civil proceedings. However, in cases where these rights are
not adequately protected or are ignored by the courts, individuals can resort to an
appeal process as outlined under Order XLIII Rule 1 of the Code of Civil Procedure,
1908.