Code of Civil Procedure

Introduction

• ‘To interplead’ means to litigate with each other to settle a point concerning a third party. An interpleader suit is a legal action taken by a party over a property which is claimed by two or more other parties.
• Under this category of suits, the real dispute does not lie between plaintiff and defendant rather multiple defendants interplead against each other.
  • E.g. - A finds a phone lying on the road, thereafter both B & C claim the phone from him. A himself claims no interest in such phone, he can file a suit of interpleader.
• The provisions for the interpleader suit are provided under Section 88 and Order 35 of the Civil Procedure Code, 1908 (CPC).

Interpleader Suit under Section 88 of CPC

• Conditions on Which an Interpleader Suit can be Instituted:
  • Two or more persons claim adversely to one another the same debts, sum of money or other property from another.
  • Property may be movable or immovable.
  • The person from whom the property is claimed, claims no interest therein other than for charges or costs.
  • There must not be any pending suit under which the rights of all parties can properly be decided.
• Who may File an Interpleader Suit:
  • The person who claims no interest in the property other than for charges or costs may institute the suit of interpleader. The plaint for the same should be in Form 40 of Appendix A of CPC.

Procedure for Institution of Interpleader Suit

The procedure is provided under Order 35 (Interpleader) of CPC which is as follows:

• Rule 1: It states that the plaintiff while filing a suit of interpleader must also state:
  • That he claims no interest in the subject-matter in dispute other than for charges or costs.
  • The claims are made by the defendants severally.
  • That there is no collusion between the plaintiff and any of the defendants.
• Rule 2: It mentions that 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 he can be entitled to any order in the suit.
• Rule 3: It states that where defendant in an interpleader suit actually sues the plaintiff in respect of the subject matter, any court in which suit against plaintiff is pending shall on being informed by the Court in which suit of interpleader is pending stay such suit.
• Rule 4: At first hearing the court may declare that:
  • Plaintiff is discharged from all liability towards defendant in respect of things claimed.
  • If the court thinks that for ends of justice to meet all parties need to be retained, till the end, it may retain such party.
• Rule 5: It mentions that agents and tenants may not institute interpleader suit against their principal and landlord respectively.
  • Illustration - A deposits a box of jewels with B as his agent. C alleges that the jewels were wrongfully obtained from him by A, and claims them from B. B cannot institute an interpleader-suit against A and C.
• Rule 6: Charge for Plaintiff’s 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.

Case Laws

• Chaturbhuj Vithaldas Jasani v. Moreshwar Parashram & Ors. (1987): This case dealt with an interpleader suit filed by a bank, which held funds belonging to multiple parties. The Supreme Court emphasized that interpleader suits serve the purpose of preventing the stakeholders from being drawn into multiple, time-consuming, and costly litigations and that they provide a convenient mechanism for resolving competing claims.
• Mangal Bhikaji Nagpase v. State of Maharashtra (1997): Bombay High Court held that the plaintiff must declare that he has no interest in the issue other than expenses and charges.
• Puran Chand v. Ram Gopal (2000): In this case, the Delhi High Court reiterated the principle that an interpleader suit is an appropriate remedy when multiple parties assert competing claims to a specific property or fund held by a third party.