In legal disputes, the prospect of several claims over the same subject matter frequently causes uncertainty and risks for the person holding the disputed property, money or debt. To resolve such complications, the interpleader suit, as codified in Section 88 and Order 35 of the Code of Civil Procedure, 1908 (CPC), provides an effective remedy. It enables a neutral stakeholder, someone with no personal interest in the property or money to request the court's assistance in determining the legitimate claimant among two or more adverse claimants.

An interpleader suit is based on the idea that no should suffer as a result of others' conflict over the property of debt held by them. However, certain conditions like plaintiff's neutrality and the absence of collaboration, must be met before the suit can be maintained. Judicial rulings have clarified the scope and implementation of these provisions, ensuring that disputes are resolved fairly and transparently.

Meaning
The term "interplead" is derived from the concept of suing against one another. In essence, it is a judicial battle between two or more rival claimants to establish their right to disputed property, money or debt. The neutral stake holder seeks remedies in court to avoid being unfairly targeted or held liable by various parties for the same obligation.

In Mangal Bhikaji Nagpase v. State of Maharashtra [i], it was held that in an interpleader suit, the contest is between the defendants for title and the plaintiff has got nothing to do with that contest. The language of section 88 itself suggests that a plaintiff can file an interpleader suit firstly, for obtaining a decision as to the person to whom the payment or delivery should be made and, secondly, for obtaining an indemnity for himself. Where therefore, plaintiff claims any interest in the property concerned, interpleader suit has to fail necessary.

Illustration:
For example, consider A, who owes money to B. However. Two individuals, X and Y make competing claims for the money, each claiming that they are entitled to it. When faced with doubt, A can bring an interpleader suit naming X and Y as defendants. In this instance, A requests the court's involvement to decide between X and Y, rather than claiming any personal right to the money.

What happens to B?
The role of B is dependent on the nature of the claims made by X and Y.

1. If X and Y challenge B's entitlement to the money, B will be included as a party to the interpleader suit. The court will then determine whether B is the rightful claimant or if X or Y have a superior claim.
2. If X and Y do not fight B's entitlement and instead claim the money as entitled to it on independent grounds (for example, as B's beneficiaries or legal heirs), B's role in the proceedings may be limited. The court will focus on resolving the disagreement between X and Y while protecting B's legal rights.

Another example, A bank (plaintiff) holds a fixed deposit of Rs. 20,00,000. Two parties, Xand Y, claim ownership of the fixed deposit due to contradictory wills left by the deceased account holder. The bank, with no interest in the fixed deposit, wishes to avoid liability by paying the wrong claimant. The bank files an interpleader suit, asking the court to decide whether X or Y is the rightful heir to the fixed deposit.
This guarantees the court determines the conflicting claims fairly and clearly for all parties involved.

In the case of Asan v. Saroda[ii], it was determined that if the defendants do not make any adverse claims against each other and the plaintiff does not acknowledge one of the defendants' title or the plaintiff is not willing to pay or deliver the property to him, the suit is not an interpleader suit.

According to Halsbury's Laws of England:[iii]
"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 that 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."

In simple words Halsbury's Law of England provide that an individual can initiate an interpleader suit if they are obligated to pay money or surrender property but have conflicting claims. The court then determines who has the right to make the claim. This mechanism, known as interpleader, ensures that the shareholder is not subjected to double jeopardy or held liable twice for the same commitment.
 
Nature And Scope
Ordinary Suits vs. Interpleader Suits

Aspect	Ordinary Suit	Inter pleader Suit
	A suit initiated by the plaintiff to assert a personal claim against the defendant.	A suit where the plaintiff, having no personal interest, seeks to resolve conflicting claims of defendants over the property or money.
Parties Involved	The dispute is between the plaintiff and the defendant.	The plaintiff is a neutral party, and the dispute is between the defendants.
Plaintiff's Interest	The plaintiff has a personal stake or claim in the subject matter.	The plaintiff has no personal claim other than costs or charges incurred.[iv]
Nature of Dispute	A legal claim by the plaintiff against the defendant.	A dispute over property or money between multiple claimants, with the plaintiff being neutral.
Purpose	To enforce the plaintiff's legal rights or claim against the defendant.	To resolve conflicting claims and discharge the plaintiff from liability.
Legal Provisions	Governed by general provisions of the Code of Civil Procedure, 1908.	Governed by Section 88 and Order 35 of the Code of Civil Procedure, 1908.
Adjudication	The court decides the rights of the plaintiff against the defendant.	The court decides who the rightful claimant is between the defendants, relieving the plaintiff from further liability.
Plaintiff's Role	Active participant seeking relief or remedy.	Neutral party, asking the court to decide between rival claimants.
Indemnity	The plaintiff may seek indemnity for losses or damages if applicable.	The plaintiff is typically indemnified by court for any costs or charges incurred, with a charge on the disputed property or money.[v]

Purpose of the Plaintiff:

The plaintiff in an interpleader suit seeks to discharge their liability, such as paying money or transferring property, without putting themselves at risk of:

• Paying the wrong person.
• Facing multiple claims or lawsuits for the same debt or property.

In the case of Televista Electronics P. Ltd. V. Mass Communications and Marketing P. Ltd. And Ors., it was held that the words "suit or proceeding" used in section 446 of the Companies Act, 1956, are general and include an interpleader suit. Nothing has been pointed out to exclude interpleader suit from the operation of section 446 of the Companies Act, 1956.

Objectives of an Interpleader Suit:

The primary objectives of an interpleader suit include:

• Resolution of Rival Claims: The court reviews the defendants' claims and determines who has the legal title to the disputed property or money.
• Protection of the Plaintiff: The plaintiff is protected from the possibility of making an improper payment or being sued by many parties.
• Fairness in Justice: The process ensures that the legitimate claimant obtains the disputed property or money without undue delay.

Interpleader suits are critical for establishing clarity and avoiding duplicative or conflicting obligations for the plaintiff.

Conditions:

• Adverse Claims by Two or More Individuals: Two or more people must make competing claims for the same property, money, or debt. The claims must be mutually exclusive, which means that one claimant's rights clash with the others. For example: If X claims ownership of a piece of property and Y claims the same property, their claims are mutually exclusive.
• Existence of a Disputed Subject Matter: The dispute must be about a debt, sum of money, or property (movable or immovable). The subject matter must be tangible, identifiable, and transferable or deliverable.
• Neutrality of the Plaintiff: The plaintiff must not claim personal interest in the disputed subject matter, except for charges or costs incurred. The plaintiff must be willing to pay or transfer/deliver the subject matter to the person lawfully entitled to it, as determined by the courts. The plaintiff acts solely as a stakeholder and has no competing claim to the disputed property.
• No Pending Adjudication of Rights: There must be no other cases ongoing in which the rival claimants' rights can be adequately adjudicated. An interpleader suit cannot be maintained if a parallel legal proceeding is already underway in which the claimants' dispute is being resolved.

Illustration: Let's say A holds a sum of Rs. 50,000. Both B and C claim entitlement to this money. A has no personal interest in the money but is unsure whom to pay. A files an interpleader suit under section 88 of the CPC.

• Adverse Claims: Both B and C claim the same sum of money.
• Disputed Subject Matter: The Rs. 50,000 forms the subject matter of the dispute.
• Neutral Plaintiff: A does not claim any interest in the money other than seeking recovery of any costs incurred.
• No Parallel Proceedings: No other suit is pending between B and C regarding the Rs. 50,000.

This satisfies the conditions, allowing A to seek the court's intervention to determine the rightful claimant.

Who Can and Cannot Bring an Interpleader Suit?

Can:

An individual who has no interest in any debt, sum of money, or other property movable or immovable except charges or costs, and is willing to pay or give the property to the legitimate claimant may initiate an interpleader suit.

Cannot:

Certain relationships, such as those between an agent and a principal or a tenant and a landlord, are barred from using interpleader lawsuits to force their counterparts to interplead with third parties, according to the rules regulating interpleader suits.

• Agent: An agent is legally obligated by a fiduciary responsibility to work in the best interests of their principal and cannot challenge the principal's title or authority over the subject matter assigned to them.
• Tenant: A tenant is prohibited from disputing their landlord's title during the term of the tenancy. This approach is founded on the tenant estoppel doctrine, which protects the landlord's interests as well as the tenancy agreement's integrity.

For example: In Bilas Kunwar v. Desraj Ranjit Singh, the Privy Council held that a tenant who has been let into possession cannot deny his landlord's title, however defective it may be, so long as he has not openly restored possession by surrender to his landlord.

Procedure Of An Interpleader (Order 35 Rules 1-4)

Inter-pleader Suit

1. Plaint

   The plaintiff files a plaint for an interpleader suit and the plaint must include the following essential declarations:
   • The plaintiff must clearly state that they have no personal interest in the subject matter of the dispute, except for the charges or costs incurred in its custody or management.
   • The plaint must specify that the defendants are asserting mutually conflicting claims over disputed property, money or debt.
   • The plaintiff must declare that they are not acting in collusion with any of the defendants. This ensures the plaintiff's impartial role in the dispute.
   In the case of Sambayya v. Subba Reddi[xii], the court held that an interpleader suit will not lie if the plaintiff has any interest in the subject matter of the dispute or if they are in collusion with one of the defendants.
    

2. Custody of the Subject Matter

   The court may direct the plaintiff to:
   • Deposit the disputed money with the court.
   • Place the disputed property under the court's custody.
   In the case of Syed Shamshul Haque v. Sitaram Singh and Ors.[xiii], the court has authority to issue such orders and the party must comply before seeking any remedy. This secures the subject matter, preventing its misuse until the rightful claimant is determined.
    

3. Discharge of the Plaintiff

   At the first hearing the court may:
   • Discharge the Plaintiff from all liabilities concerning the disputed subject matter.
   • Award the plaintiff costs incurred in filing the suit.
   • Dismiss the Plaintiff from the proceedings, leaving the dispute to be resolved between the defendants.
      

4. Adjudication of Title

   The court may, based on the available evidence, determine the lawful entitlement to the disputed subject matter and pass an appropriate order.
    

5. Framing of Issues and Further Proceedings

   If evidence is insufficient for an immediate decision, the court may:
   • Frame issues outlining the points of dispute between the defendants.
   • Allow the suit to proceed as an ordinary civil suit.
   • Designate one of the defendants as the plaintiff, in addition to or in place of the original plaintiff, for the purpose of advancing the trial.

Illustration:
Suppose warehouse owner (plaintiff) stores goods claimed by both X and Y. The plaintiff has no personal interest in the goods and is willing to hand over them to the rightful owner.
The plaintiff files an interpleader suit, affirming their neutrality and depositing the goods with the court. At the first hearing, the court discharges the plaintiff from further involvement and directs X and Y to present evidence supporting their claims. Based on the evidence, the court either adjudicates the rightful ownership or frames issues for further trial if the evidence is insufficient.

Conclusion
Interpleader suits are a fair and effective legal procedure for settling disputes when many claimants claim competing rights to the same property, debt or money. These proceedings are especially advantageous for neutral stakeholders, such as agents or custodians, who hold the disputed subject matter without a personal stake but face the potential of multiple liabilities.

Interpleader suits avoid several litigations by merging conflicting claims into a single procedure, improving judicial efficiency and saving the plaintiff from lengthy legal entanglements. The court's involvement in establishing the legitimate claimant adheres to principles of equity and procedural justice.

In essence, interpleader suits protect neutral parties while guaranteeing that the rightful party obtains what they are entitled to, making them a necessary remedy in civil law. They demonstrate the importance of striking a balance between fairness justice and legal protection when settling such problems.

End Notes:

• 1997 SCC OnLine Bom 59.
• AIR 1992 Cal 138.
• Halsbury's Laws of England (4th Edn.) Vol. 37.
• Groundnut Extractions Export Development Assn. v. SBI, 1996 SCC OnLine Bom 123.
• Sobhanadrirao v. Jaggayya, AIR 1996 AP 92.
• 1979 SCC OnLine Del 59.
• 2010 SCC OnLine Del 774.
• National Insurance Co. Ltd. v. Dhirendra Nath, AIR 1938 Cal 287.
• Order 35 Rule 5, Code of Civil Procedure, 1908.
• S. 122, Bharatiya Sakshya Adhiniyam, 2023.
• 1915 SCC OnLine PC 34.
• AIR 1952 Mad 564.
• AIR 1978.

Also Read:

• Inter-Pleader Suit
• Representative Suit Under The Code Of Civil Procedure, 1908