Inter-pleader suit is a suit filed by a person who has no direct interest in the subject-matter of the suit. In other words if the plaintiff is in possession of some article, things or property (in which he is not having direct interest or he may be a custodian or stake holder) and if he is in a dilemma over the rivals claims of the defendants, he may file inter-pleader suit in the competent court to have determination as to who is the actual owner of the article, things or property.
It is a suit where there must be more than one defendants and the defendants contest against each other for the disputed property. In an interpleader suit the plaintiff holds the movable or immovable property and files the suit only to ascertain as to whom he should deliver the property because the defendants claim the property against each other or they interplead against each other. In every interpleader suit, there must be some debt or sum of money or other property in dispute between the defendants only. And the plaintiff must be a person who claims no interest therein other than for charges or costs and who is ready to pay or deliver the property to such of the defendants as may be decided by the court to be entitled to the property.
Section 88 of the Civil Procedure Code lays down that where two or more persons claim adversely to one another, the same debt, 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 .
Proviso to section 88 further says that where any suit is pending in which the rights of all parties can properly be decided, no such interpleader suit shall be instituted.
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. [Mangal Bhikaji Nagpase vs State Of Maharashtra (1997) 99 BOMLR 91 a]
According to Order 35, Rule 1, of CPC, in every interpleader suit, in addition to other statements, the plaint shall state:-
- That the plaintiff claims no interest in the subject matter in dispute other than the charges or costs. For example, when consigned goods are claimed by several parties, the railway can bring an interpleader suit claiming only a lien for freight, demurrage etc. ;
- the claims made by the defendants severally , and
- that there is no collusion between the plaintiff and any of the defendants .
Order 35, Rule 2, provides hat where the subject matter 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.
The provision is intended to protect a bona fide person from future list that he did not discharge his obligation. Order 36 obviates the difficulties of parties in locking themselves up in a lengthy legal battle when the crux of the dispute depends on a single or a few points.
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An equitable proceeding brought by a third person to have a court determine the ownership rights of rival claimants to the same money or property that is held by that third person.
Interpleader is a form of equitable relief. Equitable remedies are ways for courts to enforce rights other than by issuing a judgment for money damages. Interpleader is employed when two or more parties seek ownership of money or property that is held by a third party. The property in question is called the stake, and the third party who has custody of it is called the stakeholder. The stakeholder is faced with a legal dilemma: giving the property to either one of the parties will likely lead to a lawsuit by the other party against the stakeholder and the new property owner.
Interpleader enables the stakeholder to turn the controversy over to a court and to be dismissed from the legal action. It is designed to eliminate multiple lawsuits over the same stake and to protect the stakeholder from actual or potential multiple liability. Typically, interpleader will involve corporate Securities or proceeds from insurance policies.
The stakeholder initiates an interpleader by filing an action that states that he or she has no claim to the money or property in controversy, and does not know to which claimant it should be lawfully delivered. The stakeholder must also establish the possibility of multiple lawsuits. The stakeholder then may be required to deposit the stake with the court, and notifies possible claimants that they can present their claims of ownership in court for determination.
The court must decide whether the interpleader is proper. It has discretion to allow the interpleader, and may deny the relief if the stake-holder is guilty of Laches (unreasonable delay) or was responsible for the creation of the adverse claim. If the court grants the interpleader, the stakeholder is dismissed from the action. The rival claimants are given the right to litigate their claims, and they will be bound by the decision of the court.
Interpleader is primarily a device of federal Civil Procedure. Two types of interpleader are available in federal courts: one under the Federal Rules of Civil Procedure and one under federal statute. When interpleader is sought through rule 22 of the Federal Rules of Civil Procedure, more than $10,000 must be at issue in the action, and the claimants must reside in the same state and must be citizens of a state other than the one in which the stakeholder is a citizen. The action can be tried where the stakeholder resides, where the Cause of Action arose, or where the claimants reside. The stakeholder is not obligated to deposit the stake with the court, an important advantage when the property is used for purposes of investment and to generate income.
Interpleader authorized under 28 U.S.C.A. § 1335 differs in several respects from rule 22 interpleader. The dispute may involve as little as $500, at least two of the claimants must be from different states, and the citizenship of the stake-holder is immaterial. The venue, or place of trial, is anywhere that a claimant resides. At the time the suit is filed, the stakeholder must deposit the stake or post a bond in an amount equivalent to its value.
Claimants in an interpleader proceeding may be permitted to assert additional claims against each other or the stakeholder if they satisfy jurisdictional requirements and do not unreasonably complicate or delay the action. Courts must decide, on the particular facts of each case, whether such claims will be considered.
INTERPLEADER, practice. Interpleaders may be had at law and in equity.
2. An interpleader at law a proceeding in the action of detinue, by which the defendant states the fact that the thing sued for is in his hands, and that it is claimed by a third person, and that whether such person or the plaintiff is entitled to it, is unknown to the defendant, and thereupon the defendant prays, that a process of garnishment may be issued to compel such third person, so claiming, to become defendant in his stead. 3 Reeves, Hist. of the Eng. Law, ch. 23; Mitford, Eq. Pl. by Jeremy, 141; Story, Eq. Jur. Sec. 800, 801, 802. Interpleader is allowed to avoid inconvenience; for two parties claiming adversely to each other, cannot be entitled to the same thing. Bro. Abr. Interpleader, 4. Hence the rule which requires the defendant to allege that different parties demand the same thing. Id. pl. 22.
3. If two persons sue the same person in detinue for the thing, and both action; are depending in the same court at the same time, the defendant may plead that fact, produce the thing (e. g. a deed or charter in court, and aver his readiness to deliver it to either as the court shall adjudge; and thereupon pray that they may interplead. In such a case it has been settled that the plaintiff whose writ bears the earliest teste has the right to begin the interpleading, and the other will be compelled to answer. Bro. Abr. Interpl. 2.
4. In equity, interpleaders are common. Vide Bill of Interpleader, and 8 Vin. Ab. 419; Doct. Pl. 247; 3 Bl. Com. 448; Com. Dig. Chancery, 3 T; 2 Story, Eq. Jur. Sec. 800.