Meaning and Purpose

An Interpleader Suit is a specific type of suit filed when 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 in the subject matter himself and is willing to deliver it to the rightful claimant, but is unable to determine which claimant is entitled to it. This person, who holds the property but is caught between conflicting claims, is called the 'stakeholder'. The suit is filed by this stakeholder to compel the conflicting claimants to interplead (plead against each other) so that the Court can determine who is the rightful owner and thereby discharge the stakeholder from liability.

Section 88 of the Code of Civil Procedure, 1908 (CPC) provides for filing an interpleader suit, and Order XXXV lays down the procedure to be followed in such suits.

To resolve conflicting claims to property

The primary purpose of an interpleader suit is to obtain a judicial decision from the Court as to the rightful owner of property (or debt) where there are rival claims. The person filing the suit (the plaintiff) does not dispute the title of the property or debt; they merely hold it and are uncertain about who is legally entitled to receive it. By filing the suit, the plaintiff asks the Court to resolve the dispute between the defendants (the conflicting claimants) and protect the plaintiff from being sued by each claimant separately or from wrongly paying/delivering the property to the wrong person.

It protects the stakeholder from potential double liability or harassment by multiple lawsuits. The stakeholder is essentially saying to the Court, "Here is the property/money. These parties are claiming it. I have no claim myself and am ready to give it to whoever the Court says is entitled. Please decide their rights and discharge me."

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Conditions for Filing an Interpleader Suit

Section 88 of the CPC lays down the specific conditions that must be fulfilled by the plaintiff for filing an interpleader suit. These conditions are:

Two or more persons claiming adversely

There must be at least two persons (the defendants in the suit) who claim, adversely to one another, the debt, sum of money, or other property which is the subject matter of the suit. Their claims must be conflicting and mutually exclusive.

Same debt, sum of money, or other property

The subject matter of the conflicting claims must be the same debt, sum of money, or movable/immovable property. Section 88 uses the phrase "from another person", indicating that the property/debt is held by the plaintiff.

Plaintiff claims no interest

The person filing the suit (the plaintiff) must claim no interest in the subject matter in dispute other than for charges or costs. This is a crucial condition. The plaintiff must be a neutral party who merely holds the property/debt. If the plaintiff claims ownership or any title interest in the property/debt, an interpleader suit is not maintainable.

Plaintiff is willing to pay or deliver to the rightful claimant

The plaintiff must be ready and willing to pay or deliver the sum of money or other property to whichever of the claimants the Court shall direct.

No collusion

The plaintiff must not be colluding with any of the claimants. Collusion means an agreement between the plaintiff and one of the claimants to deceive the Court or the other claimant.

No suit pending where rights can be decided

An interpleader suit shall not be instituted if a suit is already pending in which the rights of the conflicting claimants can be properly decided.

If any of these conditions are not met, the suit may be dismissed as not being a proper interpleader suit. The plaintiff must plead and prove that these conditions exist.

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Procedure in Interpleader Suits

The procedure for filing and conducting an interpleader suit is detailed in Order XXXV of the CPC. The procedure is designed to quickly relieve the plaintiff (stakeholder) from the litigation and let the actual claimants contest the matter.

Plaint (Order XXXV, Rule 1)

In addition to the usual particulars required in a plaint under Order VII, Rule 1, a plaint in an interpleader suit must specifically state:

• That the plaintiff claims no interest in the subject matter in dispute other than charges or costs.
• The claims made by the defendants severally (separately).
• That there is no collusion between the plaintiff and any of the defendants.
• That the plaintiff is willing to pay or deliver the subject matter to the rightful claimant as the Court shall direct.

Payment or Delivery into Court (Order XXXV, Rule 2)

Where the subject matter is capable of being paid or placed into Court, the plaintiff may be required to do so. For example, if it's a sum of money, the plaintiff usually has to deposit it in Court. If it's movable property, it might be deposited or placed at the Court's disposal.

Procedure at First Hearing (Order XXXV, Rule 3)

At the first hearing, the Court examines the plaintiff and the plaint. If the Court is satisfied that the plaintiff is entitled to relief (i.e., the conditions under Section 88 are met), the Court may:

• Declare that the plaintiff is discharged from all liability to the defendants in respect of the subject matter in dispute.
• Award the plaintiff their costs out of the subject matter in dispute or otherwise.
• Discharge the plaintiff from the suit.
• Pass any other order deemed fit.

The Court may also frame issues between the defendants (the conflicting claimants) and proceed to try the suit between them to determine their respective rights.

Plaintiff's Position After Discharge:

Once the plaintiff is discharged under Rule 3, they are effectively out of the suit, except for receiving their costs. The suit then proceeds between the defendants as if they were the plaintiff and defendant, respectively.

Trial Between Claimants (Order XXXV, Rule 4)

Where the plaintiff is discharged, the Court may direct the defendants to prepare and file statements of their respective claims and answers to the claims of the other defendants. Issues are then framed based on these pleadings, and the case proceeds to trial between the claimants to determine their rights to the subject matter.

The Court will decide the dispute between the claimants based on the evidence presented. The claimant found to be entitled to the property or money will be declared the rightful owner by the Court.

Costs (Order XXXV, Rule 3 & 5)

The plaintiff in an interpleader suit is usually entitled to their costs of bringing the suit from the subject matter itself or from the unsuccessful claimant(s). The Court has the discretion to award costs as it deems just.

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Section 79: Suits by or against the Government

Section 79 of the Code of Civil Procedure, 1908 (CPC) specifies how suits are to be instituted when the plaintiff or defendant is the Government, either Central or State. The purpose of this section is to identify the correct legal entity to be impleaded in litigation involving the Government.

Parties in Suits by or Against Government

Section 79 states:

"Suits by or against the Government shall,—

(a) in the case of a suit by or against the Central Government, be instituted by or against the Union of India;

(b) in the case of a suit by or against a State Government, be instituted by or against the State."

Explanation:

• This means that whenever a suit is filed by or against the Central Government, the proper party to be named in the plaint or written statement is "The Union of India".
• Similarly, when a suit is filed by or against a State Government (e.g., Government of Maharashtra, Government of West Bengal, etc.), the proper party to be named is the name of the State, such as "The State of Maharashtra" or "The State of West Bengal".
• It is not necessary or appropriate to sue individual departments or ministries of the Government directly, nor is it proper to sue the President of India or the Governor of a State in their personal capacity for actions taken on behalf of the Government.
• Naming the correct legal entity as per Section 79 is essential. If the Government is wrongly described (e.g., suing a particular Ministry instead of the Union of India or the State), the suit may be dismissed for misjoinder of parties or technical defect, although courts often allow amendment of the plaint to correct such descriptions.

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Section 80: Notice to Government

Section 80 of the CPC mandates the giving of prior notice before instituting a suit against the Government or a public officer for acts done in their official capacity. This is a statutory requirement intended to provide the Government with an opportunity to examine the claim and possibly settle it without litigation.

Mandatory requirement of notice

Section 80(1) states:

"Save as otherwise provided in sub-section (2), no suit shall be instituted against the Government (including the Government of the State of Jammu and Kashmir) or against a public officer in respect of any act purporting to be done by him in his official capacity, until the expiration of two months next after notice in writing has been delivered to, or left at the office of—

(a) in the case of a suit against the Central Government, a Secretary to that Government; ...

(b) in the case of a suit against the Government of a State, a Secretary to that Government or the Collector of the district; and

(c) in the case of a public officer, delivered to him or left at his office, stating the cause of action, the name, description and place of residence of the plaintiff and the relief which he claims; and the plaint shall contain a statement that such notice has been so delivered or left."

Key aspects of the notice requirement:

• Mandatory: The requirement of notice under Section 80(1) is mandatory. Non-compliance is generally fatal to the suit, and the plaint may be rejected under Order VII, Rule 11(d) for being barred by law.
• Who needs notice: Notice is required for suits against the Union of India, a State, or a public officer for acts done in their official capacity.
• Purpose of the Act: The act by the public officer must "purport" to be done in his official capacity, meaning it must appear to be done in that capacity, even if it was done wrongly or illegally.
• Notice Period: A clear period of two months must expire after the delivery of the notice before the suit is filed.
• Recipient of Notice: The notice must be delivered to or left at the specified offices/officers (Secretary to the Central/State Govt., Collector of the district for State Govt., or the public officer himself).
• Contents of Notice: The notice must clearly specify:
  • The cause of action (the facts giving rise to the right to sue).
  • The name, description, and place of residence of the plaintiff.
  • The relief claimed by the plaintiff.
  The purpose is to give sufficient information to the Government/officer to understand the claim.
• Statement in Plaint: The plaint must explicitly state that such a notice has been delivered or left, along with details.
• Effect on Limitation: The two-month period required for notice is excluded while computing the period of limitation for filing the suit, as per Section 15(2) of the Limitation Act, 1963. If the limitation period expires during the notice period, the plaintiff gets the full notice period plus the balance limitation period after the notice period expires.

Exceptions to the notice requirement

Section 80(2) provides an exception to the mandatory notice requirement in cases seeking urgent relief. It states:

"A suit to obtain an urgent or immediate relief against the Government or any public officer in respect of any act purporting to be done by him in his official capacity, may be instituted, with the leave of the Court, without serving any notice as required by sub-section (1)..."

However, this exception comes with conditions:

• Leave of the Court: The plaintiff must obtain the permission (leave) of the Court to file the suit without notice.
• Urgent or Immediate Relief: The suit must be for obtaining urgent or immediate relief, such as an injunction to prevent imminent harm that cannot wait for the two-month notice period to expire.
• Application and Affidavit: The application for leave must be supported by an affidavit.
• Opportunity to show cause: Section 80(3) adds a condition: "No relief shall be granted against the Government or any public officer in a suit instituted under sub-section (2) before giving to the Government or public officer, as the case may be, a reasonable opportunity of showing cause in respect of the relief prayed for in the suit." This means the Court cannot grant *ex parte* relief (relief without hearing the other side) immediately; it must issue notice to the Government/officer to present their side.
• Consequences of Failure: If the plaintiff files a suit without notice under Section 80(2) claiming urgent relief but fails to obtain such urgent or immediate relief, the plaint shall be returned to him for presentation after complying with the requirements of sub-section (1). This prevents abuse of the urgent relief provision.

Waiver: The Government can waive the requirement of notice under Section 80. Such waiver may be express or implied (e.g., by participating in the suit without raising the objection of lack of notice at the earliest opportunity).

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Section 82: Power to make decree against Government

Section 82 of the CPC deals with the execution of decrees passed against the Government or a public officer in respect of acts done in an official capacity. It provides a special procedure and grace period for the Government before execution can be levied.

Execution of Decrees Against Government

Section 82(1) states:

"Where in a suit by or against the Government, or by or against a public officer in respect of any act purporting to be done by him in his official capacity, a decree is passed against the Union of India or a State or, as the case may be, the public officer, a time, not exceeding three months from the date of such decree, shall be fixed for the satisfaction of the decree."

Section 82(2) states:

"Execution shall not be issued on any such decree unless it remains unsatisfied for the period of three months from the date of pronouncing the decree."

Key aspects of Section 82:

• Application: This section applies to decrees passed against the Union of India, a State, or a public officer sued in their official capacity.
• Grace Period: The Court passing the decree must fix a time, not exceeding three months from the date of the decree, for the Government or public officer to satisfy the decree. The purpose of this period is to allow the Government machinery time to process the decree, decide on potential appeals, and make arrangements for payment.
• No Immediate Execution: Execution proceedings cannot be initiated against the Government or public officer immediately after the decree is passed. Execution can only be applied for and issued if the decree remains unsatisfied after the expiration of the three-month period (or the shorter period fixed by the Court, if any, not exceeding three months).
• Execution Procedure: Once the three-month period expires and the decree remains unsatisfied, the decree-holder can apply for execution in the regular manner provided under Order XXI of the CPC. Execution can then proceed against the property of the Government.
• No Personal Liability for Public Officer: If the suit was against a public officer for an act done in his official capacity, and the decree is passed against him in that capacity, execution is typically levied against the Government, not against the officer's personal property.

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