Skip to content


inuganti Sobhanadrirao and anr. Vs. Muthangi Jaggayya and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAndhra Pradesh High Court
Decided On
Case NumberAppeal No. 133 of 1961
Judge
Reported inAIR1966AP92
ActsCode of Civil Procedure (CPC) , 1908 - Sections 88 - Order 35, Rule 4(1)
Appellantinuganti Sobhanadrirao and anr.
RespondentMuthangi Jaggayya and ors.
Appellant AdvocateB.V. Subrahmanyam, Adv. General;Sankarasastry and ;T. Veerabhadrayya, Advs.
Respondent AdvocateP.L.N. Sarma and ;M. Jagannadharao, Advs.
DispositionAppeal allowed
Excerpt:
.....4 (1) (a) of code of civil procedure,1908 - appeal against judgment of district court deciding interpleader suit as not maintainable - interpleader suit instituted for purpose of obtaining decision as to person to whom payment or delivery shall be made - plaintiff to pay amount which he admits to be due and payable - language of section 88 nowhere mentions plaintiff in interpleader suit to admit debt in its entirety - held, suit maintainable and lower court to decide interpleader suit in accordance with law. - - it is alleged in the plaint that several payments were made towards the debt and that they were endorsed on the mortgage bond. (c) the debtor pleads partial failure of consideration ;(d) the debtor pleads payments, which are disputed by the creditor. if that is the rule..........between the creditor and the debtor as to the amount actually due. this may be because:(a) the debtor claims to be an agriculturist and the debt has to be sealed down under madras act iv of 1938; (b) the debtor claims that the rate of interest is usurious and relief has to be given under the usurious loans act; (c) the debtor pleads partial failure of consideration ; (d) the debtor pleads payments, which are disputed by the creditor. 13. if the argument on behalf of the respondents is to be accepted an interpleader suit will not at all be maintainable in such cases. we have to decide whether the language of section 88 and order 35 c. p. c. warrants such a decision, and whether that is the law in england.14. in reading v. school board for london, (1886) 16 qbd 686 in the head-note to.....
Judgment:

Chandrasekhara Sastry, J.

1. This is an appeal by the Plaintiffs against the judgment and decree in O. S. No. 11/58 on the file of the District Court, West Godavari at Eluru dismissing the suit as not maintainable. The suit was an interpleader suit instituted under Section 88 and Order 35 C. P. C.

2. The plaintiffs borrowed Rs. 40,000 under a registered mortgage deed, dated 14-7-43 executed by them in favour of late Buchiramaiah and defendants 1 to 3. Buchiramaiah is the father of defendants 1, 2, 4 and 5. The 3rd defendant was the wife of the 1st defendant. The 3rd defendant died pending the suit and defendants 6 to 9 were added as her legal representatives. It is alleged in the plaint that several payments were made towards the debt and that they were endorsed on the mortgage bond. The interest stipulated in the mortgage bond was Rs. 0-10-0 per cent per mensem, compound. But it is claimed that the plaintiffs are agriculturists and that the debt had to be scaled down under Madras Act IV of 1938, and that, if so scaled down, the balance due was only Rs. 30,000, In paragraph 5 of the plaint, it is stated that the 2nd defendant issued a notice on 9-4-52 stating that defendants 1, 2, 4 and 5 and their mother are entitled to a 1/5th share each in the amount due under the mortgage bond. It is further averred in the plaint that the plaintiffs are not in a position to know the real claimants entitled to receive the sum of Rs. 30,000 in question. That was why the suit was filed under section 88 read with Order 35 C. P. C. The plaintiffs prayed;

'(a) to direct the defendant to interplead together concerning their claims to the amount now being deposited by the plaintiffs and to determine the rightful claimants that are entitled to receive the amount due under the bond;

(b) to authorise some or all the defendants to receive the said amount pending the litigation;

(c) to discharge the plaintiffs of their liability to either of the defendants in relation thereto under the mortgage bond, dated 14-7-1953;

(d) to grant costs of this suit; and

(e) to grant all other reliefs which the Honourable Court deems fit under the circumstances of this case.'

3. Each of the defendants 1 to 5 filed se-parate written statements. Defendants 6, 7 and 9, the legal representatives of the 3rd defendant, filed an additional written statement. The 8th defendant filed a memo adopting the written statements filed by the 3rd defendant and defendants 6, 7 and 9. Besides asserting their separate claims to the debt due under the suit mortgage bond, they denied the allegation that the plaintiffs are agriculturists and that the debt has to be scaled down under Madras Act IV of 1938. One other plea was that, on 12-7-1957, the amount due under the mortgage bond was ascertained to be Rs. 57,171-5-0 after making the several adjustments as to principal and interest.

4. The following issues were framed by the lower Court:

(1) Whether the suit as framed is maintainable?

(2) Whether the suit is properly valued and court-fee paid is proper?

(3) Whether the plaintiffs are entitled to the benefits of Act IV of 1938?

(4) Whether there was a settlement of the amounts due on the mortgage for Rs. 57,171-05 nP. on 12-7-57?

(5) If so, whether the settlement can be reopened?

(6) Who are the claimants to the 1/5th share of late Buchiramaiah, one of the mortgagees?

(7) Whether defendants 4 and 5 are necessary parties to the suit?

(8) Whether the third defendant is entitled to any portion of the suit amount?

(9) Whether this Court has no jurisdiction to entertain this suit?

(10) To what relief are the plaintiffs entitled?'

5. In the lower Court, the defendants conceded under Issue No. 9 that the Court had jurisdiction to entertain the suit. The only other Issue tried by the lower Court was issue No. 1. On that issue, the lower Court held that, since the plaintiffs' claim that they are agriculturists and that the debt has to be scaled down under Madras Act IV of 1938 and that, if so scaled down, the amount due is only Rs. 30,000 is disputed by the defendants and since that is a very material point in dispute between the plaintiffs on the one hand and the defendants on the other, the suit filed as an interpleader suit is not maintainable. The lower Court also observed that since the deposit of Rs. 30,000 made along with the plaint was a conditional deposit, it takes it away from the category of interpleader suit. The other issues viz. Issue Nos. 2 to 8 were not tried. But the suit was dismissed on the finding that the suit is not maintainable as an interpleader suit. Hence this appeal is filed by the plaintiffs.

6. By an order dated 1-9-64, this Court ordered notice to the learned Advocate General as the question whether an interpleader suit can include issues arising between the plaintiffs and other claimants is an important one, and he has therefore, appeared in this appeal and argued the case.

7. It is argued by Mr. Ch. Sankarasastry, the learned counsel for the appellants, that the Civil Procedure Code provided for the institution of an interpleader suit for the purpose of obtaining a decision as to the person to whom the payment or delivery shall he made and of obtaining indemnity for himself. Therefore, the main issue to be decided by the Court in a suit instituted under Section 88 C. P. C. with respect to a debt, sum of money or other property, moveable or immoveable was for obtaining a decision as to the person to whom the payment or delivery shall be made. In the present case, it is pointed out that there are rival claimants to the amount due under the suit mortgage. No doubt, the plaintiffs claimed that they are agriculturists within the meaning of Madras Act IV of 1938 and that, if the debt is scaled down, only an amount of Rs. 30,000 is really due on the date of the plaint and this claim is disputed by the defendants. But the Court can decide the main question without considering the issue as to what exactly the amount due is under the mortgage bond. According to Mr. Sankara Sastry, the person, who is adjudged to be entitled to the debt due under the mortgage bond, can receive this admitted sum of Rs. 30,000 without prejudice to his right to claim the balance in a separate proceeding from the plaintiffs and recover the same if It is really duo under law.

8. The learned Advocate General argued that, having regard to the scope and intendment of an interpleader suit, it is essential that there should be no dispute between the plaintiffs and the defendants as to the amount due, or in other words, unless the plaintiffs admit their liability for the entire amount claimed, they cannot at all institute an interpleader suit. According to the learned Advocate General, the remedy of the plaintiffs in this case is only to institute a suit for redemption making parties to the suit as defendants the rival claimants and not to file an interpleader suit. It is also suggested that, in other cases of simple debts or other property, moveable or innoveable, the person has to wait till a suit is filed by one of the claimants and seek addition of the rival claimants also as parties to that suit so that all questions might he finally decided so as to he binding on all parties.

9. The provisions in the Civil Procedure Code relating to interpleader suits are Section 88 and Order 35.

'88. Where two or more persons claim adversely to one another the same debt, sum of money or other property, moveable or immoveable, 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;

Provided that where any suit is pending in which the rights of all parties can properly be decided, no such suit of interpleader shall be in-stituted.'

'Order 35. Rule 1. In every suit of interpleader the plaint shall, in addition to other statements necessary for plaints, state-

(a) that the plaintiff claims no interest in the subject matter in dispute other than for charges or costs;

(b) the claims made by the defendants severally; and

(c) that there is no collusion between the plaintiff and any of the defendants.

Rule 2. 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. Where any of the defendants in an interpleader suit is actually suing the plaintiff in respect of the subject-matter of the suit, the Court in which the suit against the plaintiff is pending shall, on being informed by the Court in which the interpleader suit has been instituted, stay the proceedings as against him; and his costs in the suit so stayed may be provided for in such suit; but, if, and in so far as, they are not provided for in that suit, they may be added to his costs incurred in the interpleader suit.

Rule 4(1). At the first hearing the Court may

(a) declare that the plaintiff is discharged from all liability to the defendants in respect of the thing claimed, award him his costs, and dismiss him from the suit; or

(b) if it thinks that justice or convenience so require, retain all parties until the final disposal of the suit.

(2) Where the Court finds that the admissions of the parties or other evidence enable it to do so, it may adjudicate the title to the thing claimed.

(3) Where the admissions of the parties do not enable the Court so to adjudicate it may direct-

(a) that an issue or issues between the par-tics be framed and tried, and

(b) that any claimant be made a plaintiff in lieu of or in addition to the original plaintiff, and shall proceed to try the suit in the ordinary manner.

Rule 5. Nothing in this Order shall be deemed to enable agents to sue their principals, or tenants to sue their landlord, for the purpose of compelling them to interplead with any persons other than persons making claim through such principals or landlords.'

10. It is pointed out in Hari Karmarkar V. J. A. Robin, AIR 1927 Rang 91 that the law of interpleader as set out in the Civil Procedure Code is identical with that of England.

11. The corresponding provision of law in England is Order 57 of the Rules of the Supreme Court. The meaning of interpleader is stated in Halsbury's Laws of England, Third Edition, Vol, 22, at page 456:

'Where a person is faced with adverse claims to property or money wherein be claims no interest but of which he is in possession or for which he is liable, he is entitled to invoke the authority of a Court in order to compel the claimant to litigate their differences at their own expense in place of subjecting him to the uncertainty and expense of separate proceedings, in such circumstances he is said to apply to the Court for relief by way of interpleader'.

The learned Advocate General laid great stress upon Order 35, Rule 1 (a), which requires that, in every suit of interpleader, the plaint shall, in addition to the other statements necessary for plaints, state that the plaintiff claims no interest in the subject-matter in dispute other than for charges or costs and contended that, as in the present case, the plaintiffs claimed an interest in the subject-matter in dispute by asserting that only Rs. 30,000 is due and not the entire amount as claimed by the defendants, this suit is not maintainable as an interpleader suit.

12. The question is whether it can be said that the plaintiffs in this case claimed an interest in the subject-matter in dispute merely because the amount admitted by the plaintiffs to be due is less than that claimed by the defendants. In several cases, there will generally be a dispute between the creditor and the debtor as to the amount actually due. This may be because:

(a) the debtor claims to be an agriculturist and the debt has to be sealed down under Madras Act IV of 1938;

(b) the debtor claims that the rate of interest is usurious and relief has to be given under the usurious Loans Act;

(c) the debtor pleads partial failure of consideration ;

(d) the debtor pleads payments, which are disputed by the creditor.

13. If the argument on behalf of the respondents is to be accepted an interpleader suit will not at all be maintainable in such cases. We have to decide whether the language of Section 88 and Order 35 C. P. C. warrants such a decision, and whether that is the law in England.

14. In Reading v. School Board for London, (1886) 16 QBD 686 in the head-note to the report what was decided is summarised as follows:

'A debtor against whom an action has been brought, and who has had notice of assignment of the debt, may interplead as to part only of the claim, and may dispute the residue. His application for relief may either be made in the action under Order LVII, Rr. 1, 4 or by a separate proceeding under Section 25 Sub-section (6), of the Judicature Act, 1873.'

In that case, an action was brought in January, 1886, by the plaintiff Reading, against the defendants to recover 977 pound 12 shilling for work and labour under one contract. The defendants pleaded that only 861 pound 18 shilling was the value of the work done by the plaintiff and denied liability for the balance of 115 pound. They also took out an independent summons to the plaintiff and the claimants, who claimed under an assignment from the plaintiff, to inter-plead as to the 861 pound 18 shilling which is part of the larger sum . A. L. Smith, J. ordered that the defendants should pay into Court the sum of 861 pound 18 shilling to abide any order that might thereafter be made and also directed that an issue should be framed to determine the rights of the plaintiff and claimants. On appeal by the plaintiff, it was argued by his counsel that there was no power to split up a money demand arising from one cause of action under one contract and to interplead as to a portion and that the party seeking to avail himself of the relief given by the interpleader procedure cannot do so if he does not admit the debt and that it was essential that he be in the position of a mere stakeholder who asserts no interest of his own in the fund.

It was further submitted that, unless the party seeking relief submits in its entirety the claim made against him, he is a person who claims an interest in the subject-matter in dis-pute within the meaning of Section 1 of the Interpleader Act, 1831, und of Order LVII, Rule 2. Day and Wills, JJ. upheld the order of A. L. Smith J. directing that an issue should be framed to determine the rights of the plaintiff and the claimants with respect to the amount of 861 pound 18 shilling only admitted by the defendants though they disputed their liability for the balance. Wills, J. observed:

'Although I think it is to be regretted that the summons was not taken out in the action, as it might have been, there seems to me to be no difficulty in allowing the defendants to interplead as to a part of the claim against them. It is said that we are precluded from relieving a defendant as to a portion of a larger claim, because in equity interpleader would not be allowed under such circumstances. If that is the rule in equity, I am happy to think that under new rules there is no reason for us to apply it. It may be that, because section 1 of the Interpleader Act contains the expression, 'showing that such defendant does not claim any interest in the subject-matter of the suit', it is sufficient for a plaintiff to make an unjust demand for a larger sum that is due to him in order to defeat interpleader proceedings on the part of the defendant; but it is unnecessary for me to express an opinion on such a point, which is the logical conclusion of the contention on behalf of the appellants.'

Then the learned Judge proceeded to point out:

'All the common law statutes as to interpleader are now repealed, and the right to the class of relief is regulated by Order LVII by which the old practice of the Court of Chancery is modified.'

The learned Judge could not understand why relief should not be granted as to 861 pound and the claim against the defendants satisfied as to that amount because another pound 115 is said to be due from them and observed that to so hold would be to inflict unnecessary injustice.

15. In Halsbury's Laws of England, 3rd Edition, Volume 22, at page 459, the above decision is referred to as authority for the position that 'relief may also be granted although the applicant admits liability as to part of the claim only and although the claim made against him are not co-extensive.'

16. In Annual Practice, 1963 Edition, at page 1632 also, the position is summarised as follows:

'The applicant may interplead as to so much of a debt as he admits, the dispute as to the residue being settled separately.'

The decision in (1886) 16 QBD 686 is referred to as laying down that rule.

17. Section 88 C. P. C. also indicates that an interpleader's suit may be instituted '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.' No doubt, the section requires that the plaintiff must be ready to pay or deliver the debt, sum of money or other property, moveable or im-moveable, to the rightful claimant. But this can only mean that the plaintiff must be ready to pay, in the case of a debt, the amount, which he admits to be due and payable. The language of the section does not indicate that the plaintiff in an interpleader suit, shall admit in its entirety the claim against him. To the extent the plaintiff admits his liability, he may ask that the rival claimants interplead.

18. The learned Advocate General pointed and that Order 57, R. S. C. is revoked in 1962 and that, therefore, the law as laid down in (1886) 16 QBD 686 and as summarised in Hals-bury's Laws of England and the Annual Practice, 1963 Edition may not be taken to be correct now. Though Order 57 R. S. C. was revoked in 1962, the provisions are now incorporated in Order 17 R. S. C. The position of law as summarised in 1963 Edition of Annual Practice is reiterated in identical language in the 1965 Edition of Annual Practice at page 346, and the decision in (1886) 16 QBD 686 is referred to as authority for the same. It may be mentioned that, when Section 88 and Order 35 C. P. C. were enacted in our country, the corresponding provisions in England were Order 57 R. S. C. and Section 17 of the Common Law Procedure Act, 1860 and there does not appear to be any change at all in this respect either in England or in India.

19. The learned Advocate General also pointed out that Order 35, Rule 4(1) C. P. C. provides for the Court passing an order discharging the plaintiff from all liability to the defendants in respect of the thing claimed, and that such an order cannot be passed as in the present case, where the amount due is in dispute, and therefore, an interpleader suit is not maintainable. But it has to be noticed that the word used is 'may' so that it is only in a case where the amount is not in dispute and where the plaintiff pays into Court the entire amount that the Court may declare that the plaintiff is discharged from all liability; but where the amount is in dispute, the Court may declare that the plaintiff is discharged from liability only to the extent of the amount admitted (Rs. 30,000 in the present case) and leave the parties to settle their disputes for the balance otherwise or in other proceedings.

20. The decision in Sambayya v. Subba Reddi, : AIR1952Mad564 does not really touch this question at all. No doubt, where the plaintiff colludes with one of the claimants as in the decision referred to by the lower court or has taken indemnity from one of the claimants or has entered into an agreement with one of them to receive less than what is actually due as is the case in AIR 1927 Rang 91 an interpleader suit has to be dismissed. But the present is not such a case. We, therefore, hold that the suit is maintainable and that the lower Court erred in dismissing it on the ground that it is not maintainable.

21. Mr. Sankara Sastry stated before us on behalf of the plaintiffs-appellants that the plaintiffs will be satisfied if the Court gives a decision as to the person to whom the payment of the amount due shall be made and that the other issues need not be tried. He further submitted that the person so declared entitled to receive payment, can receive the amount of Rs. 30,000 deposited in this suit without prejudice to his right to claim any higher amount from the plaintiffs if due under the suit mort-gage bond in a separate proceeding or otherwise. Under such circumstances, it is admitted by Mr. Sankara Sastry that the plaintiffs will be discharged from liability to the defendants only in respect of the amount of Rupees 30,000 leaving open the question of liability for any further amount under the suit mortgage bond. In this view, the only issues that nave to be tried by the lower court are Issue Nos. 8, 7 and 8, Issue No. 2 relates to the question whether the suit is properly valued and the Court fee paid is proper. In the view we take that this suit as an interpleader suit is maintainable we hold that it is properly valued and that the court-fee paid is proper.

22. In the result, the appeal is allowedand the suit is remanded to the lower Courtfor trial on Issue Nos. 6, 7 and 8 i.e. for adecision as to the person or persons to whomthe amount of Rs. 30,000 admitted by theplaintiff has to be paid. The parties will be at liberty to produce such evidence as they choose for trial of the suit on Issue Nos. 6, 7 and 8. In the circumstances of this case, we direct the parties to bear their own costs in this appeal. The costs in the lower Court will be provided by it after trial. The Court feepaid on the memorandum of this appeal shall be refunded to the appellants. Since the learn-ed Advocate General has appeared and argued the case as per the order dated 1-9-64 ofthis Court, we fix his fees at Rs. 350.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //