S.N. Shankar, J.
(1) Asuda Singh, defendant No. 3 in the suit, (since deceased, and now represented by his legal representatives) filed this regular first appeal against the judgment and decree of the learned trial' court rejecting the plaint of an interpleader suit filed by Union of India and in the alternative holding that defandant No. 1, R. B. Pahlaj Singh alone was entitled to receive the amount mentioned in the plaint and held by Union of India.
(2) It appears that a sum of Rs. 74,878/5/9 was received by transfer by Union of India from the Government of Pakistan on partition of the sub-continent, being the amount due on account of certain works executed in pursuance of certain contracts entered into by the Government of undivided India. The appellant herein registered a claim for l/3rd of this amount with the Controller General of defense Accounts with the plea that this amount was payable to the firm. M/s. R. B. Pahlaj Singh Lulla (hereinafter called 'the firm') of which the appellant and the other two defendants to the suit, R.B. Pahlaj Singh Lulla (defendant No. 1 ) and Seth Ram Singh Chiman Singh Lulla (defendant p. No. 2) were partners with equal shares. Defendant No. 2 also registered a similar claim on the same basis while defendant No. 1, R. B. Pahlaj Singh Lulla claimed the full amount to be payable to him solely on the ground that the works had been executed by him alone. In September, 1961 Union of India filed the interpleader suit which has led to this appeal staling that it had no interest in the amount received by transfer and as disputes between the defendants to the suit were pending and as the firm of which defendants 2 and 3 claimed to be partners had been dissolved, the defendants be required to interplead and the Union of India be discharged from all liabilities to the defendants relating to the said amount. Defendants 2 and 3 filed separate written statements and set up their respective claims for the l/3rd share each in the total amount. Their case in substance in terms of the written statements was that the contracts in question were taken by the firm R. B. Pahlaj Singh L. Lulla and even if it be found that the contracts were taken in the individual name of R. B. Pahlaj Singh L. Lulla they were taken for and on behalf of and executed by the firm in which they were partners with l/3rd share each. Defendant No. 1 in his written-statement contended that the contracts in question were in his personal and individual name and that the whole amount was payable to him. He maintained that the privity of contract in respect of the contracts was solely between the Government of undivided India and him, and defendants 2 and 3 had no interest in the amount received by Union of India from Pakistan Government. He denied that the partnership alleged by defendants 2 and 3 ever came into existence and that the contracts were executed by the alleged firm and that the Union of India illegally withheld this amount in spite of full knowledge that it was defendant No. 1 alone who was entitled to it. Union of India, he maintained had no 'cause of auction' to file the interpleader suit. It was further pleaded that Union had colluded with defendants 2 and 3 and the interpleader suit being collusive was not maintainable. On the pleadings, the learned trial court framed the following issues:
(1)Whether the plaintiff has a cause of action and the suit lies in the present form ?
(2)Whether there has been collusion between the plaintiff and defendant Nos. 2 and 3 as alleged in the' written statement of defendant No. 1 ?
(3) Union of India examined Public Witness 1, Shri D. P. Ghosh, Supervisor, Audit Claim Section, Office of Controller General of defense Accounts, who stated that the Union had received two fixed bank deposit receipts worth Rs. 25,801/4/9 and Rs. 2000 in the name of Rai Bahadur Pahlaj Singh L. Lulla, defendant No. 1 and also certain other amounts. He stated that' the two receipts had been filed in court and the further amounts which had been received by the Union from Pakistan Government had also been deposited in court, that the Union had no interest in these monies and that the amount so received was being claimed by defendants 1, 2 and 3 adversely to each other and had also served notices for recovery of the share of the amount on Union of India. He stated that the suit of the Union of India was bona fide and that the Union had no intention to help any of the contesting defendants. Union of India also produced certain admitted documents in support of its contentions. Defendants 2 and 3 produced no evidence.
(4) The learned trial court while dealing with issue No. 1 noticed that section 88 of the Code of Civil Procedure conferred a right on the person holding the money in which he claimed no interest to file an interpleader suit if two or more persons claimed the said money ad versely to one another to obtain a decision from the court as to the person to whom the payment should be made and then observed :-
'............O.35 Civil Procedure Code lays down the procedure of interpleader suit. It is clear that in order to justify an interpleader suit, there must be two claimants to the same property or subject matter of the suit. It obviously implies the claimants, as contesting defendants, should be real claimants. In other words, the contesting claimants should have some legal justification for their claims. The mere fact that a man makes a claim when the claim has obviously no legal basis does not entitle the plaintiff to file interpleader suit against the frivolous claimant and the other genuine claimant to whom the plaintiff is bound to pay.'
Proceeding on this basis the learned court held that Pakistan Government had released the amount in question in favor of defendant No. 1 only to whom in fact the Union of India was going to make the payment at one stage but later filed the interpleader suit. It was stated in the plaint that there had been litigation between the parties in Pakistan in respect of the partnership now relied upon by defendants 2 and 3 and that those suits were dismissed but with liberty to the respective plaintiffs in the suits to file fresh suits. The court held that the plaintiffs to those suits (now defendants 2 and 3 in the interpleader suit) having not filed fresh suits after the dismissal of their suits in Pakistan were not entitled to 'get adjudication of their claims against defendant No. 1' and were 'disentitled to seek the relief' in the interpleader suit.
(5) The learned court decided issue No. 2 in favor of Union of India ' and held that the material on record showed that there was no collusion between Union of India and defendants 2 and 3. On its finding under issue No. 1, however, the learned court held that the plaint deserved to be 'rejected'; but proceeding further in the alternative. assuming that the interpleader suit was competent, held that from the admission of the parties and the facts on record it was dear that defendant No. 1 alone was entitled to the amount in suit. In the result, the plaint was 'rejected with costs against defendant No. 1 ' but in the alternative the court said
'Iwould make an order that the defendant No. 1 alone is entitled to the amount in question deposited in court and the same is payable to defendant No. 1.....'.
(6) It has now transpired that no amount was ever deposited by the Union of India in court. On record there is a cheque for Rs. 43,228.00 drawn by the Controller of defense Accounts in favor of Sub-Judge 1st Class, Delhi and two original .bank deposit receipts of Rs. 25,801/ 4/9 and Rs. 2000.00 respectively issued by Imperial Bank of India, Karachi & the United Commercial Bank Ltd. Karachi.
(7) We are in agreement with the learned trial court that there is nothing en the record to prove that there was collusion between Union of India and defendants 2 and 3 in filing the interpleader suit. Exhibit P/14 is letter dated as far back as June 30, 1947 addressed by the appellant to the Garrison Engineer in relation to the works in question which he signed as a partner of R. B. Pahlaj Singh L. Lulla which prima facie indicates that this firm had something to do with the contracts. In face of this and the other material placed before the Union of India and having regard to the fact that the amount received from Pakistan was quite substantial, Union of India entertained a bona fide belief that it was proper for it to file an interpleader suit to obtain a complete discharge for itself rather than take the responsibility of deciding the rival claims itself.
(8) We are, however, unable to sustain the finding of the trial court that in order to Justify an. interpleader suit the claims of the rival claiments should be shown to have 'legal justification'. Section 88 of the Code of Civil Procedure confers a right' on the person holding a debt, or a sum of money, or property, moveable or immoveable, to which two or more persons claim adversely to one another, to seek the assistance of the court by filing an interpleader suit and obtain a decision as to the person to whom the payment or delivery shall he made so as to furnish indemnity for himself. The requirements of the section are that the plaintiff seeking to avail of this right must be ready to pay or deliver the debt, sum of money or other property to the rightful claimant subject to orders of the court and claim no interest therein. There is nothing, in the language of this section to indicate that before filing the suit the plaintiff must also go into the validity or otherwise of the rival claims and seek legal justification for the same inter se between the rival claimants. It is true that where it is found that the plaintiff instituting the interpleader suit has colluded with one of the claimants, as for example where he is found to have taken an indemnity bond from one of the claimants or has entered into an agreement with one of them to receive less than what is due, the suit can be held to be incompetent-(as in G. Hari Karamakar v j. A. Robin and others: Air 1927 Ran 91 but that is because they are considerations relevant to determine the bona fides of the plaintiff himself. This is different from saying that the plaintiff to the suit must prove the legal justification for the rival claims because that is the function of the court trying the suit, It is also true that the claims of the rival claimants to the interpleader suit have to be real but the 'reality' of the claim is to be looked at from the angle that if the claim as made, if allowed to be proved, will be upheld by the court. In para 911 of Halsbury's Laws of England, Third Edition, Volume 22, this is what is stated on this aspect : ............The conflict between the claimants must be real in the sense that each claim, if proved, would give a good cause of action against the applicant, so that where the applicant is not under any obligation to one of the claimants or where he can, without incurring any liability, pay the subject matter of the claim to one of the claimants, he is not entitled to relief'. The Union of India, in the instant case received the amount forming the subject matter of the interpleader suit from Pakistan in discharge of the liability of the undivided Government of India under the specified contracts. It held the amount so received by way of a resultant trust. To discharge the obligation created by this trust, it was reasonably expected of the Union to pay the amount to rightful claimant or claimants to obtain a complete discharge for itself. The claim to l/3rd each of the amount set up by defendants 1 and 2, if proved, cannot be said to be unreal. The learned trial court. thereforee, in our view, was not right in holding that the interpleader suit was not competent because the claim of one or more of the rival claimants when examined on merits could not be upheld. The correctness of the rival claims is a matter that has to be decided at the trial of the suit to be held in accordance with the procedure prescribed in Order 35 of the Code of Civil Procedure.
(9) Shri Gajaria, appearing for defendant No. 1 in the suit, in support of his submission that the suit was not maintainable, placed heavy reliance on Sun Insurance Office v. Galinsky and others: (1914) K B D 545. In this case, a house was insured against fire in the joint names -'of .the Lesser and lessee. During the currency of the policy the house was burnt down, and the Lesser served notice on the Insurance Company requesting them to cause the insurance money to be laid and expended in or towards rebuilding the house. The lessee, on the other hand, claimed payment of the amount to him. The Insurance Company sought relief by way of interpleader suit and the court held that the company was not entitled to relief by way of interpleader suit. The reason for this decision was that the question that arose for decision in the suit was not as to which of the rival claimants were entitled to the performance of the obligation under the insurance policy but the nature and effect of the relevant clause in the insurance contract and as to the nature of obligation it operated to create on the Company itself. Buckley Lord Justice very aptly set out this aspect of the matter in the following words :
'THEquestion, and in my opinion the only question, for determination is whether the insurance office can claim relief by way of interpleader under Order LVII., rule (a). From the facts .which I have stated it is apparent that the position of the matters is this. The persons who are contesting this matter are Robinson and Bott on the one hand, and Galinsky on the other. They are persons to whom with another, who may be left out of consideration, the Sun Insurance Office owe a certain obligation. It is not that they owe the obligation to one of them to the exclusion of the other, or that they owe a larger obligation to one and a lesser obligation to the other. They owe one obligation, whatever that obligation may be. The parties are not disputing as to which of them is entitled to the performance of the obligation. They are disputing as to what is the obligation which is due to them. One of them says that the obligation is to repair and reinstate the premises, the other says it is to pay money. In that state of facts the interpleader summons is issued'.
This case, thereforee, does not help the learned counsel.
(10) Shri Gajaria then contended that the amount received by the Union of India forming the subject matter of the interpleader suit was only one of the partenership assets and as the entire accounts of the partnership of which the amount in question formed only one of the items had not been rendered between the partners defendants 2 and 3 were not entitled to enforce recovery of l/3rd share out of a single asset of the partnership. This plea relates to the merits of the claim set up by defendants 2 and 3. It has nothing to do with the Union of India and the maintainability of the interpleader suit.
(11) We are, thereforee, unable to sustain the finding of the learned trial court that the, plaint in the interpleader suit deserved to be rejected. The learned trial court should have proceeded with the suit in accordance with the procedure prescribed 'by order 35 of the Code of Civil Procedure.
(12) The finding in the alternative recorded in the judgment that defendant No. 1 alone is entitled to the amount in question, to our mind, is wholly unjustified. We find that issues in respect of the merits of the contentions raised between the defendants inter se were not at all framed in the case. The rival claimants, defendants to the suit, had no occasion to lead evidence on this aspect. In fact in para 5 of the judgment, the learned trial court itself has said :
'ONthe pleadings of the parties the following preliminary issues, arose in this case'.
(13) The two issues framed thus were only preliminary issues to determine if the interpleader suit was maintainable or not. Finding on merits as to which of the parties was entitled to the payment of the amount in suit or any part is wholly premature and unsustainable.
(14) Shri Gajaria argued that the third issue, namely, 'Relief' was a comprehensive issue and at the trial the parties did in fact adduce evidence on merits in support of their respective claims which consisted of documentary evidence produced by Union of India and they knew that the court would be adjudicating their claims on merits also. We are unable to accept this submission. Having regard to the pleadings it was incumbent on the trial court to frame specific issues on each plea on merits which involved questions of fact. Decision of the respective claims of the parties, without framing these issues, under the residuary issue of 'Relief' in case like this is unwarranted. As to the argument that documentary evidence had been led before the court, we find that the evidence adduced by Union of India was primarily to show its bona fide in filing the suit. It is true that this evidence is also relevant for the purpose of deciding the respective claims on the merits but this circumstances alone is no indication of the fact that the contesting defendants desired to adduce no further evidence on the merits of their respective contention. We have, thereforee, no hesitation in setting aside this finding of the trial court.
(15) Lastly, Shri Gajaria argued that Union of India who had filed the interpleader suit had not come up in appeal and, thereforee, the appellant had no locus standi to file this appeal. This is not correct. The trial court had not only held that the interpleader suit was incompetent but had also given the finding that defendant No. 1 alone was entitled to the amount which formed the subject matter of the interpleader suit. The appellant is aggrieved from this finding and has the right to file this appeal.
(16) In the result, thereforee, we accept this appeal and set aside the judgment and decree of the learned trial court. We remand the interpleader suit for being tried by the competent court on merits in accordance with the provisions of Order 35 of the Code of Civil Procedure. It will be open to the learned trial court to pass appropriate orders in accordance with law in regard to deposit in court of the amounts represented by the fixed deposit receipts issued by Imperial Bank of India, Karachi & United Commercial Bank Ltd., Karachi. Parties shall appear before the Senior Sub-Judge, Delhi on September 9, 1974.
(17) Having regard to all the circumstances of this case we leave the parties to bear their own costs of this appeal. August 23,1974.