Sections 88, 89 and 90 CPC: Interpleader, ADR and Special Case

Sections 88, 89 and 90 of the Code of Civil Procedure, 1908 deal with three distinct procedural subjects: interpleader suits, settlement of disputes outside Court, and determination of a written case stated for the opinion of the Court.

Current central law: Sections 88, 89 and 90 remain part of the Code of Civil Procedure, 1908. The currently operative Section 89 continues to provide the statutory framework for referral to arbitration, conciliation, judicial settlement including Lok Adalat, and mediation.
Mediation Act, 2023 update: Section 59 read with the Fourth Schedule of the Mediation Act, 2023 enacts a replacement for Section 89 CPC. However, Section 59 has not yet been brought into force. Until commencement is notified, the existing Section 89 reproduced below remains the operative central provision. The enacted replacement should therefore not be presented as already effective law.

Section 88 CPC - Where Interpleader Suit May Be Instituted

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:

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 instituted.

Meaning and effect of Section 88

  • An interpleader suit is available where two or more persons make adverse claims to the same debt, money or property.
  • The stakeholder must claim no beneficial interest in the subject matter apart from charges or costs.
  • The stakeholder must be ready to pay or deliver the subject matter to the person legally entitled to it.
  • The purpose is to obtain a judicial determination of the rightful claimant and indemnity for the neutral stakeholder.
  • No separate interpleader suit may be instituted if a pending suit can properly determine the rights of all concerned parties.

Section 89 CPC - Settlement of Disputes Outside the Court

(1) Where it appears to the Court that there exist elements of a settlement which may be acceptable to the parties, the Court shall formulate the terms of settlement and give them to the parties for their observations and after receiving the observations of the parties, the Court may reformulate the terms of a possible settlement and refer the same for:

(a) arbitration;

(b) conciliation;

(c) judicial settlement including settlement through Lok Adalat; or

(d) mediation.

(2) Where a dispute has been referred:

(a) for arbitration or conciliation, the provisions of the Arbitration and Conciliation Act, 1996 shall apply as if the proceedings for arbitration or conciliation were referred for settlement under the provisions of that Act;

(b) to Lok Adalat, the Court shall refer the same to the Lok Adalat in accordance with Section 20(1) of the Legal Services Authorities Act, 1987 and the other provisions of that Act shall apply to the dispute;

(c) for judicial settlement, the Court shall refer the same to a suitable institution or person and such institution or person shall be deemed to be a Lok Adalat and the provisions of the Legal Services Authorities Act, 1987 shall apply as if the dispute were referred to a Lok Adalat under that Act;

(d) for mediation, the Court shall effect a compromise between the parties and shall follow such procedure as may be prescribed.

Meaning and effect of the currently operative Section 89

  • Section 89 is the CPC gateway for court-referred alternative dispute resolution.
  • The present operative text identifies arbitration, conciliation, judicial settlement including Lok Adalat, and mediation.
  • The procedure differs according to the mode selected, with statutory cross-references to the Arbitration and Conciliation Act, 1996 and Legal Services Authorities Act, 1987.
  • The enacted Mediation Act, 2023 replacement is not yet operative because the amending Section 59 has not been commenced.

Enacted Replacement of Section 89 Under the Mediation Act, 2023

The Fourth Schedule to the Mediation Act, 2023 provides for substitution of Section 89 CPC. When Section 59 of that Act is brought into force, the substituted provision will provide for referral to arbitration, mediation, Lok Adalat and judicial settlement, with mediation governed by the Mediation Act, 2023. As the commencement of Section 59 has not yet been notified, this replacement is an enacted future amendment and not the presently operative Section 89.

Section 90 CPC - Power to State Case for Opinion of Court

Where any persons agree in writing to state a case for the opinion of the Court, then the Court shall try and determine the same in the manner prescribed.

Meaning and effect of Section 90

  • The parties must agree in writing to state a case for the opinion of the Court.
  • The Court then tries and determines the stated case in the prescribed manner.
  • The detailed procedure is contained in the relevant rules of the First Schedule to the CPC.

Official Legal References

See the Code of Civil Procedure, 1908 on India Code, the Mediation Act, 2023 on India Code, and the Department of Legal Affairs materials on the Mediation Act, 2023.