Inter Se

What is Inter Se?

**Inter se** is a Latin expression meaning "among themselves" or "between themselves." In law, it is used to describe the **rights, obligations, and priorities** that exist among parties who share a common legal relationship — such as co-owners, co-sureties, co-heirs, shareholders, or co-defendants. While these parties may present a united front to the outside world, their internal relationships and relative rights are governed by inter se arrangements.

In everyday terms, inter se answers the question: "Among the parties on the same side, who gets what, who owes what, and who comes first?" If three co-sureties guarantee a loan and the creditor recovers the full amount from one, the inter se rights of the co-sureties determine how much each must contribute.

The concept is ubiquitous in Indian law — from partnership disputes and company shareholder agreements to co-ownership of property and priority among creditors in insolvency.

Legal Definition and Framework

Inter se is not defined in any Indian statute. It is used as a descriptor for internal relationships within a group of persons sharing a common legal nexus.

Key Areas of Application

#### Among Co-Sureties (Section 146-147, Contract Act)

When multiple sureties guarantee the same debt:

- **Section 146:** Co-sureties are liable to contribute **equally** to the creditor's claim, unless the contract provides otherwise.

- **Section 147:** Co-sureties bound in different sums are liable to contribute proportionately. These provisions define the inter se rights of contribution among co-sureties.

#### Among Co-Owners (Transfer of Property Act)

When multiple persons own property jointly:

- Each co-owner has the right to possess the entire property, subject to the inter se arrangement.

- The **inter se share** of each co-owner may be defined by the title document, partition deed, or succession law.

- Under **Section 44 TPA**, a co-owner can transfer their undivided share, but this does not affect the inter se rights of the other co-owners.

#### Among Partners (Partnership Act, 1932)

- **Section 13:** The mutual rights and duties of partners may be determined by contract between them — this is the inter se agreement.

- **Section 17:** Subject to the partnership agreement, all partners have equal rights in the conduct of the business.

- The partnership deed governs the inter se relationship — profit-sharing, decision-making, and capital contribution.

#### Among Shareholders

In company law, shareholders' agreements define **inter se rights** — pre-emptive rights, tag-along and drag-along rights, voting arrangements, and dispute resolution. These agreements govern internal relationships among shareholders while the company's Articles of Association govern the shareholder-company relationship.

#### Among Creditors in Insolvency

Under the **Insolvency and Bankruptcy Code, 2016**, the **inter se priority** among creditors in liquidation is prescribed by **Section 53** — the waterfall mechanism that determines the order in which creditors are paid: insolvency resolution process costs first, then workmen's dues, then secured creditors, then unsecured creditors, and so on.

When Does This Term Matter?

In Partition Suits

When co-owners or co-heirs seek partition, the court determines the **inter se shares** of each party. In Hindu law, coparcenary property is divided according to the rules of the Hindu Succession Act, 1956, and the inter se entitlement of each coparcener depends on their relationship to the deceased.

In Shareholder Disputes

Disputes among shareholders over management, dividends, dilution, or exit are inter se matters. The National Company Law Tribunal (NCLT) adjudicates such disputes under **Sections 241-242 of the Companies Act, 2013** (oppression and mismanagement).

In Creditor Disputes During Insolvency

When a company enters liquidation, secured creditors, unsecured creditors, employees, and government tax claims compete for the limited assets. The inter se priority under Section 53 of the IBC determines the distribution order.

In Contribution Claims

When one of several jointly liable parties pays the entire claim, they seek **contribution** from the others based on their inter se shares. This applies to co-sureties, joint tortfeasors, and co-defendants.

Practical Significance

- **Governs internal relationships** — while external rights (against third parties) are one dimension, inter se rights define the internal equation among co-parties.

- **Often contractually defined** — partnership deeds, shareholders' agreements, and co-ownership agreements define inter se rights. In the absence of agreement, statutory default rules apply.

- **Determines distribution** — in insolvency, inheritance, and partnership dissolution, inter se rights determine who receives what share.

- **Enforceable independently** — inter se disputes can be litigated even when the parties have common interests against third parties.

- **Applicable across domains** — property law, corporate law, contract law, family law, and insolvency law all use inter se principles.

Frequently Asked Questions

How are inter se rights different from rights against third parties?

**Inter se rights** govern the relationship **within** a group of parties — for example, how co-owners share property among themselves, or how partners divide profits. **Rights against third parties** govern the relationship between the group (or its members) and outsiders — for example, the partners' collective liability to a creditor. The two are independent: a partnership deed defining inter se profit-sharing does not affect the firm's liability to its creditors.

Can inter se rights be changed by agreement?

Yes, in most cases. **Inter se rights are primarily contractual** and can be modified by agreement among the parties — for example, partners can amend the profit-sharing ratio, co-owners can execute a new partition agreement, and shareholders can amend their shareholders' agreement. However, certain inter se rights are prescribed by statute and cannot be contracted out of — for instance, the priority waterfall under Section 53 of the IBC is mandatory and cannot be altered by agreement.

What happens when inter se rights are not defined in an agreement?

When the parties have not defined their inter se rights by agreement, **statutory default rules** apply. For partnerships, Section 13 of the Partnership Act provides equal sharing of profits and losses. For co-sureties, Section 146 of the Contract Act provides equal contribution. For co-owners, the shares are determined by the title under which they acquired the property. Courts look to the applicable statute to fill the gap left by the absence of a contractual arrangement.