Is Champerty Legal in India

In 2009, Lord Justice Jackson was interviewed by the Master of the Roster to “examine the rules and principles governing the cost of civil proceedings and make recommendations to promote access to justice at a reasonable cost”. In his final report, he praised TPF as a complement and sometimes as the only way for TPF to intervene in litigation that supports obstruction of justice: “I recognise that third-party funding is still emerging in England and Wales and that, first and foremost, A satisfactory voluntary code is required for all litigation funders to sign. Currently, third-party funding recipients are generally commercial or similar enterprises with access to comprehensive legal advice. In the future, however, if the use of third-party funds is extensive, full legal regulation may be required. In 2010, the Civil Justice Council, a non-ministerial advisory body funded by the Department of Justice, submitted a consultation paper entitled “A Self-regulation Code for Third-Party Funding.” Now it is an established law that a Champerty and maintenance contract is valid in India. [19] However, this should not be contrary to public policy under the Indian Contract Act of 1872. The interpretation of the term “public policy” is broad and not exhaustive. The question here is whether a Champerty deal is void in India if a lawyer is the third party. While the intentions behind this strict approach are reasonable, it ignores the fact that the poor litigants who depended on these agreements were powerless because of the ever-increasing cost of accessing the justice system. In order to assist these persons, the Criminal Law of 1967 (1967 Act) was enacted “to eliminate certain outdated crimes as well as the offences of alimony and reverence”. [3] Schedule 4 of the Act classifies Champerty and all related provisions as “obsolete crimes”. Moreover, section 14 of the 1967 Act merely declares invalid and unenforceable contracts contrary to public policy or other laws, thus not departing from their traditional roots of preventing abuses of the judicial system. Currently, contracts that contemplate third-party financing of litigation are “per se” legal, according to Indian court jurisprudence.

However, the determination of the validity of a third-party funding agreement is an exercise carried out by the courts after considering whether the agreement is unscrupulous, unfair or exorbitant; and taking due account of the facts and circumstances prevailing in relation to the Agreement. Although such an exercise is necessary, it takes a lot of time. Third-party funding agreements are on the rise, and determining the validity of all such agreements by the courts would be an extremely onerous task for the courts. This leads to the conclusion that it is necessary that third-party funding schemes, in particular in the context of a constantly increasing legal costs, should fall within the scope of a regulation that contains a mechanism that not only corresponds to the `per se` legality of third-party financing agreements, but would also help to reduce the burden on the courts to determine the validity of such agreements. The suffering of the courts dates back to the Middle Ages and the main dispute over the shielding of the sanctity of justice rendered to the public. A bastion of TPF in litigation can distort the judicial process; They may make questionable or frivolous legal claims to hide evidence or even witnesses, or artificially alter the amount of damages. In this way, a crusader can try to guarantee a triumph in court in order to prosecute or put pressure on his opponents. The English judiciary has been negligent with regard to third-party funding, taking into account funding problems and proclaiming that access to justice is of paramount importance to litigants. Earlier, in 1825, in Ram Gholam Singh v. Keerut Singh,[8] the Sudder Court stated that “a contract to give half of a large estate for a relatively small advance was unfair and described the transaction as highly valued by the game.” Later, in Tara Soonduree Chowdhrain v. The Court of Wards[9] annulled a Champerty agreement for breach of public order.

Later, the courts began to recognize a Champerty contract and alimony in India. The concept of third-party financing is a recognized practice in litigation. The adoption of the practice of third-party financing in arbitration proceedings is in its infancy in India. There is no fundamental difference between the tribunal and arbitration, as both use dispute resolution and work to promote the principles of justice, fairness and good conscience. [21] In this context, the English court in Bevan Ashford v. Geoff Yeandle Ltd. “Champerty`s law originates in the perception of the requirements of public order and must still be based on them. I consider it quite impossible to see a difference between judicial proceedings, on the one hand, and arbitration, on the other, which would result in contingency fee agreements being contrary to public policy in the former case, but not in the latter. If it is contrary to public policy to act on means without a sufficient interest in maintaining the transaction, what does it matter whether the cause of action must be pursued in court or arbitration? [22] Support and costs rules have been relaxed in a number of jurisdictions, including England and Wales and parts of Australia, Canada and the United States, where litigation and third-party arbitration are now permitted. The Supreme Court confirmed the above in In Re:”G”, Senior Counsel at the Supreme Court. [10] The above and many other cases result in contracts being accepted as legal in India, unless they are unfair, unscrupulous or exorbitant.

The task of explaining the Champerty doctrine was raised in 1876 before the Privy Council of the High Court of Bengal in the case of Ram Coomar Coondoo and Anr. v. Chunder Canto Mookerjee. In that case, it was found that the approach of the English courts cannot simply be grafted onto the Indian courts, for not only the opinions, but also the particular demographic customs, practices, etc. are different. It also stated that “a fair agreement on the provision of funds for the conduct of an action in exchange for a share of the property, if recovered, should not in itself be considered contrary to public policy”. [8] It allows a third-party insurance company or others to assess the likelihood of a claim and then agree to pay the legal fees associated with pursuing (or defending) a claim. 11. Now, it can be immediately accepted that such a contract would not be legally objectionable if no lawyer were involved. The rigid English rules for Champerty and Maintenance do not apply in India, so if this agreement had been made between so-called third parties, it would have been legally enforceable and good.

It may even be legally valid and enforceable, although we do not decide because the question does not arise; But this has been argued, and for the sake of reasoning, even it can be conceded. It follows that in such a legal transaction as such, that is, if it is not a lawyer, nothing morally reprehensible, nothing that may shock the conscience, nothing violates public order and public morality. But that is not the question we should ask ourselves, whatever the scope of these agreements to other people, we must decide whether they are admissible under the rigid rules of conduct enjoyed by members of a very narrow profession, so that their integrity, dignity and honour can be placed above the breath of scandal.