‘Maintenance’ may be defined as an agreement whereby a stranger promises to help another person by money or otherwise in litigation in which that -third person has himself no legal interest. ‘Champerty’ is an agreement whereby a person agrees to assist another in litigation in exchange promise to hand over a portion of the proceeds of the action. Thus, in both cases financial or professional assistance is provided with a view to assisting another person in litigation but in case of champerty the party helping in litigation also shares in the gains of the litigation in addition to interest on money advanced or fees for professional services.
Under the English Law such agreements are absolutely void.’ The Indian Law, however, does not make them absolutely void because of the peculiar position of Indian litigants many of whom are too poor to afford expensive litigation. “The uncertainties of litigation are proverbial; and if the financier must need risk losing his money he may well be allowed some chances of exceptional advantage” (Ram Sarup vs Court of Wards).
The rules applied in India are as follows: - -
I. An agreement for supplying funds by way of ‘maintenance for ‘Champerty’ is valid unless:
(a) it is unreasonable so as to be unjust to the other party, or
(b) It is made by a malicious motive like that of gambling in litigation or oppressing other party by encouraging unrighteous suits, and not with the -bona fide object of assisting a claim believed to be just (Bhagwat Dayal -Singh vs Debi D “I Sahu ).
II. An agreement for providing professional services is valid if it is made by way of maintenance’ and with a bona fide object of assisting a claim believed to be-just and obtaining a reasonable recompense therefore. But if it is made by way of ‘Champerty’, i.e., making the remuneration dependent to any extent whatsoever upon the result of the suit, it is void (Ko/hi Jairam vs Vishvanat).
Illustrations
(a) Where 75 paise in a rupee was agreed as the share of the financier, out of the prop recovered, It was held that the agreement was unreasonable and hence void. However, the plaintiff (financier) was awarded the expenses legitimately incurred by him with interest (Nuthaki Venkataswami vs Katta Nagi Reddy).
(c) An agreement by a client to pay his lawyer according to the result of the case was held opposed to public policy and void, it being against the professional code of conduct (Kothi Jairam vs Vishvanath).
Under the English Law such agreements are absolutely void.’ The Indian Law, however, does not make them absolutely void because of the peculiar position of Indian litigants many of whom are too poor to afford expensive litigation. “The uncertainties of litigation are proverbial; and if the financier must need risk losing his money he may well be allowed some chances of exceptional advantage” (Ram Sarup vs Court of Wards).
The rules applied in India are as follows: - -
I. An agreement for supplying funds by way of ‘maintenance for ‘Champerty’ is valid unless:
(a) it is unreasonable so as to be unjust to the other party, or
(b) It is made by a malicious motive like that of gambling in litigation or oppressing other party by encouraging unrighteous suits, and not with the -bona fide object of assisting a claim believed to be just (Bhagwat Dayal -Singh vs Debi D “I Sahu ).
II. An agreement for providing professional services is valid if it is made by way of maintenance’ and with a bona fide object of assisting a claim believed to be-just and obtaining a reasonable recompense therefore. But if it is made by way of ‘Champerty’, i.e., making the remuneration dependent to any extent whatsoever upon the result of the suit, it is void (Ko/hi Jairam vs Vishvanat).
Illustrations
(a) Where 75 paise in a rupee was agreed as the share of the financier, out of the prop recovered, It was held that the agreement was unreasonable and hence void. However, the plaintiff (financier) was awarded the expenses legitimately incurred by him with interest (Nuthaki Venkataswami vs Katta Nagi Reddy).
(c) An agreement by a client to pay his lawyer according to the result of the case was held opposed to public policy and void, it being against the professional code of conduct (Kothi Jairam vs Vishvanath).
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