Maintenance and Champerty

Maintenance is the officious assistance by money or otherwise proffered by a third person to either party to a suit, in which he has no legal interest to enable them to prosecute or defend it. The essence of the offence is intermeddling with litigation in which the intermeddler has no concern about the case. It is against public policy that litigation should be promoted and supported by those who have no concern about it. If a person agrees to maintain a suit in which he has no interest, the proceeding is known as maintenance; if he bargains for a share of the result to be ultimately decreed in a suit in consideration of assisting in its maintenance, it is called as ‘Champerty’. Every champerty (or campipar titio) is maintenance, but every maintenance is not champerty, for champerty is but a species of maintenance, which is the genus.

Example: X is a widow and Y another person takes over X’s property forcefully. X tries to get back her property from Y but was not successful so the only option left with X is to file a suit against Y. X doesn’t have strong financial support to fund her case and her advocate. So, Z promises her that he will fund the case and her advocate and she could return the amount given by Z after the case. This arrangement is called Maintenance. Extending the same example mentioned above, X’s advocate ‘A’ suggests to her that instead of relying on Z’s finance, he asks for a 20% share of her property as his fees in exchange for his legal services to fight X’s case and recover her property. Here ‘A’ who is the advocate has a vested interest in the case and is bargaining for a share of the result, so this arrangement is called Champerty.   

An action for damages for maintenance will not lie in the absence of proof of special damage. The success of maintained litigation, whether an action or a defence, is not a bar to the right of action for maintenance.

By the Criminal Law Act, 1967, maintenance and champerty have been abolished as crimes and torts in England. But a champertous agreement is still void for legality so far as the law of contracts is concerned.

In the context of Indian law, the English law of Maintenance and Champerty is not in force as a specific law in India. A fair agreement to supply funds to carry on a suit, in consideration of the lender having a share of the property sued for, if recovered, is not to be regarded as necessarily opposed to public policy, or merely, on this ground, void. But in agreements of this kind the questions are- Whether the agreement is extortionate and unconscionable, so as to be inequitable against the borrower; or whether the agreement has been made, not with the bona fide object of assisting a claim, believed to be just, and of obtaining reasonable compensation therefor, but for improper objects, as for the purpose of gambling in litigation, or injuring others, so as to be, for these reasons, contrary to public policy. To make such agreements void, “there must be something against a good policy, and justice, something tending to promote unnecessary litigation, something that in a legal sense is immoral, and to the constitution of which a bad motive in the same sense is necessary.” The Courts will consider whether the transaction is merely the acquisition of an interest in the subject of litigation bona fide entered into, or whether it is an unfair or illegitimate transaction got up for the purpose merely of spoils of litigation or disturbing the peace of families and carried on from a corrupt or other improper motive. In other words, the determination of the validity of the Maintenance and Champerty agreements will be made at the discretion of the court. 

References:

RATANLAL & DHIRAJLAL, THE LAW OF TORTS (Lexis Nexis, 28th ed., 2019)

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

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