Maintenance and Champerty

 Maintenance is a malicious assistance, by money or otherwise, preferred by a third person to either party to a suit to enable him to prosecute or defend it. When a person agrees to maintain a suit in which he has no interest, the proceeding is known as maintenance, and where a person bargains for a share of the result to be ultimately decreed in a suit in consideration of assisting in its maintenance it is styled champerty. They tend to encourage litigation which is not bona fide but speculative. The law of maintenance is confined to cases where a man improperly and for the purpose of stirring up litigation and strife encourages others to bring actions or to make defences which they have no right to make. No encouragement should be given to litigation by the introduction of parties to enforce those rights which others are not disposed to enforce.

No action will lie for improperly promoting a civil action in the name of a third person, unless it is proved to have been done;

1. maliciously,
2. without reasonable and probable cause, and
3. there is also legal damage.

It would seem that even where there is no directly malicious motive inducing the party to sustain the suit, yet if his acts tend to promote unnecessary litigation malice will be implied. But it may be rebutted by showing;

1. that the maintainer had a common interest in the action with the party maintained e.g., a master for a servant or a servant for a master, an heir, a brother, a son-in-law, a brother-in-law, a fellow-commoner defending right of common, or a landlord defending his tenant in a suit for title. The interest spoken of is an actual valuable interest in the result of the suit itself, either present, or contingent, or future, or the interest which consanguinity or affinity to the suitor gives to the man who aids him, or the interest arising from the connection of the parties, e.g., as master and servant, or that which charity and compassion gives a man in behalf of a poor man, who but for the aid of his rich helper could not assert his rights, or would be oppressed and overborne in his endeavour to maintain them.
2. That the maintainer was actuated by motives of charity, bona fide believing that the person maintained was a poor man oppressed by a rich one.

Plaintiff having sat and voted as a Member of Parliament without having made and subscribed the oath appointed by a statute, defendant, also a Member of Parliament, procured C to sue the plaintiff for the penalty imposed by that statute for contravention thereof. C was a person of insufficient means to pay the costs in the event of the action being unsuccessful. The defendant gave to C a bond of indemnity against all costs and expenses he might incur in consequence of the action. Held, that the defendant and C had no common interest in the result of the action for the penalty, that the conduct of the defendant in respect of such action amounted to maintenance and that the action for maintenance was maintainable.

H being interested in the success of certain electrical appliances employed T to write a report upon them. A published an article in which H, T and the appliances were attacked. At the instigation of H who paid the expenses, T brought an action for libel against A. Held, that there was no such community of interest between T and H as to be an answer to an action for maintenance brought by A against H.

Where during the pendency of an action, the plaintiffs became bankrupt, and the trustee in bankruptcy assigned the right of action to F, with power to continue it, on the terms that if F was successful he should take three-fourths of the net result, and that the remaining one-fourth should be paid to the trustee in bankruptcy, and it further appeared that F was in reality trustee for himself and certain other creditors of the bankrupt, it was held that the transaction was lawful. For F and the trustee in bankruptcy had a common interest in the subject matter of the action, and so had the other creditors for whom F was trustee.

Indian law

The English law of maintenance and champerty is not in force as specific law in India. A fair agreement to supply money to a suit or to carry on a suit, in consideration of the lender's 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:

1. whether the agreement is extortionate and unconscionable, so as to be inequitable against the borrower; or
2. 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 of injuring others, so as to be, for these reasons, contrary to public policy.

In either of these cases, effect is not be given to the agreement.

To make such agreements void there must be something against 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.

Champerty is a bargain between a plaintiff or defendant in a suit and a third person, campum partire, to divide between them the land or other matter sued for in the event of the litigant being successful in the suit. Rigid English rules of champerty and maintenance do not apply in India. If the agreement is between what might be termed third parties it would be legally enforceable and good. So far as they test on general grounds of policy they should be regarded as part of the Indian Law as well and taken into account on grounds of equity, justice and good conscience.

Any agreement between a lawyer and his client for payment of any portion of the amount of the award or decree debt as consideration for the lawyer financing the litigation or conducting the litigation towards his fees or charges is per se illegal and will not be enforced by any Court in India.

Indian Courts will not sanction every description of maintenance. Administering, as they are bound to administer, justice according to the broad principles of equity and good conscience, those 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 spoil, or of litigation disturbing the peace of families, and carried on from a corrupt or other improper motive.

In V. A. Babu (Died) LRs Jessy Babu and Others v. M. V. Ayyappankutty and Another, the Hon'ble High Court of Kerala held that: “champerty and maintenance means an agreement between the claimant in a litigation and a party unrelated to the litigation under which the unrelated party agrees to maintain and support the litigation on condition that the fruits of the litigation will be shared between them. According to English Law, champerty and champertous agreements are per se illegal and the Courts in England will not give effect to agreements of champerty and maintenance. But in India, an agreement between a party to a litigation and a non party to share fruits of the litigation does not become illegal for the sole reason that the agreement is to share the fruits of the litigation. At the same time, if it is revealed that the object of the agreement is illegal or if the conditions of the agreement are violative of principles of equity, justice and good conscience or if the agreement discloses an unconscionable bargain, then, the Courts in India will find the champertous agreement to be illegal and refuse to enforce the same.”