Champerty Agreement Indian Kanoon

Champerty agreements have been a controversial topic within the Indian legal system for many years. These agreements, which allow third parties to finance a lawsuit in exchange for a portion of the settlement or award, have been a source of debate due to their potential to encourage frivolous litigation and compromise the integrity of the legal system.

The Indian legal system has taken a firm stance against champerty agreements, prohibiting them under section 23 of the Contract Act, 1872, which states that any agreement that involves wagering or is against public policy is void. In addition, champerty agreements are specifically prohibited under the Advocates Act, 1961, which regulates the practice of law in India.

Despite these prohibitions, champerty agreements do occasionally occur in India. In such cases, the courts have taken a strong stance against these agreements, considering them to be unethical and against the public interest. For example, in the landmark case of Maheshwar Peri v. Y. Harish Chandra Prasad , the Delhi High Court held that a champerty agreement was void and unenforceable, as it violated public policy and the provisions of the Advocates Act, 1961.

The consequences of entering into a champerty agreement can be severe. In addition to being void and unenforceable, parties who enter into these agreements may face legal sanctions, including fines and imprisonment. Furthermore, champerty agreements can negatively impact the outcome of a lawsuit, as they may encourage parties to pursue frivolous claims or compromise their legal positions in order to secure a settlement.

In conclusion, champerty agreements are strictly prohibited under Indian law, and individuals or companies who attempt to enter into such agreements do so at their own risk. As a professional, it is important to ensure that articles on this topic accurately reflect the legal landscape in India and do not promote or encourage the use of champerty agreements in any way.

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