TMI Blog1954 (1) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... o Prasad, in whose favour Baiju had executed a will which, according to Ram Prasad, was invalid. Bam Prasad was unable to finance the litigation and, in order to establish his claim to the property, he thought it fit to sell a half share of the property to Batan Chand in order to raise funds for fighting out the suit. This sale deed in favour of Batan Chand was executed on 14-12-1934. A suit was thereafter instituted jointly by Bam Prasad and Batan Chand against Smt, Janaka, Smt. Jasrath Dei and Mahadeo Prasad. The suit was decreed on 17-4-1935, for a declaration that Bam Prasad was the owner of a half share in the property and for possession. An appeal was filed against this decree by Smt. Janaka and others, but this appeal was ultimately dismissed for default of prosecution. A review application against the dismissal of the appeal was also dismissed on the 3-5-1940. 4. On 2-2-1937, Batan Chand, who was indebted to the Unnao Commercial Bank, sold away some property, including his half share in the two houses acquired from Bam Prasad. On 16-6-1937, Smt. Janaka, who was held to have a life interest in the other half of the two houses, executed a deed of relinquishment in favour o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compense to Ratan Chand. He therefore allowed the appeal and decreed the plaintiff's suit for a partition of one-fourth share in the two houses. He also allowed ₹ 100/- as mesne profits. The plaintiff has now come up in appeal. 8. The first point which has been pressed on behalf of the appellant is that the transaction entered into between Ram Prasad and Ratan Chand on 14-12-1934, was in substance a completed sale and not an agreement to sell. A copy of the sale deed Ex. 2 was filed by the plaintiff. A perusal of this document shows that Ram Prasad sold a half share in the two houses in dispute, as also in some moveable property to Ratan Chand for a sum of ₹ 400/-. There is a recital in the sale-deed to the effect that Ram Prasad was not possessed of sufficient funds to enable him to institute a suit against Smt. Janaka, Jasrath Dei and Mahadeo Prasad, who had obtained a will from Baiju which was invalid. It was, therefore, necessary for him to obtain funds for financing tlie litigation by the sale of a half share in the property. It is also mentioned in the sale deed that Ratan Chand was to defray the costs of the litigation out of the sale consideration whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. There is no specific law against champerty in India and although champertous transactions are prohibited in England, such agreements have not been held to be invalid except in certain circumstances. The leading case on the subject is '4 Ind App 23 (PC) (A)', which has also been referred to in the judgment of the trial Court in which it has been held that a fair agreement to supply funds to carry on a suit, in consideration of having a share of the property if recovered, ought not to be regarding as being 'per se' opposed to public policy, but agreements of this kind ought to be carefully watched, and when found to be extortionate and unconscionable, or made not with the bona fide object of assisting a claim believed to be just but for the purpose of gambling in, litigation, should not be given effect to. The principles laid down in this leading case still hold good and a transaction made for the purpose of financing a litigation would not 'per se' be held to be invalid. The Court should, however, refuse to give effect to such transactions if it appears that they are unconscionable or unfair or are otherwise opposed to public policy. Financing a poor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alf of defendant 1 was that the transaction was champertous in nature. Even if it be assumed that, where it appears that the transaction was champertous in nature, the burden of proving that the transacion was fair lay upon the person who seeks to rely on the transaction, the circumstances have to be weighed as a whole and it is not the mere disparity in consideration which should be the sole criterion for deciding whether a particular transaction was or was not fair. Although the sale consideration mentioned in the sale-deed was ₹ 400/-, it was expressly stipulated that Ratan Chand was to bear the entire costs of the litigation and was not entitled to recover any amount from Ram Prasad even if the expenses 'exceeded ₹ 400/-. This would in effect mean that the consideration of the sale deed was the amount to be spent in litigation. Ratan Chand entered the witness box. and stated that he had spent ₹ 1400/- towards the costs of the suit instituted by him and Ram Prasad Jointly, for declaring the will invalid and for possession of the property. The witness was not cross-examined on this point and no details of the expenses incurred by him were inquired into. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of that amount. It has been remarked by the trial Court that there is no sufficient evidence in support of the contention that any money was spent in the proceedings in appeal on behalf of Ram Prasad. It is difficult, therefore, to find that Ratan Chand did not perform his part of the contract. 14. Another circumstance which has to be taken into consideration is that there was no stipulation in the sale deed, that if Ratan Chand did not defray the entire costs of the litigation the sale deed would be ineffectual. At the worst if Ratan Chand had not defrayed the costs of the appeal it would amount to non-payment of a part of the consideration and the only remedy open to the vendor was to sue for the recovery of that amount. No amount has been satisfactorily proved to have been spent by Ram Prasad in the proceedings in appeal. 15. It has been held in some cases that it is not open to a third party to challenge a transaction as champertous and this plea is open only to the vendor. In the present case Ram Prasad only half-heartedly raised the plea in the trial Court but did not join defendant 3 in the appeal. He submitted to the findings of the trial Court and as such this ple ..... X X X X Extracts X X X X X X X X Extracts X X X X
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