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(i) As per the agreement of sale dated 04.07.2006, the respondent must pay balance sale consideration of Rs.42 Lakhs within 4 months from the date of agreement. The learned counsel appearing for the appellants referred to Clause 2(b) of the agreement and submitted that time is essence of contract. The suit agreement is not an agreement of sale, but it is only a champertous agreement. The appellants required money for investment and also to conduct the suit filed against one D.Balaraman. The appellants entered into suit agreement only for the litigation expenses and did not agree to sell the suit property to the respondent. The respondent in paragraph nos.5,6 and 8 of the plaint admitted that agreement is for funding the litigation.
“13. From the aforesaid facts, which are not in dispute, the question that arises, for determination is whether the agreement dated 23-10-1978' Ex. P-2, is void because it is champertous in nature. What is a champertous agreement ? It is an agreement to finance litigation and to'' share the fruits thereof. There is no special enactment in India barring such an agreement. For this reason, in our country, the champertous agreements have to be examined by the Courts under Section 23 of the Contract Act. It is now https://www.mhc.tn.gov.in/judis settled law in India-that these agreements, by themselves, are not, illegal in the sense, that they are immoral or opposed to public, policy. However, if the Court finds that a particular agreement is opposed to principle of equity and good conscience or unconscienable and extortionate in itself, then the 'Courts would not enforce it. In other words, when such agreement is not made with a view to help persons to tide over their financial difficulties arising as aconsequence of unequal litigation, but with a view to take advantage from the predicament of the persons involved in the litigation, the Court may refuse to accept it. In the case of Lala Ram Samp v. Court of Wards through Deputy Commissioner, Delhi, AIR 1940 PC 19, the opinion of the Privy Council was given by Sir George Rankin as follows:--
11(a) (i). It is the further contention of the learned counsel appearing for the appellants that suit agreement is only a champertous agreement and therefore, cannot be enforced is not acceptable. The appellants have not proved that agreement is only champertous agreement. In the judgment reported in AIR 1997 MP 106 (cited supra) relied on by the learned counsel appearing for the appellants itself, the Madhya Pradesh High Court has held that -
(I)There is no special enactment in the India barring champertous agreement.
(II)Champertous agreement is not illegal in the sense that they are immoral or opposed to public policy.
(III)If the Court finds that a particular champertous agreement is opposed to principle of equity and good conscience or unconscionable and extortionate in itself, then the Courts would not enforce such an agreement.