Litigation funding—India—Q&A guide
Litigation funding—India—Q&A guide

The following Dispute Resolution practice note provides comprehensive and up to date legal information covering:

  • Litigation funding—India—Q&A guide
  • 1. Is third-party litigation funding permitted? Is it commonly used?
  • 2. Are there limits on the fees and interest funders can charge?
  • 3. Are there any specific legislative or regulatory provisions applicable to third-party litigation funding?
  • 4. Do specific professional or ethical rules apply to lawyers advising clients in relation to third-party litigation funding?
  • 5. Do any public bodies have any particular interest in or oversight over third-party litigation funding?
  • 6. May third-party funders insist on their choice of counsel?
  • 7. May funders attend or participate in hearings and settlement proceedings?
  • 8. Do funders have veto rights in respect of settlements?
  • 9. In what circumstances may a funder terminate funding?
  • More...

This Practice Note contains a jurisdiction-specific Q&A guide to litigation funding in India published as part of the Lexology Getting the Deal Through series by Law Business Research (published: November 2020).

Authors: Gaggar and Partners—Vaibhav Gaggar; Sumedha Dang

1. Is third-party litigation funding permitted? Is it commonly used?

Third-party litigation funding is permitted in India. The concept of third-party funding is statutorily recognised under the Civil Code of Procedure, 1908 in some states (eg, Maharashtra, Gujarat, Madhya Pradesh and Uttar Pradesh) by their respective state amendments to Order XXV rules 1 and 3 of the Civil Procedure Code, 1908 (CPC). Therefore, the permissibility of third-party funding in India can be adduced from the CPC. Even though the remaining states have not statutorily recognised the concept of third-party funding, there is no express bar under any legislation against the same. In fact, the Hon’ble Supreme Court of India in Bar Council of India v AK Balaji (2018) 5 SCC 379 has clarified the legal permissibility of third-party funding in litigation and observed that:

There appears to be no restriction on third parties (non-lawyers) funding the litigation and getting repaid after the outcome of the litigation.

The same has been reiterated in ‘G’ Senior Advocate, In re, AIR 1954 SC 557, where the Supreme Court has laid down that lawyers are not permitted to fund litigation, but there seems to be

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