Chandra Reddy, J.@mdashThe genuineness of the agreement date 25-11-1932, Ex. A-2, is involved in this appeal brought by the defendant against the judgment of the Subordinate Judge, Visakhapatnam. (sic) impugned document upon which the suit for recovery of Rs. 8,000/- was founded is alleged have come into existence in the following circumstances.
2. The defendant was a member of a family which owned considerable movable immovable properties. After the death of father, his cousins taking advantage of his less position denied him a share in the properties. Nay more. They drove him out of house. He was thus deprived of the suster(sic) and also financial backing to fight his power cousins. Faced with this situation, he s(sic) the assistance of one Lakshimayya to litiga Courts for the recovery of these properties.
Ex. A-2 was executed by the defendant favour of the said Lakshmayya embodying terms of the understanding that was re(sic) between them. A suit was filed in the Court the Subordinate Judge, Visakhapatnam, for covering the whole property of the joint f(sic) in forma pauperis. In the initial stages of enquiry in regard to the pauperism of the defendant, the said Lakshmayya spent small su(sic) money.
For some reason or other, Lakshmayya (sic)ed to fulfil the terms of the agreement with result that the defendant had to approac(sic) plaintiff, a neighbour of his, with a simil(sic) quest. The parties after discussion of the entered into Ex. A-2 the contents of which as follows:
In pursuance of the agreement ex and delivered in favour of Patnala Laksh Garu, for advancing moneys, on my beh(sic) respect of the suits going on between myse(sic) my junior paternal uncle late Pandrangi (sic)shnamurthy Garu''s relatives Reddy Sury(sic) yana, Pandrangi Adinarayana and others (sic)gard to my property, he has not been adv(sic) moneys, and so, after getting the af(sic) agreement cancelled, I have executed and (sic)vered this agreement in your favour.
The agreement executed on the 13th September, 1932, is herewith delivered the after cancelling the same. After agreeing you should conduct the suit by meeting t(sic) tire expenses from this date until I reco(sic) property in whole, or a half share therein enter into a compromise with the said duals, and that I should pay you (there sum of Rs. 8,000/-, in words Rupees eigh(sic) sand, after a period of two years subseq(sic) delivery of possession of my property to (sic)ie, I have executed and delivered this agreement.
If you evade without advancing moneys during the pendency of this suit, you yourself should (sic)rgo the entire amount advanced by that (sic)ne. If you do so dishonestly, I shall give notice (sic)mediately and get this agreement cancelled, (sic)ter agreeing that in case I fail to pay you the (sic)oney by the time mentioned herein, I shall (sic)y you in full the entire Courts costs incurred you and that I shall not pray for an account (sic)refor or pray for remission, I have whole (sic)artedly executed and delivered this agreement.
3. According to the plaintiff, in pursuance the terms of the contract, he financed the (sic)gation and rendered assistance in the conduct it till it was carried to a successful termination. It is not necessary to refer to the various (sic)ges of the litigation. Suffice it to say that (sic)ugh the plaintiff had obtained a decree as (sic)yed for he succeeded in getting only half a (sic)re in the family properties as a result of the (sic)gment of the High Court in an appeal pre(sic)ed by the aggrieved defendants in that(sic). Consequent upon this decree passed by the High Court, the present defendant applied for passing of a final decree. After the passing the decree by the trial Court he levied execution and got possession of the half share in the properties on the 27th or 28th of March, 1946. (sic)n a preliminary decree was passed by the (sic) court the present defendant instituted a in forma pauperis for mesne profits. Having failed to get the amount stipulated (sic)r Ex. A-2 the plaintiff issued a registered (sic)e, Ex. B-55, dated 19-1-1950 calling upon the defendant to pay him a sum of Rs. 8,000/- as (sic)ed between them. In reply, the defendant (sic)ed the existence of the agreement, the capa(sic) of the plaintiff to help him with money and alleged that the plaintiff would have taken (sic)ntage of the existence of blank papers con(sic)ng the signatures of the defendant to forge in documents. This led the plaintiff to lay action which has given rise to this appeal.
4. It was contended by the defendant in written statement that the agreement was genuine, that it must have been brought into (sic)nce long after the litigation referred to (sic) came to an end and that in any event the was barred by limitation. The trial Court (sic) on the testimony of witnesses on the exe(sic) and genuineness of Ex. A-2 decreed the for Rs. 8,000/- with interest from the date (sic)e plaint. The conclusions of the Subordinate Judge are assailed before us.
5-18. In this appeal, the main controversy (sic)s round the question of the execution of (sic)-2. This agreement is proved by P.Ws. 4, (sic)6. His Lordship then considered the oral and (sic)dentary evidence and other relevant circumstance and continued as under:
(sic)r all these reasons we concur in the opi(sic) of the trial Court that Ex. A-2 is genuine (sic)at plaintiff had acted up to its terms and (sic)ttled to enforce the agreement.
19. It was lastly contended by Mr. Venka(sic) that assuming Ex. A-2 was genuine it (sic) not be enforced for the reason that it was (sic) and that in any event it was an inequitable bargain that was struck between the parties and that lastly only so much amount as has been proved to have been advanced by the plaintiff could be recovered by him in the suit. We shall first dispose of the contention as regards the equitable nature of this agreement. The specific rules of English Law, which prohibit a bargain whereby one party assists another to recover his property and get a share in the proceeds, are not applied in India. In dealing with such agreements, courts have to conform to a principle which is a part of the law of justice, equity and good conscience.
The general principles on the subject are summarised by the Judicial Committee of the Privy Council in Ram Coomar Coondoo v. Chunder Canto Mookerjee, 4 Ind App 23 (A), which have been extracted in the judgment of the Privy Council in Raja Mokhan Singh v. Raja Rup Singh, ILR 15 All 352 (B):
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 regarded as being, per se, opposed to public policy. Indeed, cases may be easily supposed in which it would be in furtherance of right and justice, and necessary to resist oppression, that a suitor, who had a just title to property, and no means-except the property itself- should be assisted in this manner.
But agreements of this kind ought to be carefully watched, and when found to be extortionate and unconscionable, so as to be inequitable against the party, or to be made, not with the bona fide object of assisting a claim believed to be just, and of obtaining a reasonable recompense therefor, but for improper objects, as for the purpose of gambling in litigation, or of injuring or oppressing others by abetting and encouraging unrighteous suits, so as to be contrary to public policy, effect ought not to be given to them.
20. It is thus evident that agreements of this kind are not per se opposed to public policy. Such agreements have to be judged with reference to the facts of the case whether they are unconscionable and extortionate. To substantiate the proposition that this agreement fall within the category of inequitable agreement and that the plaintiff could not get more than what was actually spent by him he cited ILR 15 All 352 (B), and
These rulings are not quite relevant in this discussion as they deal with agreements which on the face of them were extortionate and unconscionable, as they stipulated for a recompense out of all proportion to the amount to be spent by them for the litigation. In spite of it, the Court awarded in those cases to the financiers all legitimate expenses incurred by them with interest after refusing to give effect to the agreements.
21. Even according to the rules enunciated in them, the plaintiff would get an almost equal amount of money. Though he estimated the expenditure incurred by him in this regard at about Rs. 6.000/-, the particulars furnished by him would bring the total upto a little less than Rs. 5,000/- which is to a large extent borne out by the lawyer P.W. 6. This sum of money was spent over a long period and does not carry any interest.
Again, there is one distinction between the rulings to which our attention was called and the instant case, viz: that all those cases related to financing the litigation whereas under the agreement in the present case the plaintiff had not only to supply him with funds but also to carry on litigation. So, it is not a case of mere financing the suit, and the appeal but in addition rendering assistance in proceedings which dragged on for a number of years and this had to be fought on several fronts.
It is in evidence that the plaintiff had to bring witnesses to Court, engage counsel and accompany the plaintiff in that suit i.e., the present defendant to several Courts at Visakhapatnam, Chicacole and Madras and even some times to Tuni to bring papers and also to afford protection to him and to the witnesses. It is plain from the evidence of D.W. 6 that attempts were made on the life of the defendant, and the safety of the witnesses was also apprehended. In judging whether this document was extortionate or unconscionable or whether what was provided was a reasonable recompense or not the various circumstances pointed out above have to be borne in mind.
Moreover, if the plaintiff had invested this money in his trade, it might have fetched him at least as much as Rs. 8,000/-. There is also the factor that the man with whom the defendant had entered into contract for financing this litigation had disappointed him and it does not appear that there was any one else who was willing to undertake the responsibility.
22. In Navaneethakrishnaswami Devasthanam v. Rukmani and Co., 1955 2 Mad LJ 339 (E), Mr. Justice Satyanarayana Rao and Mr. Justice Rajagopalan held that an agreement under which the financier had to get a bonus of Rs. 5,00,000/- and income from certain private lands in consideration of the financier spending a lakh of rupees for assisting the party to recover property worth Rs. 30,00,000/- was not extortionate or unconscionable. The learned Judges reached that conclusion notwithstanding the provision that anything spent over and above Rs. 1,00,000/- was to be repaid to the financier with interest thereon at a particular rate.
23. There is also another circumstance which has some bearing on this aspect of the matter. It was provided in the agreement that in case the plaintiff had not advanced money during the pendency of the suit he would forgo the entire amount advanced at that time. So the condition precedent to his claiming the compensation sum of Rs. 8,000/- was his helping the defendant to carry on the litigation to a successful end whatever may be the number of years.
He had also to wait for two years after getting delivery of the properties. These terms clearly indicate that the defendant was not a gullible person but was a hard nut to crack.
24. To deal with the last argument of Mr. Venkatesam that the plaintiff had failed to render an account of the money spent by him and that he should be awarded only so much as has been satisfactorily proved to have been spent by him, we are not impressed with it. For one thing, there is a specific provision that the plaintiff should not be called upon to give an account of the moneys actually spent by him in connection with the litigation.
There may be various reasons for inducing the party to insert such a provision and it is not necessary for us to speculate about it. The is nothing illegal about such a clause. That (sic)ing so, there was no obligation on the part the plaintiff to render an account of the mone(sic) expended by him. Mr. Venkatesam wanted us draw an adverse inference from the non-production of the account-books. We cannot, accede this request.
A pre-requisite to the drawing of such inference is its being established that the plaintiff was maintaining accounts and yet failed produce them into court. Nor does the argum(sic) that a decree should be passed for the su(sic) actually spent by him appeal to us. Having regard to the fact that the assistance to be (sic)dered by him consisted not only of finding mo(sic) for the litigation but also conducting the lit(sic)tion, a sum of Rs. 8,000/- was provided in document for both the services.
We regard that sum as a fair compensation. Even if such a principle is applied it does make a material difference for the reason if he should get this with interest from the of his spending, the total would come to much. It is also not out of consideration already pointed out, that the plaintiff w(sic) have earned much more if he has utilised money for his business. In these circumstance this argument also fails and is rejected.
25. In the premises, the judgment and decree under appeal are confirmed and the appeal is dismissed with costs.
