05/03/2026
Third-Party Litigation Funding (TPF) in India is often misunderstood as being illegal, but Indian law does not prohibit it; the restriction operates only on advocates and not on external funders. Under the Bar Council of India Rules, advocates are barred from financing litigation on behalf of clients or entering into contingency fee arrangements that make their remuneration dependent on the outcome of the case. However, this professional restriction does not extend to non-lawyer third parties such as investors, financial institutions, or specialized litigation funding companies. The Bar Council of India v. A.K. Balaji decision clarified this position when the Supreme Court of India observed that there is no legal prohibition against third parties funding litigation and recovering their investment after the dispute is resolved, provided the funder is not an advocate representing the litigant. Historically, Indian courts have also tolerated champertous agreements unless they are extortionate, unconscionable, or against public policy, reflecting the common law approach adopted during the colonial era. In fact, certain states such as Maharashtra and Gujarat have amended the Code of Civil Procedure 1908 to expressly empower courts to secure costs from third-party funders, indirectly acknowledging their legitimacy. Consequently, TPF is increasingly viewed as a legitimate mechanism that enhances access to justice by enabling financially constrained litigants to pursue meritorious claims while allowing funders to assume the financial risk of litigation in return for a share of the proceeds if the claim succeeds.