Introduction
Black’s Law Dictionary defines champerty as a bargain by a stranger with a litigant to undertake the costs and risks of the suit in exchange for part of the proceeds or subject matter to be recovered, if the suit succeeds.1 In modern practice, an arrangement of this kind is known as third-party funding. Indian courts have not expressly barred such funding by a third party. Indeed, such agreements were indirectly recognised in Harilal Nathalal Talati v. Bhailal Pranlal Shah, where the Bombay High Court accepted that agreements to finance litigation are not in themselves opposed to public policy, but refused to enforce one that it found extortionate and unconscionable.2 This ruling helps to ensure that a funder does not unfairly exploit a claimant by taking a disproportionate share of the proceeds of the suit. In the realm of a child’s rights in her education and schooling, Section 17 of the Right of Children to Free and Compulsory Education Act, 2009, prohibits physical punishment and mental harassment of a child.3 A written complaint of such a violation may be made to the local authority under Section 32 of the Act, which must decide it within three months,4 but the Act does not empower the authority to determine compensation for the victim. The consequence that the Act attaches to a contravention is disciplinary action under the service rules applicable to the person concerned.5 This is why child claimants approach the courts for compensation for the violation of their rights, although approaching a court brings its own challenge of complex procedures that often require advocates, unlike the local authority, whose procedures are not so complex as to require counsel. This paper argues that third-party funding is better equipped to meet the need to engage advocates than the free legal aid available under the Legal Services Authorities Act, 1987.6 It then evaluates the merits of third-party funding in child rights litigation, considers the challenges in recognising such funding, and offers suggestions to mitigate them.
Legal protection against corporal punishment and remedies for child rights violations
Corporal punishment in schools harms children at an early stage of their development. In S. Jai Singh v. State rep. by the Inspector of Police, K-9, Thiru-Vi-Ka Nagar Police Station, Chennai, the Madras High Court strongly condemned the “sadistic and inhumane ‘culture’ of corporal punishment”, referring to research showing that its outcomes for the child can be severely negative.7 The seriousness of the issue is also reflected in Kendriya Vidyalaya Sangathan v. M.K. Rajappan, where the Delhi High Court dismissed a challenge to compensation of Rs. 2,50,000 awarded by the National Human Rights Commission to a Class XI student severely beaten by the principal, holding the institution vicariously liable for incidents concerning students within its precincts.8
A child can claim compensation for such corporal punishment as a public law remedy for violation of her rights under Article 21 of the Constitution,9 which was read to include the right to live with human dignity in Francis Coralie Mullin v. Administrator, Union Territory of Delhi.10 Compensation is also available in tort, as damages for the harm caused. The two remedies, however, rest on different foundations. In Nilabati Behera v. State of Orissa, the Supreme Court held that compensation under Articles 32 and 226 is a public law remedy based on strict liability for contravention of fundamental rights, to which the defence of sovereign immunity does not apply, and that it is distinct from, and in addition to, the private law remedy of damages in tort.11 The public law remedy therefore lies where the contravention is by the State or its servants, whereas the tort remedy is pursued by the ordinary process of a civil action, typically for a negligent act.
Need for effective legal representation and limitations of the legal-aid framework
The availability of these remedies does not by itself ensure that a child can effectively pursue compensation. The claimant representing the child would find it difficult to determine the appropriate type of proceeding or the relief to be sought, as this depends on sustained legal preparation, evaluation of causation, assessment of the injury and quantification of damages. There is therefore a pressing need to engage counsel diligent enough to determine the course of legal action. Legal aid might appear to resolve this issue, since a child is entitled to legal services under Section 12(c) of the Legal Services Authorities Act, 1987,12 but it does not always ensure that the child is allotted counsel who will bring a minimum standard of diligence to her case. In Ramanand @ Nandlal Bharti v. State of Uttar Pradesh, the Supreme Court described as “below average” the cross-examination conducted by defence counsel for an accused who appeared to have been provided with legal aid, and stressed that the constitutional expectation is “a threshold level of competence and due diligence”, which shows that legal aid is not a flawless remedy.13 Although Ramanand was a criminal appeal, it remains relevant because it concerns the quality of counsel supplied through legal aid, and counsel for an aided child comes through the same statutory scheme: Section 12 applies to every person who has to file or defend a case, and the same regulations govern panels at High Court Legal Services Committees and District Legal Services Authorities alike.14 Where the quality of legal aid is low, counsel may also choose the wrong proceeding on the facts of the case, for example between compensation in public law and damages in private law. It may therefore be safer to engage a private lawyer in such child compensation claims than to rely on allotted legal aid counsel whose expertise in the subject the claimant cannot readily verify.
Legal aid falls short in other ways as well. Jeet Singh Mann’s empirical study, Plight of Legal Aid Counsels at the District Courts of India (2020), helps explain the constraints faced by legal aid counsel (LACs) and their clients.15 The study is limited to district courts and does not examine High Courts. Its findings bear directly on a tort suit filed at district level. They carry over to a writ petition before a High Court only in part: the empanelment regulations are common to both levels, while the findings on chambers and interviews concern district courts. The study found that LACs were empanelled solely on length of practice rather than on competence,16 and that only a general list of counsel is prepared, without any specific area of interest or type of case.17 The regulations permit, but do not require, separate panels by subject, and allow a case to be assigned to a panel lawyer outside the subject for which he was empanelled.18 A counsel specialised in constitutional law may therefore not be allotted a constitutional matter, which weakens access to quality counsel. The study also identified infrastructural limitations: a majority of those empanelled are junior practitioners without chambers of their own, so they interact with their clients in court complexes.19 LACs are unable to sit in the court complex beyond court working hours, which limits their communication with clients.20 A further concern was that the District Legal Services Authority selected LACs through an informal interview process, with no mechanism to evaluate their competence at the time of empanelment.21
Third-party funding
The Supreme Court of India has not barred funding by third parties. In Bar Council of India v. A.K. Balaji, counsel for the Bar Council of India submitted, in a comparison of professional rules recorded in the judgment, that advocates in India cannot fund litigation on behalf of their clients, while there appears to be no restriction on third parties who are not lawyers funding litigation and being repaid after its outcome. The Court did not rule on the point.22 Such funding arrangements have been allowed provided the consideration is not against public policy.23 Third-party funding enables claimants to choose private counsel, as the expenses are borne by the third party, who carries the risks associated with the litigation.24 A privately retained lawyer will also ordinarily have chambers in which to meet clients, which most LACs in Mann’s study lacked.25 It may further be argued that a lawyer chosen by the litigant or the funder has a stronger incentive to be vigilant, since that choice depends on professional reputation, and that such a lawyer can be selected for expertise in the relevant area of law, which a general list of LACs does not allow.
The third-party funder can bear costs such as court and procedural fees on the petition and on interlocutory applications, expert witness expenses, and ancillary expenses such as the travel of a summoned witness.26 In Tomorrow Sales Agency Pvt. Ltd. v. SBS Holdings, Inc., the Delhi High Court held that a funder who was not a party to the arbitration could not be mulcted with a liability it had not agreed to bear, including under an award of costs.27 Although this ruling is limited to third-party funding in arbitration, it might be persuasive in a future ruling on third-party funding in litigation. Given the wide variety of costs that a funder can cover, such arrangements can open access to justice for claimants representing a child whose economic capacity would otherwise prevent them from approaching the courts for compensation for mental harassment or physical harm at school.28
Problems arising in recognising third-party funding and suggested solutions
A funder may contract with the claimant for a disproportionate share of the property or amount claimed if the case succeeds. Such terms can render the agreement void as opposed to public policy under Section 23 of the Indian Contract Act, 1872.29 However, what amounts to disproportionate is subject to each court’s assessment,30 and contesting it exposes the claimant to the further stress of litigation. Harilal Nathalal Talati v. Bhailal Pranlal Shah stands as precedent that third-party funding agreements cannot rest on extortionate consideration, but it fixes no amount or percentage, so each court decides for itself what share of the claimed property is disproportionate.31
A funder may also indirectly influence the claimant’s lawyers not to settle early even where settlement would be in the claimant’s best interest.32 Such lawyers need training in maintaining professional ethics towards the client. Rule 15, Section II, Chapter II, Part VI of the Bar Council of India Rules, 1975, requires an advocate to uphold the interests of the client by all fair and honourable means without regard to any unpleasant consequences to himself.33 This Rule should be expanded through judicial interpretation to include the situation where an advocate must settle early if that is in the client’s best interest in the litigation, even if the funder threatens the advocate’s fees through inadequate or delayed funding.
Cross-border funding raises a further difficulty under the Foreign Exchange Management Act, 1999 (FEMA).34 FEMA distinguishes capital account transactions, which alter the assets or liabilities outside India of persons resident in India, or the assets or liabilities in India of persons resident outside India, from current account transactions, which include payments due in connection with services.35 The two are regulated differently.36 FEMA does not classify third-party funding, and it is unclear which category it falls under.37 A funder’s payment of the claimant’s legal fees may appear to be a current account transaction, as it is made for services.38 At the same time, the funds are provided in exchange for a share of the recovery, which resembles a risk-based investment and so a capital account transaction.39
A further problem arises where the funder may discontinue funding at any stage of the proceedings, leaving the child claimant without support. A possible solution is for the law to specify the permissible grounds of withdrawal and notice requirements, mandate payment of committed expenses and fix a reasonable transition period. The Code of Conduct of the Association of Litigation Funders of England and Wales offers a partial model: it confines termination to loss of reasonable satisfaction with the merits, a reasonable belief that the dispute is no longer commercially viable, and material breach, and keeps the funder liable for obligations accrued to the date of termination unless the termination is for material breach.40
A funder may also influence litigation strategy, for example by pressing for appeals or by controlling expert expenditure through its approval of case expenses.41 Such influence can be countered by educating future lawyers to remain independent of funders, and by rules such as those in the Code, under which a funder must not cause a funded party’s lawyers to breach their professional duties or seek to influence them to cede control of the dispute.42
To protect the child claimant, third-party funding should be allowed only to funders who engage in funding litigation as their main business. Such a funder should have a minimum paid-up share capital to ensure that its funding is bona fide and secure, as Singapore’s regulations and the Code require in their own terms.43 Parliament, through legislation, should ensure that a funding agreement does not prioritise the funder’s consideration from the recovered compensation over the monetary compensation intended to provide relief to the child claimant.
Sensitive information relating to a child, such as her medical history, disclosed to a funder who uses it to evaluate the strength of the suit, must not be used beyond that purpose. The sharing of case information with funders is itself recognised as a confidentiality risk.44 The Digital Personal Data Protection Act, 2023, points in the same direction, since, once its consent provisions commence, consent will be limited to the personal data necessary for the specified purpose, and processing a child’s personal data will require verifiable parental consent.45 Parliament should therefore also ensure, by law, that third-party funders are regulated by an authority for this purpose and for ensuring transparency. In England and Wales, a comparable role is performed on a self-regulatory basis by the Association of Litigation Funders, whose Code requires funders to observe the confidentiality of information relating to the dispute and provides for a complaints procedure.46
In Singapore, third-party funding of arbitration, related court and mediation proceedings, and proceedings in the Singapore International Commercial Court is confined to qualifying funders, who must carry on the principal business of funding dispute resolution proceedings and hold at least S$5 million in paid-up share capital or managed assets.47 A similar requirement for litigation funders in Indian law would help to ensure that a funder can meet its commitments to the claimant. A funder may also be reluctant to support proceedings seeking institutional reforms, disciplinary action or preventive orders where the claim offers little monetary return. This too is a form of influence over litigation strategy.
The same difficulty affects the compensation claim itself. Compensation claims for corporal punishment are often modest in value: the award upheld in Kendriya Vidyalaya Sangathan was Rs. 2,50,000,48 and even in S. Jai Singh, where a boy lost his life, the sum fixed was Rs. 10,00,000.49 Commercial funders have tended to favour larger cases: a 2011 report in the English legal press stated that most funders invested in cases typically worth at least £500,000, although one new entrant, aiming at high volumes of cases, would consider claims from £50,000.50 A single claim of this size is unlikely to be commercially viable on its own, and a funder’s share would also reduce the compensation meant for the child. Two models could address this. A funder could take on a portfolio of similar claims, so that its return depends on volume and a loss on one claim is absorbed by the others, although portfolio funding has itself raised concern in England and Wales about consumer detriment and the pursuit of weak claims. Alternatively, public-interest funding from philanthropic sources, which does not depend on a share of the compensation, could support such claims.51 Either model would still need the safeguards on withdrawal, counsel’s independence and confidentiality proposed above.
Conclusion
The right to free and compulsory education, to remain meaningful, requires that the ancillary rights of the child against mental harassment and physical punishment be enforced. Even though these rights are enforceable and their violation compensable under constitutional public law and in tort, their existence without access to the courts would leave the child without a remedy. One such hindrance to access to justice is the economic incapacity to pursue litigation for compensation. Free legal aid under the Legal Services Authorities Act, 1987, may at first glance appear to remedy the defect, but it comes with its own challenges: counsel may not be specialised in the area of the suit, may be less diligent in certain cases, or, for lack of chambers, may be unable to spend enough time with their clients. This paper has therefore suggested third-party funding of litigation in child compensation disputes to fill the gap left by legal aid. While third-party funding can provide access to justice by meeting court costs and the cost of engaging counsel, it has its own flaws. Its recognition must properly address the risks of disproportionate funder consideration, interference with settlement decisions, premature withdrawal of funding and misuse of children’s sensitive information. India could consider a regulatory framework inspired by Singapore’s approach to third-party funding, including qualifying criteria and minimum financial capacity. Legislation should additionally establish clear conditions for withdrawal of funding, protect advocates’ professional independence, regulate conflicts of interest and ensure appropriate confidentiality safeguards. The framework should also clarify the treatment of cross-border funding under the Foreign Exchange Management Act, 1999. Ultimately, third-party funding in litigation should supplement rather than replace existing legal aid and statutory remedies. Parliament should by law ensure that funding agreements do not prioritise funder consideration over monetary compensation intended to relieve the child’s injury. A carefully structured framework could help ensure that the right of the child against harassment in schools exists not only on paper but is enforced in practice.
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Footnotes
1. Champerty, Black’s Law Dictionary 292 (rev. 4th ed. 1968).
2. Harilal Nathalal Talati v. Bhailal Pranlal Shah, AIR 1940 Bom 143; see also Krrishan Singhania, Avni Singhania & Aayush Shah, Third Party Funding in the Indian Arbitration Scenario, 4 AIADR J. Int’l ADR F., no. 17, 15, 17 (2024), https://singhanialaw.com/third-party-funding-in-the-indian-arbitration-scenario/.
3. The Right of Children to Free and Compulsory Education Act, No. 35 of 2009, India Code (2009), § 17(1) [hereinafter RTE Act].
4. Id. § 32(1)–(2).
5. See id. §§ 17(2), 32.
6. The Legal Services Authorities Act, No. 39 of 1987, India Code (1987).
7. S. Jai Singh v. State rep. by the Inspector of Police, K-9, Thiru-Vi-Ka Nagar Police Station, Chennai, Crl. O.P. No. 23120 of 2019 & Crl. M.P. No. 807 of 2020 (Mad.) (Mar. 4, 2021), ¶¶ 13–15.
8. Kendriya Vidyalaya Sangathan v. M.K. Rajappan, W.P.(C) 15651/2022 (Del.) (Nov. 16, 2022), ¶¶ 2, 5–7; see also Delhi HC Dismisses Plea Challenging Order of NHRC Awarding Compensation to Student Beaten by Principal, ANI (Nov. 17, 2022), https://www.aninews.in/news/national/general-news/delhi-hc-dismisses-plea-challenging-order-of-nhrc-awarding-compensation-to-student-beaten-by-principal20221117021526/.
9. India Const. art. 21.
10. Francis Coralie Mullin v. Administrator, Union Territory of Delhi, (1981) 1 SCC 608.
11. Nilabati Behera v. State of Orissa, (1993) 2 SCC 746.
12. Legal Services Authorities Act, § 12(c).
13. Ramanand @ Nandlal Bharti v. State of Uttar Pradesh, Crim. App. Nos. 64–65 of 2022 (S.C.) (Oct. 13, 2022), ¶¶ 117–119, reported at 2022 SCC OnLine SC 1396.
14. Legal Services Authorities Act, § 12; National Legal Services Authority (Free and Competent Legal Services) Regulations, 2010, regs. 2, 8(2).
15. Jeet Singh Mann, Plight of Legal Aid Counsels at the District Courts of India, 55 Econ. & Pol. Wkly., no. 19, May 9, 2020, https://www.epw.in/engage/article/plight-legal-aid-counsels-district-courts-india.
16. Id. (discussing empanelment solely on the basis of length of practice).
17. See id. (noting that only a general list of legal aid counsel is prepared without any specific area of interest and type of cases).
18. National Legal Services Authority (Free and Competent Legal Services) Regulations, 2010, supra note 14, reg. 8(7)–(8).
19. Mann, supra note 15 (discussing the lack of independent chambers and the interaction of counsel with beneficiaries in the court complex).
20. Id. (discussing the inability of counsel to sit in the court complex beyond court working hours).
21. Id. (discussing the selection of counsel through an informal interview process and the absence of any mechanism to evaluate competence at empanelment).
22. Bar Council of India v. A.K. Balaji, Civil Appeal Nos. 7875–7879 of 2015 (S.C.) (Mar. 13, 2018), ¶¶ 30–31, 35, 37, reported at (2018) 5 SCC 379; cf. Singhania et al., supra note 2, at 17 (treating the passage as the Court’s view).
23. See Harilal Nathalal Talati, AIR 1940 Bom 143.
24. See Singhania et al., supra note 2, at 16.
25. See Mann, supra note 15.
26. See Singhania et al., supra note 2, at 16.
27. Tomorrow Sales Agency Pvt. Ltd. v. SBS Holdings, Inc., FAO(OS)(COMM) 59/2023 (Del.) (May 29, 2023), ¶¶ 70, 73–75, reported at 2023 SCC OnLine Del 3191, appeal dismissed as withdrawn, Civil Appeal No. 7664 of 2023 (India Jan. 21, 2026), and appeal dismissed, Civil Appeal No. 14752 of 2024 (India Mar. 11, 2026); see also Singhania et al., supra note 2, at 17–18.
28. See Singhania et al., supra note 2, at 16; Tomorrow Sales Agency, FAO(OS)(COMM) 59/2023, ¶ 73.
29. The Indian Contract Act, No. 9 of 1872, India Code (1872), § 23.
30. See Singhania et al., supra note 2, at 21.
31. Harilal Nathalal Talati, AIR 1940 Bom 143.
32. See Singhania et al., supra note 2, at 20.
33. Bar Council of India Rules, 1975, pt. VI, ch. II, § II, r. 15.
34. The Foreign Exchange Management Act, No. 42 of 1999, India Code (1999) [hereinafter FEMA].
35. FEMA, §§ 2(e), 2(j); see Singhania et al., supra note 2, at 22.
36. FEMA, §§ 5–6.
37. See Singhania et al., supra note 2, at 22.
38. FEMA, §§ 2(j), 5.
39. Id. §§ 2(e), 6.
40. Association of Litigation Funders of England & Wales, Code of Conduct for Litigation Funders cl. 11.2, 12, 13.1 (Jan. 2018), https://associationoflitigationfunders.com/wp-content/uploads/2018/03/Code-Of-Conduct-for-Litigation-Funders-at-Jan-2018-FINAL.pdf.
41. See Singhania et al., supra note 2, at 20.
42. Code of Conduct for Litigation Funders, supra note 40, cl. 9.2–9.3.
43. Civil Law (Amendment) Act 2017 (No. 2 of 2017) (Sing.) (amending the Civil Law Act 1909, §§ 5A–5B); Civil Law (Third-Party Funding) Regulations 2017 (S 68/2017) (Sing.), reg. 4 (prescribing the criteria for a “qualifying third-party funder”, namely that its principal business is funding dispute resolution proceedings and that it has paid-up share capital or managed assets of at least S$5 million); see also Code of Conduct for Litigation Funders, supra note 40, cl. 9.4.2.
44. See Singhania et al., supra note 2, at 20–21.
45. The Digital Personal Data Protection Act, No. 22 of 2023, India Code (2023), §§ 6(1), 9(1) (to commence eighteen months after publication of Notification G.S.R. 843(E), Gazette of India, Nov. 13, 2025).
46. Code of Conduct for Litigation Funders, supra note 40, cl. 1, 7, 15; see also Singhania et al., supra note 2, at 19.
47. Civil Law (Third-Party Funding) Regulations 2017, supra note 43, regs. 3–4 (2024 Rev. Ed.).
48. Kendriya Vidyalaya Sangathan, W.P.(C) 15651/2022, ¶ 2.
49. S. Jai Singh, Crl. O.P. No. 23120 of 2019, ¶ 10.
50. Rachel Rothwell, ‘Alternative’ Litigation Funder to Invest £100m in Smaller-Scale Disputes, L. Soc’y Gazette (Nov. 28, 2011), https://www.lawgazette.co.uk/news/alternative-litigation-funder-to-invest-100m-in-smaller-scale-disputes/63274.article.
51. Civil Justice Council, Review of Litigation Funding: Final Report ¶¶ 6.40–6.41, 9.2–9.6, 9.10 (2025), https://www.judiciary.uk/wp-content/uploads/2025/06/CJC-Review-of-Litigation-Funding-Final-Report.pdf.