ACTIONABLE CLAIM UNDER TRANSFER OF PROPERTY ACT

INTRODUCTION?

Actionable claim means a debt or a claim on which action can be started in a Court of law for comfort or relief. The civil Courts recognized as giving the grounds for relief whether such claims are conditional, accruing and other. The actionable claim is defined under section 3 of the Transfer of Property Act, 1882. In general terms, an actionable claim is a debt or claim for which the person can take an action and also approach the Court for recovery his debt or claim.

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Tangible or touchable movables?such as chairs or bikes and many have physical existence and can be possessed. Some movable property is an actionable claim. It is also a claim for unsecured debt and any beneficial interest in the?moveable property?and the property is not in any kind of possession.

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Like example- X is a person who needs a loan or money from Y. Then X takes loan 50,000/- from Y. And Y does not take any security. It means X takes loan 50,000/- from Y without any security. So the debt or claim given by Y is an actionable claim. And if the X failure on his part or not repay the money then Y can approach the Court.

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DEFINITION

According to section 3 of the Transfer of Property Act, the actionable claim is a claim to any debt which is not secured by a mortgage, pledge, and hypothecation. The?mortgage of immovable property?does not come under section 3 of Transfer of Property Act and also the pledge OR hypothecation of moveable property is not an actionable claim. An actionable claim is transferable under the Transfer of Property Act. The?transfer of actionable claim?is given under chapter eight of the Transfer of Property Act. Chapter eight of the Transfer of Property Act is the last chapter of the Transfer of Property Act and it covers section 130 to 137.

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IMPORTANT PROVISIONS DEALING WITH ACTIONABLE CLAIM UNDER TRANSFER OF PROPERTY ACT

Under?Section 130 of the Transfer of Property Act,?the mode of transfer of actionable claim is described.?According to Section 130[1],

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(a)??????????The transfer can be done by only a written instrument;

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(b)?????????And signed by the transferor or his legal agent; and

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(c)??????????The transfer will be complete.

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Exceptions of the Sec 130 - Sec 130 does not apply on the transfer of marine and insurance of fire policy.

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In the case of Simon Thomas vs. State Bank of Travancore[2], in this case, there should be an intention to transfer the debt represented by the written receipts.

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Under?Section 132[3] of the Transfer of Property Act, defines the liability of the transferee of actionable claim. The liabilities and equities of the transferor are transferred to the transferee.

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Some examples of actionable claim, these following claims are the actionable claim-:

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(a)??????????Claim for arrear rent.

(b)?????????Claim for rent to fall due in future.

(c)??????????A choice offered to repurchase the property once again.

(d)?????????Book debts or claims

(e)?????????The right to claims maintenance.

(f)???????????Claim the benefit of the contract.

(g)??????????Deposit receipt.

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The following claims are not the actionable claim-:

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(a)??????????A claim which is decreed.

(b)?????????“Right to sue”, it is a right but it is not an actionable claim.

(c)??????????The claim for the main profits.

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In the case of the?Jugalkishore Saraf Vs Raw Cotton Co. Ltd[4], the Supreme Court held that a judgment debt or decree is not an actionable claim for action is necessary.

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In the leading case?Lachmi Koeri Vs the State of Bihar[5], the Court has been pointed out the transfer of arrears of rent is a type of a transfer of actionable claim. And the transfer of arrears of rent could be transferred in accordance with the provisions of the Transfer of Property Act.

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In the case of?Rekhath Koeri[6], where the Court said that the transfer of arrears of rent is really a?transfer of actionable claim?and it could be transferred in accordance with the rules and regulations of Transfer of Property Act.

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Section 133[7]?of the Transfer of Property Act described the warranty of solvency of the debtor. In this section when a claim is transferred the transferee may run the chance or risk of losing the debt, in this case, the debtor is insolvent. So as a precautionary measure, the transferee should be assured that the debtor is solvent.

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Section 134[8]?of the Transfer of Property Act is deals with the mortgaged debt. And?section 135[9]?of the Transfer of Property Act deals with the assignment of rights under the policy of insurance against fire.?Section 136[10]?deals with the incapacity of officers connected with the Court of justice. The person who includes in section 136 are:-

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(a)??????????Legal practitioner;

(b)?????????Judges of the Court; and

(c)??????????The legal or officer who concerned with the justice of the Court.

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And the last?Section 137[11]?describes the saving of negotiable instruments and etc.

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In the case, State of Kerala and Ors. Vs. Mini Shamsudin and Ors[12], the Court said that actionable claims are ‘goods’ and?movable property?but it is not for the purpose of the sales tax acts.

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CONCLUSION

The term ‘Actionable Claim’ is that every type of debt in a?movable property?which would be enforced by the Court. Under this meaning any kind claim of money whether the amount was fixed or the amount was also uncertain, it’s an actionable claim. Sometimes, these were made confusions and there also used to be conflict decisions; and the law was not uniform or not clear. In the Transfer of Property Act, the law should be amended to provide the rights and liabilities of both the parties in transactions.

[1] Transfer of actionable claim.—

(1)??????????The transfer of an actionable claim 1[whether with or without consideration] shall be effected only by the execution of an instrument in writing signed by the transferor or his duly authorised agent, 2[***] shall be complete and effectual upon the execution of such instruments, and thereupon all the rights and remedies of the transferor, whether by way of damages or otherwise, shall vest in the transferee, whether such notice of the transfer as is hereinafter provided be given or not: Provided that every dealing with the debt or other actionable claim by the debtor or other person from or against whom the transferor would, but for such instrument of transfer as aforesaid, have been entitled to recover or enforce such debt or other actionable claim, shall (save where the debtor or other person is a party to the transfer or has received express notice thereof as hereinafter provided) be valid as against such transfer.

(2)??????????The transferee of an actionable claim may, upon the execution of such instrument of transfer as aforesaid, sue or institute proceedings for the same in his own name without obtaining the transferor’s consent to such suit or proceeding and without making him a party thereto.

(Exception)?—Nothing in this section applies to the transfer of a marine or fire policy of insurance 3[or affects the provisions of section 38 of the Insurance Act, 1938 (4 of 1938)]. Illustrations

(i)???????????A owes money to B, who transfers the debt to C. B then demands the debt from A, who, not having received notice of the transfer, as prescribed in section 131, pays B. The payment is valid, and C cannot sue A for the debt.

(ii)?????????A effects a policy on his own life with an Insurance Company and assigns it to a Bank for securing the payment of an existing or future debt. If A dies, the Bank is entitled to receive the amount of the policy and to sue on it without the concurrence of A’s executor, subject to the proviso in sub-section (1) of section 130 and to provisions of section 1

[2] Simon Thomas vs. State Bank of Travencore, (1976) KLT 554

[3] ?Liability of transferee of actionable claim.—The transferee of an actionable claim shall take it subject to all the liabilities and equities and to which the transferor was subject in respect thereof at the date of the transfer. Illustrations

(i)???????????A transfers to C a debt due to him by B, A being then indebted to B. C sues B for the debt due by B to A. In such suit B is entitled to set off the debt due by A to him; although C was unaware of it at the date of such transfer.

(ii)?????????A executed a bond in favour of B under circumstances entitling the former to have it delivered up and cancelled. B assigns the bond to C for value and without notice of such circumstances. C cannot enforce the bond against A.

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[4] Jugalkishore Saraf vs Raw Cotton Co. Ltd, AIR1955 Bom 77,(1954) 56 BOMLR 905, ILR 1954 Bom 1004

[5] Lachmi koeri vs State of Bihar, AIR 1960, Pat 62, 1960 CRILJ 271.

[6] Rekhath Koeri, AIR 1923 Pat. 165

[7] Warranty of solvency of debtor.—Where the transferor of a debt warrants the solvency of the debtor, the warranty, in the absence of a contract to the contrary, applies only to his solvency at the time of the transfer, and is limited, where the transfer is made for consideration, to the amount or value of such consideration.

[8] Mortgaged debt.—Where a debt is transferred for the purpose of securing an existing or future debt, the debt so transferred, if received by the transferor or recovered by the transferee, is applicable, first, in payment of the costs of such recovery; secondly, in or towards satisfaction of the amount for the time being secured by the transfer; and the residue, if any, belongs to the transferor or other person entitled to receive the same.

[9] Assignment of rights under policy of insurance against fire.—Every assignee by endorsement or other writing, of a policy of insurance against fire, in whom the property in the subject insured shall be absolutely vested at the date of the assignment, shall have transferred and vested in him all rights of suit as if the contract contained in the policy has been made with himself.

[10] Incapacity of officers connected with Courts of Justice.—No judge, legal practitioner or officer connected with any Court of Justice shall buy or traffic in, or stipulate for, or agree to receive any share of, or interest in, any actionable claim, and no Court of Justice shall enforce, at his instance, or at the instance of any person claiming by or through him, any actionable claim so dealt with by him as aforesaid.

[11] Saving of negotiable instruments, etc.—Nothing in the foregoing sections of this Chapter applies to stocks, shares or debentures, or to instruments which are for the time being, by law or custom, negotiable, or to any mercantile document of title to goods. Explanation.—The expression “mercantile document of title to goods” includes a bill of lading, dock-warrant, warehouse-keeper’s certificate, railway receipt, warrant or order for the delivery of goods, and any other document used in the ordinary course of business as proof of the possession or control of goods, or authorising or purporting to authorise, either by endorsement or by delivery, the possessor of the document to transfer or receive goods thereby represented.

[12] State of Kerala and ors. Vs. Mini Shamsudin and ors, (2009) insc 1 (2 Jan 2009)