Dr.

Ram Manohar Lohiya National Law University

ACTIONABLE CLAIMS

Submitted to: Submitted by:

Prof. Dr. Manish Singh Ahmad Sulaiman
Faculty of Law Roll no. 13
Property Law Semester V
B.A. LL.B. (Hons.)

TABLE OF CONTENTS

ACKNOWLEDGEMENT...........................................................................................................3
CHAPTER 1........................................................................................................................4
ACTIONABLE CLAIMS: INTRODUCTION...................................................................4
CHAPTER 2........................................................................................................................7
SCOPE OF TRANSFER OF ACTIONABLE CLAIMS.....................................................7
CHAPTER 3........................................................................................................................9
FORM OF ASSIGNMENT.................................................................................................9
CHAPTER 4......................................................................................................................13
EFFECT OF TRANSFER.................................................................................................13
CHAPTER 5......................................................................................................................16
CONCLUSION..................................................................................................................16
BIBLIOGRAPHY..............................................................................................................18

2
ACKNOWLEDGEMENT

I would like to heartily thank my faculty, Property Law, Prof. Dr. Manish Singh, for
providing me with the opportunity for working over such an interesting topic of
“Actionable Claims” For any work to be successfully completed, a prime requirement is
that of leadership and guidance. It was under his guidance that I have been able to focus
on the research questions which otherwise would have been vague and unsatisfactory. He
helped me at every possible stage over this project and also encouraged me to go into
deeper research. I was also helped by my seniors who cooperated with me and guided me
with the process to proceed and as to how to limit my research into a short yet precise and
comprehensive work. Therefore this project, without any mention of their help would
have remained an idea incomplete.

Ahmad Sulaiman

3
 ACTIONABLE CLAIMS: INTRODUCTION

The definition contained in S. 3 of the Transfer of Property Act, 1882, provides

“actionable claim” means:

"actionable claim" means a claim to any debt, other than a debt secured
by mortgage of immovable property or by hypothecation or pledge of
movable property, or to any beneficial interest in movable property not in
the possession, either actual or constructive, of the claimant, which the
civil courts recognise as affording grounds for relief, whether such debt or
beneficial interest be existent, accruing, conditional or contingent”

The definition of ‘actionable claim’ has been extended so as to include such equitable
choses-in-action as debts or beneficial interest in movable property whether existent,
accruing, conditional or contingent. Actionable claims therefore include claims
recognized by the Courts as affording relief either:
A. as to unsecured debts, or
B. as to beneficial interests in movable property not in possession, actual or
constructive- whether present or future, conditional or contingent1.

MERE RIGHT TO SUE DISTINGUISHED FROM ACTIONABLE CLAIM

The right to sue for damages is not is not an actionable claim, as is also stressed by the
amendment made in S. 6(e) to the effect that a mere right to sue cannot be transferred.
However, a mere right to sue can be distinguished from actionable claim.

An actionable claim is a property and the assignee has the right to sue to enforce the
claim2. B cannot sue for a debt due to A, nor can A assign to B the right to sue for the
debt due to A. But if A assigns the debt to B, then B can sue to recover it as a debt due to
himself. A right to contribution is not a mere right to sue but an actionable claim which

1
McDowell and Co. Ltd. v. District Registrar AIR 2000 AP 374
2
Rudra Perkash v. Krishna (1887) ILR 14 Cal 241

4
can be assigned3.The assignment of differences on cross contracts has been held to be
valid as an assignment of a debt of an actionable claim, and not a mere right to sue4.

The distinction between a transfer of a mere right to sue and a transfer of an actionable
claim is well illustrated by the Privy Council in the case of Manmatha Nath v. Hedait
Ali5. The facts of the case are: A’s lessee had covenanted to pay the government
assessment or in default to be liable to A in damage. A sold the reversion to B and also
assigned to B the right to recover from the lessee certain installments of assessment
which he had paid owing to the lessee’s default. The High Court held the assignment to
be void as an assignment of a mere right to sue. But the Privy Council held that the
lessee’s failure to pay did not give rise to a claim for damages within the meaning of the
clause in the lease, but a claim for reimbursement of the precise sum A had paid to meet
the obligation. It was therefore valid as an assignment of an actionable claim.

In the case of Dhanaji v. Gulabchand6, a partner released his share in the partnership to
his partners and then assigned his share to B. A alleged that the release to his partners had
been obtained by fraud. The Court held that what was assigned to B was A’s right to sue
to set aside the release on the ground of fraud, and that such a could not be assigned

SCOPE OF TRANSFER OF ACTIONABLE CLAIMS

S. 130 applies only to the case of a transfer of an actionable claim. Section 130 reads as
follows:

Where the insurance company had paid to the consignor firm value of goods damaged
during the course of the transit, entrusted to a carrier, the assignment of the right to claim
indemnification by the firm to the insurance company is valid. It is an actionable claim
and can be validly transferred. In a suit by the insurance company against the carrier, it is
not necessary to array the consignor as party to the suit. Such an assignment is not hit by

3
Ramaswami Aiyar v. Deivasigamini AIR 1922 Mad 397
4
Nagappa v. Badridas AIR 1930 Bom 409
5
AIR 1932 PC 32
6
AIR 1925 Bom 347

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the provisions of S. 6(e).7 The fact that the consignor company was unregistered and
therefore could not file suit in view of the provisions of S. 69(2) of the Indian Partnership
Act, would not affect the maintainability of the suit filed on the basis of the actionable
claim8.

When the deceased partner in a firm which carried business as bankers with a view to
give Rs. 1 lakh to each of his three grandnephews issued a cheque for Rs. 3 lakhs in
favour of the firm and the amount was debited in the account of the firm and credited in
the account of the three grandnephews, and the amount so gifted in the accounts of the
firm in the names of the three grand nephews, the transaction amounted to a gratuitous
transfer of an actionable claim to which Section 137 in reference to S. 130 was applicable
and there was valid gift thereof the minor donees9.

When a creditor entered into an arrangement with a bank whereby the bank advanced
moneys to the contracter on overdraft against his contract bills on certain Government
departments, the giving of an irrevocable power of attorney in favour of the Bank
authorising it to receive payment from the department concerned and would not either
create a charge or in fact any transfer of a debt due to the contractor from the
Government. In such a case, there is no assignment within the meaning of S. 130 of the
T.P. Act10. An assignment creates rights in rem, destroying the right to stoppage in transit
and the assignee of the document of title to goods becomes the owner of the goods and
can even give a better title than he possesses. In the negotiation of a bill of exchange the
right created is in personam, but it reserves the right of stoppage of payment. But holder
in due course can give a discharge, he cannot give a better title than he himself possesses.
The negotiability by assignment as such is different, but it is a kind of negotiabiltity
nonetheless11. A valid and enforceable contract of assignment comes into being when it is
executed by parties possessing legal capacity to contract, when it is supported by
consideration, when it is not contrary to law or public policy, when it is not tainted by
fraud or illegality and when it is not the result of an agreement between the assignor and
the assignee that they shall divide the property sued for between them in consideration of
the assignee carrying on the suit and possibly also at his own expense. A person who
wishes to obtain decree on the basis of deed of assignment must allege and prove a valid
assignment in order to show that he had a cause of action12.

7
United India F. & G. Insurance Co. Ltd. v. P. Transport Carriers AIR 1986 AP 32
8
Ibid
9
Controller of Estate Duty, Hyderabad v. Godavari Bai AIR 1986 SC 631
10
Takhat Mal Moth Raj v. Bharat Nidhi Ltd. AIR 1963 MP 132
11
Mulji Deoji v. Union of India AIR 1957 Nag 31
12
Prem Singh v. Sat Ram Das AIR 1958 Punj 52

6
In view of the provisions of Section 130 of the Transfer of Property Act, the transfer of
an actionable claim has to be effected only by the execution of an instrument in writing
signed by the transferor or his duly authorized agent and thereafter the rights and
remedies of the transferor is to vest in the transferee13.

FORM OF ASSIGNMENT

No particular form of assignment is required under the law.14 The composite parts of an
assignment, besides the date and parties, are (1) recital of the bond, (2) the amount due
thereunder, (3) the agreement to assign debt and interest, (4) the operative part, in
consideration of the sum paid by the assignee, the assignor assigns the bond with the
principal sum and interest due and thenceforth to become due and the full benefit and
advantage of the premises, (5) habendum to the assignee absolutely, (6) a covenant that
the debt is owing and in full force and valid, (7) the witnessing clause, and (8) signature
of the assignor. It should be stamped unless executed by the Official Assignee. It does
not require to be attested or registered under Section 109 of the Indian Companies Act.
No assignment is necessary of the interest of a co-sharer in actionable claim when retiring
from the joint Mitakshara family business, and his legal representative is not a necessary
party to a suit based on such actionable claim.15

For affecting an assignment of an actionable claim, no particular form is necessary. 16

Where the company had taken loan from the bank and property was secured in favour of
the bank by way of equitable mortgage, the possession of the property was not delivered
to the bank either by way of unsufructuary mortgage or mortgage with possession, held
that the mortgagee had no right on the rents or income from the mortgaged property and
equitable mortgage did not help the bank to claim a charge or equitable assignment or
charge in regard to rents.Where simple power of attorney was executed by the company,
which authorized the Bank to demand/receive rents from the tenant, there was no
authorization for adjustment or appropriation of rents towards debt due to the bank by the
company, held that it was a power of attorney simpliciter by a Principal in favour of an
Agent, no equitable assignment in favour of the bank was created by such power of
attorney.17

13
Dayabhai Chamalal v. Ambalal Himatlal AIR 1981 SC 1556
14
Mohanlal Malpani v.Loan Company of Assam Ltd., Shillong, AIR 1960 Ass 191
15
Brijmohan v.Mahabeer, (1936) 63 Cal 194; Palani Ammal v.Muthuvenkatachala, (1924) 48 Mad 254.
16
Mohan Lal Malpani v.The Loan Co. of Assam Ltd., AIR 1960 Ass 191 (DB).
17
Corporation Bank, Bangalore v.Lalitha H.Holla,AIR 1994 Kant 133(139

7
Where the word ‘assigned’ was written on the reverse of the promissory note, the facts
showed that the party intended only to endorsee and not to assign amounts of the
promissory note, held it did not amount to assignment within the meaning of Section 130
of Transfer of Property Act, as such did not require stamp duty; it was merely
endorsement within the meaning of Section 16 of the Negotiable Instruments Act. There
cannot be any assignment of promissory note, though there can be assignment of debt.
The intention is gathered from the words actually used in the endorsement.18

Fixed deposits: In order to pass title to a fixed deposit receipt and the money represented
by it, it is not necessary that an instrument should be executed in any particular form or
that the instrument should contain any particular words or formula. It is sufficient if the
intention to transfer the receipt and the money covered by it appears from the language
used by the parties, whether the relevant writing is made on the back of the receipt or on
a separate piece of paper.19 The making of a gift by a fixed deposit is not the making of a
gift of movable property but is the gift of an actionable claims, governed by S.130 and
not S.123; of the T.P.Act that would apply to such a case. Mere handing over of the fixed
deposit receipt would not be enough to constitute its gift, a document in writing signed by
the transfer would be required.20

Railway receipts: When there is no particular mode of assignment prescribed by the

statute these rights could be transferred in any manner. The only thing to be considered
is whether the intention of the transferor to transfer the rights is made clear by the mode
adopted. The benefit and right under a contract of carriage is to receive the goods on
termination of the transit. An unqualified endorsement on a railway receipt by the
consignee to the effect that the goods consigned should be delivered to the endorsee,
clearly indicates such an intention. A legal assignment can be made by a writing
addressed to the debtor on the document itself. 21 The contract indicated by the railway
receipt can be transferred without a writing. Where a railway receipt has a service of
endorsement, the last endorsee can bring action in his name.22

Pay Order and assignment: There is an essential distinction between a pay order and
an assignment. A pay order is a revocable mandate. It gives the payee no interest in the
fund. An assignment creates an interest in the fund and is not revocable.23

A pay order gives the payee no interest in the fund and the liability of the debtor is still to
the creditor and not to the payee. But an instrument though in the form of pay order may
18
Mulji Mehta & Sons v. C.Mohan Krishna,AIR 1997 AP 153(155)
19
Brahamayya & Co. v. Thangavelu, AIR 1958 Mad 570 (572).
20
Maiyan Dalip Rajeshwari Debi v. Mohan Bikram Sah, AIR 1945 All 409.
21
Mulji Deoji v.Union of India, AIR 1957 Nag 31(45): 1956 NLJ 791.
22
Mulji Deoji v.Union of India, AIR 1957 Nag 31(44): 1956 NLJ 791.
23
Bharat Nidhi Ltd. v. Takhatmal, AIR 1969 SC 313 (316): (1969) 1 SCR 595;

8
amount to an assignment and may pass the interest in the fund to the payee. Each
instrument must be construed in the light of its own language and in the light of the
attendant circumstances. Where there was a pay order in favour of the payee to collect the
money on behalf of the creditor, even though the word “irrevocable” was used in the
assignment, the original creditor still remained, and it is open to the Court to pass decree
in favour of the creditor.24

Equitable assignment: An act which did not amount to a regular assignment, or which
was not recognized as an assignment in common law, but nevertheless gave the assignee,
a right enforceable in equity was termed as equitable assignment. In an equitable
assignment of a debt, even though there may be no regular assignment, the debtor is
notified or made to understand that the debt has been made over by the creditor to third
person. An actionable claim may be transferred under S.130 of the Transfer of Property
Act. Where a document does not amount to a transfer within S.130 it may apart from and
independently of the section operate as an equitable assignment of the actionable claim.
Where under agreement made between the Bank and the Contractor, the letter authorized
the Bank to realize amount of the bill from the department, a power of attorney executed
by the contractor in favour of the bank on the endorsement on the bill made by the
contractor, it was held an equitable assignment and the bank was held entitled to realize
the amount. The amount of the bill was not available for attachment under Section 60 of
the CPC.25

A power of attorney authorizing a lender to execute a decree then passed in favour of the
borrower or which might be passed in his favour in pending appeal and to credit to the
borrower’s account the monies realized in execution of the decree amounted to an
equitable assignment of the funds.26

EFFECT OF TRANSFER

On a completed transfer the rights and remedies of the transferor, whether by way of
damages or otherwise, vest in the transferee.

Under S.130, T.P.Act, on the execution of a transfer of an actionable claim, (e.g., a policy
of life assurance) all the rights and remedies of the transferor vest in the transferee and
24
Daga Films v. M/S Lotus Productions, AIR 1988 Cal 280 (282)(DB);
25
Bharat Nidhi Ltd. v. Takhatmal, AIR 1969 SC 313 (315, 316): (1969) 1 SCR 595.
26
Loon Karan Sethiya v. Ivon E.John, AIR 1969 SC 73

9
the latter alone is entitled to enforce the remedy, there is no interest in the transferor
which would entitle the transferor to maintain a suit in respect of the actionable claim
which is the subject matter of the transfer.27

Transfer when complete: On the assignment being executed by the transferor the
transfer is complete. Transfer, whether outright or by way of security, is governed by this
section.28 The mere delivery of a document of title does not constitute a transfer of the
right to immovable property.29

Proviso: This protects the debtor, by enacting that unless the debtor was a party to the
transfer or had received express notice thereof, any dealing by him with the debt shall not
prejudicially affect such dealing. Should the debtor in ignorance pay the debt to the
assignor the latter would be liable to the assignee, both on a failure of consideration and
as having defeated his own assignment. Where a vendor in spite of the sale realizes a
debt the purchaser must be allowed credit. 30 It is enacted for the benefit of the debtor and
has nothing to do with the title of the transferee or with priority of claims.31

A “dealing with the debt” within the meaning of S.130, T.P.Act would include a dealing
with the debt under an order of Court. A payment by the debtor even if under the Court’s
order is not protected.32

Transferee’s remedies: The right to adopt proceedings upon execution of the

assignment are vested in the transferee. The suit to enforce his rights may be in his own
name and without making the transferor a party. The transferor may maintain an action
for the benefit of the transferee. If the assignment is void a suit by the assignee would fall
within the provisions of Order 1, rule 10 of the Civil Procedure Code and the mistake
could be rectified by the name of the assignor being substituted.33

Whether the assignee has a legal right to claim performance of any part from the allotter,
depends upon the terms of the allotment. Assignment by act of the parties may cause
assignment of rights or liabilities under a contract. As a rule a party to a contract cannot
transfer his liabilities under the contract without the consent of the other party. This rule
applies both at the Common Law and in equity. Where a contract involves mutual rights

27
Santuram Hari v. Trust of India Assurance Co., AIR 1945 Bom 11 (13)
28
S.R.A.S. Sidambaram v. D.R.Moganlal Bros., (1929) 7 Rang, 365
29
Khettra Mohan Das v. Biswanath Bera, (1924) 51 Cal 972.
30
Ram Das v. Dwarka Das, AIR 1930 All 875.
31
Subramania Iyer v. Ramasubha Iyer, AIR 1935 Mad 1003.
32
Burma Shell Oil Storage and Distributing Co. v. Official Receiver, Tinnevelly, AIR 1943 Mad 244
33
Sitla Baksh v. Mahabir Prasad, (1937) 12 Luck. 150.

10
and obligations, an assignee of a right cannot enforce that right without fulfilling the co-
relative obligations.34

Where the Industrial Corporation allotted the plot on the condition that the industrial unit
by the allottee shall start construction of the building within a period of six months and
shall complete the same within a period of two years, the allottee evacuated from the
scene after introducing a third person into the plot without the consent of the Corporation,
it was held that it was not permissible for the inductee to compel the Corporation to
recognize him as an allottee.35

Even assuming that consideration was not plaid it would not affect the right of the
plaintiff to maintain the suit nor it would invalidate the assignment inasmuch as an
assignment of an actionable claim under Section 130 of the Transfer of Property Act may
be with or without consideration. Passing of the property would not depend on the
payment of consideration only. The question of payment of consideration is in fact one
between the assignor and the assignee and the debtor can take no advantage of the non-
payment of the consideration for the assignment.36

Life policy: This may be assigned by endorsement or separate deed. It has been admitted
that right to moneys due under a policy is an actionable claim. The definition of
actionable claim includes the transfer of an ordinary as well as an endowment policy
which is conditional on the assignee surviving the assured.37

Copy right, if can be transferred: In India ‘copyright, which is a chose-in-action in

England, is a beneficial interest in movable property in the actual or constructive
possession of the owner thereof, although strictly not an actionable claim, but capable of
being transferred by assignment evidenced by a writing executed by the assignor or by
his duly authorized agent. The writing containing such assignment need not be
registered.38

Hypothecation of debt: Where hypothecation of debt relating to an actionable claim is

followed by execution of power of attorney which authorizes receipts of debt and to issue
discharge to debtor, it amounts to absolute assignment, a third party cannot have claim
over the absolute assignment. The hypothecation deed relating to an actionable claim and
followed by a document vesting a right to receive the money and give full discharge to
the debtor is normally adopted whenever a transfer of an actionable claim is intended. If

34
Indu Kakkar v. Haryana State I.D.C. Ltd.,AIR 1999 SC 296 (300)
35
Indu Kakkar v. Haryana State I.D.C, Ltd.,AIR 1999 SC 296(299)
36
Narain Food Products v. Tikam Chand, AIR 1973 All 573(576)
37
Shamdas v. Savitribai, AIR 1937 Sind 181
38
Gramophone Company of India Ltd. v. Shanti Films Corpn. AIR 1997 Cal 63 (79).

11
the actionable claim takes the form of a negotiable instrument like a promissory note,
mere hypothecation will give the hypothecatee an equitable right of charge or to proceed
against it as security. In such a case, of course, the hypothecation itself will not enable
recovery of the money due under the promissory note, until a decree is obtained.
However, if there is an endorsement transferring the right under the promissory note, the
actionable claim itself is transferred and the transferee would be in a position to recover
the money due under the promissory note without obtaining a decree on the debt itself.
But where the actionable claim is merely an intangible asset, the transfer is effected only
by execution of a hypothecation bond with a right to recover the same or a regular
transfer by a document of the debt itself.39

Transfer of hire-purchase agreement: Unless the actionable claim covered by the hire
purchase agreement was transferred in favour of the bank, the bank has no locus standi to
bring a suit against the higherer merely on the basis of the collateral security executed by
him by way of pronote, unless the loan was also transferred in the way contemplated
under S.130, T.P.Act.40

Promissory note: A claim based on a promissory notice can be transferred/assigned,

only in the manner laid by Section 130, can be assigned by an instrument in writing, it
cannot be affected by parol.41 The transfer of the rights and liabilities under a promissory
is not permissible by mere book entries, must be made by assignment or endorsement
according to law. 42 A promissory note payable to order is an actionable claim as defined
by the Transfer of Property Act, the provisions of Section 130 of the Transfer of Property
Act regulate the terms and conditions of the transfer of a promissory note. The mode of
transfer prescribed by Section 130 contemplates the execution of an instrument and the
vesting of the interest in the transferee shall be complete and effectual only upon the
execution of an instrument in writing.43

When a promissory note, intended to be transferred did not mention the name of the
person in whose favour it was intended to be transferred, then such a person cannot sue
“as holder” or “as holder in due course” within the meaning of Ss. 8 and 9 of Negotiable
Instrument Act. He can maintain a suit for the recovery of debt as an actionable claim
within the meaning of S.130 of T.P.Act.44

When there was an assignment of a promissory note in a partition in favour of a member

of joint family, it would not amount to a transfer by act of parties but by operation of law
39
State Bank of India v. Venkateswara Stores, AIR 1987 Mad 221
40
Chandrasekhara Gouda v. Canara Bank, AIR 1983 Kant 233 (235): (1983) 1 Kant LJ 189.
41
Champalal v. Padam Chand, AIR 1971 MP 133(136) : 1969 MPLJ 918.
42
Dowlat Ram Mohandas v. Vasdeo Manghumal, AIR 1943 Sind 67: 208 IC 51.
43
M.R.Kotaiah v. M.Seshamma, AIR 1971 AP 315(316,317) : (1971) 2 Andh WR 36.
44
Godadhar Sumantaray v. Damo Behera, AIR 1966 Ori 230: ILR (1966) Cut 576.

12
and therefore no document in writing in support of the assignment is required under
S.130, T.P.Act.45 No single partner of a non-trading firm dissolved or even before
dissolution can by endorsement transfer the promissory note in favour of another partner
unless specifically authorized to show transfer and transferred as such. The holder of the
promissory note being the firm it is the firm, which must transfer the promissory note by
endorsement. In such cases the endorsements cannot also be admitted as transfers of an
actionable claim as they would required to be in writing u/s 130, T.P. Act, which in its
turn require necessary stamp.46

The transfer of a promissory note by means of writing is not barred. S.137, T.P.Act saves
negotiable instruments from the operation of S.130. This does not mean that S.130,
T.P.Act cannot be availed of for a transfer of a negotiable instrument nor does S.46,
Negotiable Instrument Act debar a party from resorting to the provision of S.130,
T.P.Act. The only difference between the two modes of transfer is that while the transfer
by negotiation of a document clothes the transferee with certain rights, the assignment of
it as a chose-in-action under S.130 is limited to such rights as the transferor had in the
document i.e., he takes only subject to the equities in favour of the maker of the
document. An assignee of a promissory note otherwise than by endorsement such as a
transfer by means of writing under S.130, T.P.Act, can file a suit on the promissory
note.47

“Havala” transaction: Closely analogous, though entirely different from transactions

forming the subject of this chapter, are what are known in India as havala transactions.
M. was indebted to L.S. & Co. to the extent of Rs.10,400 to J.J. to the extent of Rs.3,491
and to G & Co. to the extent of Rs.27,500 G.&Co. also held with them 212 bales of
cotton belonging to M. as security. By an arrangement to which all of them were parties,
the bales of cotton were transferred to JJ. Who in turn took over the liability to all the
creditors. In a suit by L.S. & Co. against M. and J.J. held, that the transaction was in fact
a “novation” and not the transfer of an actionable claim, than no writing was necessary to
evidence the transaction and that the beneficial interest in the bales passed to J.J. and the
other creditors of M. had no right over the same. These transactions are usually effected
by entries in the books of accounts which though expressed in the past tense, operate as a
present transfer within Section 130 which does not require the transfer to be in any
particular form.48

45
Muthu Veeran Chetty v. Govindan Chetty, AIR 1961 Mad 518(FB)
46
Achanta Subbaraju v. Cheru Kui Suryanarayana Murthy, AIR 1967 AP 11.
47
Venkatasami v. Noor Muhamad, AIR 1956 AP 9 (13,14) : 1955 Andh WR 91.
48
Jivraj Joharmal v. Lalchand Shreekison & Co., (1932) 56 Bom 462.

13
Mortgage debt and charge: The present section has no application to the assignment of
a mortgage debt.49 A debt is, however, distinct from the security. It exists as moveable
property and can be transferred without the security. 50The definition of “actionable
claim” added to Section 3 of the Transfer of Property Act, 1882, by Act V of 1900, and
Section 130 with the subsequent sections thereby substituted for the corresponding
sections of the Act of 1882 do not prevent a debt secured upon immoveable property
from being transferred apart from the security; the disability was not expressed, was
inconsistent with Section 6 and would give rise to anomalies. Arrears of annuity charged
on immoveable property but not secured by a mortgage is an actionable claim and the
debt together with the security may be transferred, as in Section 130 provided. A charge
or lien on an actionable claim can only be created by a written assignment under the
provisions of Section 130.51

Debt - Debt is property. It is a chose in action and is heritable and assignable and it is
treated as property in India under the Transfer of Property Act which calls it an
“actionable claim”.52

Debt secured by hypothecation of moveable properties would not be an actionable claim.

A decretal debt is an actionable claim within the meaning of S.130 which section applies
to Mohammedan also. Therefore, a person under an oral gift of the decretal amount
would not acquire any right, title or interest in it.53

When there is a transfer of debt owned by a Company, the transferee would become the
creditor of company and not the transferor.54

CONCLUSION

The definition which is contained in S. 3 provides that ‘actionable claim’ means ‘a claim
to a debt, other than a debt secured by mortgage of immovable property or by
hypothecation or by pledge of movable property, or any beneficial interest in movable
property not in possession, either actual or constructive, of the claimant, which the civil
courts recognize as affording grounds for relief, whether such debt or beneficial interest
be existent, accruing, contingent, or conditional.
49
Official Assignee v. Fakirji Cowasji, AIR 1930 Sind 77
50
The Imperial Bank of India v. The Bengal National Bank, Limited, (1931) 59 Cal 377: 58 1A 323.
51
S.R.A.S. Sidambaram Nadar v. Mohan Lal Brothers, (1929) 7 Rang 365
52
Delhi Cloth & Gen.Mills Co. v. Harnam Singh, AIR 1955 SC 590
53
Ahmed Hossain v. Bibi Naeman, AIR 1963 Pad 30 (DB).
54
V.V.Krishna Iyer v. New Dra Mfg.Co.Ltd., AIR 1965 Ker 241.

14
S. 130 of the Transfer of Property Act, contains some very special features relating to
transfer of actionable claims, which has some of the features of both English common
law, and of equity. It resembles equitable assignments in that it applies to assignments, by
way of charge as well as to absolute assignments, and takes effect as between the
assignor and assignee from the date of the assignment. On the other hand, it resembles a
statutory assignment in that it must be in writing, and that it enables the assignee to sue in
his own name, and to give a valid discharge.

Therefore, as a result of the judgment in Sunrise Associates, the sale of lottery tickets has
been held to be outside the ambit of Sales Tax and lottery tickets are said to be within the
ambit of actionable claims. Also, from the reasoning, it can be deduced that the Court is
leaning towards including REP licenses within actionable claims.

Hence, we see that the scope of actionable claims has been widened by the liberal
interpretation given by the Supreme Court to the definition under S. 3.

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 BIBLIOGRAPHY

1. Darashaw J Vakil’s, Commentaries on The Transfer of Property Act,(Wadhwa,

New Delhi, 2nd edn, 2004)

2. Dr. GC Bharuka, Mulla The Transfer of Property Act, (LexisNexis, New

Delhi, 10th edn., 2006).

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