AISHWARYA COLLEGE OF EDUCATION(LAW)

SESSION-2023-24

B.A.LL.B –VIIth SMESTER

SUBJECT – PROPERTY LAWS

TOPIC- ACTIONABLE CLAIM

SUBMITTED TO - SUBMITTED BY -

Mrs. AMITA PARIHAR DUSHYANT SINGH BHATI

(ASS. PROFESSOR)
 INDEX

Sr.No Content Page No.

1 Acknowledgement
2 Introduction
3 What is Actionable Claim
4 Defination of Actionable Claim
5 Beneficial Interest in Movable
Property
6 Instance of Actionable Claim
7 Claim Not Cover Under Actionable
Claim
8 Incapable Transferees of Actionable
Claim
9 Actionable claim in Movable Property
10 Conclusion
11 Bibliography
 ACKNOWLEGEMENT

On this great occasion of successful completion of my assignment

on Actionable Claim, I would like to thank my lecturer Mrs.Amita
Parihar , Ma’am , who has guided and assisted me to complete the
assignment. Without his support I would not have finished the
assignment within time.

I would also like to take again this opportunity to thank our

Coordinator Mr. Vishal Joshi ,sir and my friends and family
members, without them this assignment could not have been
completed in a short duration.
 Introduction

The Transfer of Property Act was enacted in the year 1882 with the objective of codifying
the laws relating to transfer of properties. This Act is not exhaustive in nature, as it does
not cover all kinds of transfers, or all types of properties. The Transfer of Property Act,
1882 does not incorporate all the rules relating to the different modes of transfer, neither
does it include the transfer of all properties. There are other Acts which codify the laws
regarding different types of property such as the Sale of Goods Act, 1930.

This Act also does not deal with transfers by operation of law, which includes transfers in
execution of a Court’s decree. 1 This Act only covers inter vivos transfers which are
transfers between living persons by act of parties through express or implied contracts.
Also, the Act mainly deals with transfer of immovable properties, but some of the
provisions of the Act are also applicable to movable properties.

Tangible Movables Such as tables or cars have physical existence and can be
possessed.But intangible movables being in form of rights , have no Physical existence
and cannot be possessed.

1
Arvind Kumar v. Govt. of India, (2007) 5 SCC 745
 Actionable Claim

Tangible Movables such as tables or cars have Physical existence and can be
possessed . But intangible movables being in the form of rights,have no
physical existence and cannot be possessed. The existence of tangible movable
can be known simply by it’s physicial presence,but the existence of intangible
movable property may be known only when the person having such interest
claims it by maintaining an action in a court of law.

For example , if A has a table , it can be known by seeing the possession of

table with A.But if A has right or claim to get back the money given by him to
B, then A’s claim can be known only when he files suit against B for the
recovery of his money.

In other words ,A’s claim against B can be known only when he maintains
action in a court of law. It may be stated , therefore , that beneficial interest of
a person in some movable property is an actionable claim of that person.
 Defination of Actionable Claim

Actionable claim is defined in Section 3 of the Transfer of Property Act, which was
included in the Act by the Amending Act II of 1990. Actionable claim is an intangible
movable property, and its transfer is dealt with in Chapter VIII of the Act.

According to Section 3 of the Act, actionable claim means:

1.Claim to an unsecured debt

2.Beneficial interest in a movable property

These are both claims that are recognized in the Courts of law as affording relief. There
are other types of claims also that afford relief and are actionable in the Courts of law,
such as secured debts and tortuous suits like defamation or nuisance. But those are not
categorized under the meaning of actionable claim. The term actionable claim only covers
the above mentioned two types of claims.

Unsecured Debt

Unsecured debt refers to all monetary obligations of a certain amount, and that is not
covered by any security in the form of mortgage, pledge or hypothecation. This is not just
limited to the concept of loans forwarded by a creditor to a principal debtor. It extends to
all kinds of monetary obligations, such as rent or payment on sale of property etc.

The three requirements for a transaction to qualify as unsecured debt are:

1.Monetary obligation
2.No security
3.Certainty of amount of money obligated

According to Sunrise Associates v. Govt. of NCT of Delhi 2, an actionable claim may be

existent in praesenti, accruing, conditional or contingent. So, the three types of unsecured
debt are:

1.Existent Debt
2.Accruing Debt
3.Conditional or Contingent Debt

2
AIR 2006 SC 1908
Existent Debt

This is the kind of debt that has already become due, and is payable and enforceable in
the present. For instance, if Mr. A sells a house to Mr. B in present, and the monetary
consideration has to be paid then and there, then the consideration becomes payable right
then, and this is existent debt.

Accruing Debt

If a monetary obligation is due in present, but becomes payable on a future date, then that
is accruing debt. For example, if Mr. A is the employee of Mr. B and he gets his salary on
the last day of every month, then his salary is accruing debt during that month, as it is due
throughout the month, but it becomes payable only on the last day of the month. So, if Mr.
B fails to pay the salary, then Mr. A can approach the Court to claim it only after the last
date of the month, when it becomes payable.

Conditional or Contingent Debt

A debt is conditional or contingent if it becomes payable on the fulfillment of a condition

or contingency.

It is called conditional debt when the stipulation is in control of the parties. For example,
an agreement between A and B that A will pay Rs. 1000 if B buys C’s house, then this is
a conditional debt. Here, Rs. 1000 becomes payable and B can claim it only after he fulfills
the condition.

On the other hand, when the stipulation is beyond human control, then it is called a
contingent debt. For instance, if A promises to pay a particular amount to B if C’s ship
sinks, then since the sinking of the ship is beyond the control of the parties, so it is a
contingent debt.
Benefical Interest in Movable Property

If a person has the right to possess a movable property, then it is said that he has beneficial
interest in that movable property. But if that property is not in his possession, then he has
an actionable claim. So, the requirements to constitute this type of actionable claim are:

1. Movable property;

2. The movable property is not in the possession of the claimant;

3. The claimant has the right to possess that movable property.

For example, if A sells his car to B and B has completed his obligation, that is, B has
forwarded the consideration from his side, then B has the right to possess the car; but if B
is unable to acquire possession, then B can approach the Court to claim this possession.
But if the movable property is already in the possession of the claimant, either actual or
constructive, then he cannot claim possession. So, if in the previous example, A had given
the car keys to B, then it can be said that B has constructive possession, and hence, B
cannot approach the Court to claim possession.

Moreover, the right to possess of the Claimant must be a legal right, which is recognized
by the law. For instance, if a person of unsound mind or a minor, A sells 100 bags of wheat
(or any other movable property) to Mr. B, and Mr. B also forwards the consideration from
his side, that is Mr. B fulfills his obligations, then also Mr. B cannot claim possession.
This is so because Mr. B does not have a legal right to possess, as A does not have the
capacity to contract, and the agreement between A and Mr. B is void ab initio. Now, since
the right to possess of Mr. B is not recognized legally, so this is not covered under the
heading of actionable claim.
 Instance of Actionable Claim

Some examples of actionable claims are:

1. Claim for arrears of rent. 3

2. Claim for money due under insurance policy.

3. Claim for return of earnest money. 4

4. Right to get back the purchase money when the sale is set aside.

5. Right of a partner to sue for an account of the dissolved partnership firm.

6. Right to claim benefit under a contract for the purchase of goods.

7. Right to get the proceeds of a business.

In all of these instances the amount for which the suits are filed are certain and definite.
So, such claims are transferable under actionable claims

3
Daya Debi v. Chapla Debi, AIR 1960 Cal 378.
4
Lalchand v. Hussainio, (1927) 97 IC 257.
 Claim Not Cover Under Actionable Claim

Various types of claims are not covered under the head of actionable claim, and hence
cannot be transferred under the Transfer of Property Act.
The right to claim damages, whether arising out of a tortuous or contractual liability are
not actionable claims. 5This right is not an unsecured debt, even though it is a monetary
obligation because of two reasons. First of all, it is an uncertain amount of money, and
second, it is not a part of the original transaction. Actionable claim under the category of
unsecured debt only covers the amount in the original transaction. Hence, it covers the
principal amount and the interest upon that principal, as these are of a certain amount.
Whereas, damages is uncertain, and hence, does not come under actionable claim.

Moreover, in cases of tortious liability such as defamation, or nuisance, the damages is

uncertain and personal or attached with immovable property, and hence cannot be
transferred. For instance, if A defames B, then B has the right to sue A for defamation; this
right is personal in nature as B has been defamed and so, only B can have the right to sue
A. So, this right cannot be transferred and it is not an actionable claim. An instance of
nuisance would be if person X’s neighbour, Y, let his drain pipes overflow into X’s lawn.
Here, X has the right to sue for damages for the nuisance caused by Y because of virtue
of ownership that X has over his lawn. Hence, X is the only person who has this right to
sue and so, it is not a transferable actionable claim. But, if X sells his property to a third
person, Z, then Z, along with the property, will also receive this right to sue Y for nuisance.
In the case of Jai Narayan v. Kishun Dutta [6], it was held that a claim for mesne profits is
not an actionable claim, as mesne profits are unliquidated damages and it is not a claim to
any beneficial interest in moveable property, not in the possession, either actual or
constructive, of the claimant. Thus, it was a “mere right to sue” and not an actionable
claim.

Rights such as copyright [7], patent or trademark are not actionable claims because they
already vest in the person who has it. These have their own governing Acts and are not
transferable as they are the intellectual property of the claimant, and any other person
cannot be allowed to claim that.

5
Moti Lal v. Radhey Lal, (1933) All 642; Inder v. Raghubir Singh, (1930) 5 Luck 547.
6
AIR 1924 Pat 551.
7
Savitri Devi v. Dwarka Prasad, (1939) ALJ 71.
Incapable Transferees of Actionable Claim

Section 136 of the Transfer of Property Act, 1882 declares certain groups of people who
cannot deal in the transfer of actionable claims. Section 136 states that-
“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.”

This Section bars Judges, legal practitioners or officers of Court from receiving any share
or interest in any actionable claim, and hence they cannot be the transferee in transfer of
actionable claim. Section 6(h)(3) provides that any property cannot be transferred to a
person who is legally disqualified from receiving that property, that is, transfer cannot be
made to legally disqualified transferees, and Section 136 legally disqualifies these persons
from being transferees of actionable claims and hence, actionable claims cannot be
transferred to this class of people.

The reason behind this prohibition is to ensure impartiality of the judiciary. The Privy
Council illustrated the importance of this prohibition in the case of Kerakoose v. Serle [8]
by stating that- “It is of great importance that no officer of a Court of Justice should be
even exposed to the suspicion that in the discharge of his official duties his conduct may
be influenced by any personal consideration.”

8
(1846) 3 MIA 329.
 Actionable Claim in Movable Property

Actionable claim is an intangible movable property. This can be inferred from the
interpretation of Section 2(7) of the Sale of Goods Act, 1930, which reads as follows-

“‘goods’ means every kind of moveable property other than actionable claims…”
Section 2(7) of the Sale of Goods Act, 1930 defines “goods”, wherein it states that goods
include all kinds of movable property, except for actionable claims. This Section provides
for an exception clause to exclude ‘actionable claims’ from the category of movable
property. This exclusion would not have been required if the actionable claim was an
immovable property. Hence, the interpretation of Section 2(7) of the Sale of Goods Act,
1930 shows that an actionable claim is a movable property.

Conclusion

Actionable claim is an intangible movable property, and it is transferable. It mainly refers

to the types of claims that can be recovered through proceedings in Courts. Out of multiple
such kinds of claims, the concept of actionable claim includes two types, which are claims
on unsecured debt and beneficial interest in movable property. Such claims can be
transferred to another person, but certain people are barred from becoming transferee of
actionable claims. This bar has been imposed in order to maintain the integrity of Court
proceedings. The concept of actionable claims is a highly important one that all law
students must be clear with.
 Bibliography

 The Transfer of Property Act by Dr. R.K. Sinha

 The Transfer of Property Act by Dr. Avatar Singh

 Universal’s The Transfer of Property Act,1882 Bare Act

 www. Dhristijudiciary.com