Actionable claim is defined in Section 3 of the Transfer of
Property Act as a ‘claim to any debt other than a debt secured by mortgage of
immovable property or by hypothecation or pledge of moveable property or to any
beneficial interest in the moveable property not in the 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, conditional or contingent.
Accordingly, this mean, it excludes not only a claim to any
immovable property for a debt but also a debt secured or any moveable property
in possession of the claimant. It follows, therefore that it is a claim for a
simple debt or liability and which can be realized by a legal action.
An actionable claim is called, in English Law, a chose in
action or a thing in action as against a chose or money in possession. It
denotes incorporeal personal property of all disciplines and an interest in
corporeal personal property not in possession of the owner which accordingly
can only be claimed or enforced in action. Therefore, while the different types
of moveable property governed by the Sale of Goods Act can be called as chose
in possession, an actionable claim is also a type of moveable property called
chose in action. It is also a moveable
property because a debt is a property and anything which is not immoveable
property is moveable property.
Actionable claim as defined in Section 3 of the Transfer of
Property Act, as a chose in action is different from two other such chooses in
action namely the right or property by way of copyright, trade-mark, patent, or
design, and also to stocks and shares or debentures of a limited Company or the
negotiable instruments under the Negotiable Instruments Act, which also
evidence a debt and which are recoverable by legal action.
Section 137 of the Transfer of Property Act clearly provides
that sections 130 to 136 will not apply to stocks and shares or debentures or
to instruments which are negotiable or to mercantile documents of title to
goods. Marine Insurance claim is also excluded by Section 135 A of that
Act and is dealt with in the Marine Insurance Act, XI of 1933. They are also
governed by independent separate statutes passed in respect thereof and are
not, therefore, governed by the Transfer of Property Act. That Act in Section 130 only provides for
transfer of actionable claims as defined and circumscribed by the Transfer of
Property Act. As to transfer of the earlier mentioned actionable claims
separate provisions are made for transfer thereof by the statutes governing
them.
Actionable claims within the meaning of Section 3 of the
Transfer of Property Act, therefore, cover (i) claims to unsecured debts and
(ii) claims to beneficial interest in moveable property not in possession
actual or constructive whether present or future., conditional or contingent.
Such actionable claims could be (a) a right to claim maintenance (b) a right to
arrears of rent (c) a right to annuities (d) moneys payable under a contract
for price or advance (e) a right to claim benefit of a contract (f) a partner’s
claim for accounts and his share therein (g) insurance claim, other than marine
insurance (h) salary in arrears (i) book debts (j) a fixed deposit receipt,
etc. However, a mere right to sue is not
assignable. Similarly, a decree is not
assignable under this section, as no legal action is required to be taken to
recover the claim. The decree itself can
be executed. Similarly any other property which is not transferable, under
Section 6 of the Transfer of Property Act is not assignable under Section 130
of the Transfer of Property Act. Marine Insurance Policy, negotiable instrument
and documents of title to goods are specifically excluded by Section 135 A and
Section 137 of the Transfer of Property Act as stated above.
Assignment:
Every actionable claim or chose in action is assignable
except in four cases:
(1) where the
assignment is prohibited by law,
(2) where the terms of the contract under which the claim
accrues prohibit such assignment,
(3) where the
contract is of a personal nature, and
(4) where the
assignment would increase the burden on the other party.
An actionable claim can be recovered by a legal action by
the person who is the claimant or creditor. Section 130 of the Transfer of
Property Act provides that a transfer of an actionable claim shall be effected
by execution of an instrument in writing, signed by the transferor or his duly
authorized agent in favour of the transferee and in that case all the rights
and remedies of the transferor, whether by way of damages or otherwise shall
vest in the transferee, whether notice of such transfer is given to the debtor
or not. But when no such notice of transfer is given to the debtor and the
debtor in ignorance of such transfer repays the debt or claim to the original
creditor or claimant, he would be discharged from the liability. On such transfer the Transferee would get all
the rights of the creditor including the right independently to recover the
debt without the original claimant’s consent or co-operation. The deed of transfer need not be signed by
the transferee and also does not require attestation or registration.
The written instrument assigning a debt can be in any form,
if the intention to transfer is clear. A mere letter to the assignee by the
claimant that he has assigned the debt to him is sufficient.
An assignment of a debt may be absolute or by way of
security or even as a gift. The words with or without consideration in the
definition of actionable claims are used to cover even a gift.
An assignment becomes effective from the date of writing,
unlike English Law under which it becomes effective from the date of notice to
the debtor.
The provision in the Transfer of Property Act regarding
assignment of actionable claim does not apply to claims under Marine Insurance
Policy or Fire Insurance Policy or affect any provisions of the Insurance Aft,
1938.
Section 134 of the Transfer of Property Act also shows that
assignment of the actionable claim by way of charge is also possible to secure
the debt due by the transferor to the transferee and provides how the debt
assigned when recovered is to be applied viz., first in payment of costs of recovery,
secondly, in satisfaction of the amount secured and thirdly, in payment of the
balance if any to the transferor or other person entitled thereto. Section 136 if the Transfer of Property Act
above quoted does not apply to assignment by a charge or security, though such
assignment is also recognized in English Law as equitable assignment.
An actionable claim would include
(a) any debt due to or moneys recoverable by the
transferor (except the moneys payable under a negotiable instrument)
(b) any moveable
property belonging to the transferor and not in his possession or power and
which he has a right to recover or receive and
© any claim or
benefit under a contract belonging to the transferor but without any liability
attached thereto.
An Assignment can be made either by a formal document or
even by a letter to the debtor of the transferor but not orally. An irrevocable Power of Attorney to recover a
debt and to adjust it towards the amount due to the done is held as an
assignment. An actionable claim can be assigned even as a gift that is without
consideration as Section 130 of the Transfer of Property Act in terms so
provides.
Apart from what is stated above, the following are held to
be actionable claims:
(1)a debt due or to become due, or whether
conditional or contingent
(2) future rents
(3) amounts payable under a deed
(4) amount due under a policy of life insurance
(5) a letter of credit
(6) right under a contract
(7) beneficial interest in moveable property
(8) confirmed sale price
(9) earnest money becoming repayable
(10) deposit receipt
(11) dividend due on shares, etc.
But a mere right to sue or claim for damages or mesne profits are not assignable.As regards transfer of shares, stock
and debentures, the provision in respect thereof is made in the Companies Act.
As regards actionable claims in the nature of negotiable
instruments, the Negotiable Instruments Act, makes special provision for the
transfer thereof by endorsement. It may however be stated that a promissory
note whether negotiable or not or other such instruments can be transferred by
a separate instrument of transfer instead of by mere endorsement.
An assignment of an actionable claim is not required to be
registered under the
Registration Act.It
is desirable that the document of assignment is executed both by the Assignor
and the Assignee and in duplicate, one copy remaining with the Assignor and
other with the Assignee.
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