Actionable Claim

Meaning

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Actionable claim is defined under section 3 of the Transfer of Property Act
1882
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Section 3 Para 6 defines actionable claim as “A claim to any debt, other
than a debt secured by mortgage of immoveable property or by
hypothecation or pledge of moveable property, or to any beneficial interest in
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.”
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Prima facie it is evident from a plain reading of the defintion that actionable
claim only concerns unsecured debt and other debts like mortgage, pledge or
hypothication is excluded from its perview and at the same time includes claim
to a benefical interest from a movable property.
 Cont..
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MEANING OF ‘TRANSFER OF ACTIONABLE CLAIMS’Section 130 of the
Transfer of Property Act, 1882 provides that, the transfer of an actionable
claim whether with or without consideration shall be effected only by the
execution of an instrument in writing signed by the transferor or his duly
authorized agent, shall be complete and effectual upon the execution of
such instrument, 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 in hereinafter provided be
given or not.
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Section 130 of the Transfer of Property Act, 1882 does not provide clearly
that what is meant by ‘transfer of actionable claim’. Infact the section only
reveals how the transaction of transfer of actionable claim can be made
effective and complete and insists upon the execution of an
 Section 130
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Section 130 states that on execution of an
instrument in writing duly signed by the transferor
all the rights and remedies of the transferor shall
vest in the transferee. The transferee of an
actionable claimis entitled to institute a suit or
proceeding on his own name and can do so
without seeking the consent of transferor to do so
and without making him a party. The transfer of an
actionable claim can be made with or without
consideration.
 Cont...
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Furthermore, section 130 also contains two illustrations
which are as follow, illustration no 1: A owes money to
B, who transfers the debt to C. B then demands the
debt from A, who pays, B. The payment is valid and C
cannot sue A for the debt. Illustration No. 2: A effects a
policy on own life with an insurance company and
assigns it to a bank for securing the payment of
an existing or future debts. If A dies, the bank is
entitled to receive the amount of the policy and can sue
on it without the concurrence of A’s executor.
 Cont..
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Section 130 holds an exception to itself , the
same is not applicable to marine and insurance
of fire policy.
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In the Landmark case of Simon Thomas v.
State Bank(1976) KLT 554. of Travancore the
honorable court observed that there should be
intention to transfer the debt resprensted by the
express and written receipts.
 Section 132
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Under section 132 of the Transfer of Property Act, 1882, it
defines the liablity of the transferee of the actionable claim.
It is to be understood that the liabilites and equities of the
transferor are also transfered to the concerned transferee.
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To understand in a more better ways below are few
examples of the same.
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Some examples of actionable claim, these following claims
are the actionable claim-:

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1. Claim for arrear rent.
 Cont...

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2. Claim for rent to fall due in future.

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3. A choice offered to repurchase the property once again.

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4. Book debts or claims

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5. The right to claims maintenance.

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6. Claim the benefit of the contract.

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7. Deposit receipt.
 Cont...
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The below are not actionable claim.

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1. A claim which is decreed.
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2. “Right to sue”, it is a right but it is not an
actionable claim.
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3. The claim for the main profits.
 Cont...
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In the case of the Jugalkishore Saraf Vs Raw Cotton Co. Ltd(AIR1955
Bom 77,(1954) 56 BOMLR 905), the Apex Court held that a judgment
debt or decree is not an actionable claim for action is necessary.
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In the landmark case Lachmi Koeri Vs the State of Bihar(AIR 1960, pat
62, 1960 crilj 271), 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(AIR 1923 pat. 165.) 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.
 Section 133
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Section 133 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.
 Section 137
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And the last section 137 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., the Court said that
actionable claims are ‘goods’ and movable
property but it is not for the purpose of the sales
tax acts.