Introduction:
Actionable claim
The transfer of property act is generally based on immovable property, but some of its provisions can also be laid on movable property.
Actionable claim in general terms signifies a claim or a debt for which you can take an action. It means there’s a claim and you can approach court for enforcement of the same. The debt here is unsecured. According to section 3 of the transfer of property Act, “actionable claim means 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 movable 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 confidential or contingent”.
Examples of actionable claim;
- Arrears of rent;
- Interest of the partner in a dissolved partnership;
- Annuities under a deed of waqf;
- Money due for goods sold;
- A mohammadam widow’s claim for unpaid dower;
- A claim to rent to fall due in future;
Exceptions to Actionable claim;
- Debts secured by mortgage of immovable property;
- Damages for breach of contract;
- Damages in tort;
- A claim to mesne profits;
- Share in company;
- Claim to copyright.
Debt:
For a better understanding, let’s break the above definition in two parts;
- 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.
In the above section debt means not only loan, rather than any obligation to pay certain sum of money may be called a “debt”
Hence, debt may be of two types; i. secured and ii. Unsecured.
A secured debt is a debt in which the creditor or the person who provides debt takes security; it can be of both movable or immovable property; from the debtor or the person to whom the debt is given for repayment of its money. When debt is secured by immovable property it is mortgage, and when debt is secured by immovable property it is secured by pledge or hypothecation.
An unsecured debt is exactly opposite of secured debt. If there is no security of movable or immovable property the debt is unsecured. Under section 3 only unsecured debt is actionable claim.
- Whether such debt or beneficial interest be existent, accruing, conditional or contingent.
Debt may be;
- Existent Debt: The debt is existent when a debt or sum of money becomes due and has to be payable at present for instance, the claim of arrears of salary.
b) Accruing debt: Accruing means to increase over a period of time, so, where a debt is payable on a future date, the debt is accruing. For example, if Mr. A promises to pay Rs. 3,000/- to Ms. B as maintenance allowance on 15th of every month, the claim of Ms. B against Mr. A is an accruing debt before 15th of that month.
- Conditional or contingent debt: As the word indicates, conditional means based on some condition which can be fulfilled by parties and contingent means any condition which is beyond the control of parties.
For instance: Mr. A promises to Mr. B Rs. 5,000/- if he marries Ms. C within one year. So, in this case, the claim of Mr. B of Rs. 5,000/- is based on the condition of his marriage. Hence it is conditional debt. And if Mr. A promises to give Mr. B Rs. 5,000/- on the birth of the first child of Mr. B only the male child, this is a contingency which makes it contingent debt.
Transfer of Actionable Claim.
Section 130 of the transfer of property act, states that the transfer of both actionable claims, with or without consideration are affected by written instrument. The instrument must be signed by the transferor or his agent. Transfer of claim takes place only after execution and signing of instrument.
Section 131 of TP Act, states that every notice of transferable claim must be duly signed by the transferor or his agent.
Section 132 of the act deals with liability of transferee of actionable claim.
Section 133 provides that the transferee is not bound to give any warranty as to the solvency of the debtor.
Section 134 provides for mortgage debt, it says that if a transfer of an actionable claim is made by way of mortgage for securing an existing or future debt, the money should firstly be applied in payment of the cost of such realization, secondly towards satisfaction of the amount secured by the transfer.
Section 135 provides assignment of rights under policy of insurance. Section 136 provides for the incapacity of officers connected with the court of justice. Section 137 lays down the saving of negotiable instruments.
Conclusion:
Negotiable Instruments are governed by the provisions of Negotiable Instrument Act, 1881, such instruments are assigned or transferred by endorsement and delivery or mere delivery. However, a negotiable instrument may also transfer like and actionable claim. The assignee under the Transfer of Property Act, 1882 will acquire no more than the right, title and interest of the assignor but under transfer in Negotiable Instrument Act, 1881 the endorsee will have all rights and advantages of a holder of instrument in due course.
Case laws
State of Kerala and Others v. Mini Shamsudin and Other 2009,The court said that actionable claims are “goods” and movable property but it is not covered under the provisions of sales tax acts.
Jugal Kishore Saraf v. Raw Cotton Limited 1954, The Supreme Court held that a judgment debt or decree isn’t an actionable claim.Sunrise Associates v. Government of NCT of Delhi 1998 Appeal (2006), Supreme Court held that the right to participate in a draw is a beneficial interest in movable property. The object of the participation would be to win the prize. Transfer of right is thus a beneficial interest in movable property not in permission. It was held that a lottery is an actionable claim.
