Actionable Claim under Transfer of Property

INTRODUCTION

The transfer of property act is generally based on immovable property, but some of its provisions can also be laid on movable property.

In general, an actionable claim refers to one that allows you to take legal action. It signifies there is a claim and you can approach the court to have it enforced. This is an unsecured debt. In accordance with 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 moveable property not in the claimant’s actual or constructive possession, which the civil courts recognize as providing grounds for relief, whether such debt or beneficial interest be existent, accruing confidentially, or whether such debt be secured by a mortgage of moveable property

ACTIONABLE CLAIM

An actionable claim is defined under section 3 of the Transfer of Property Act 1882. 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.
Actionable claims are recognised by the court of law in order to provide relief in reference to unsecured debt or beneficial interest in movable property.

An Actionable Claim comprises of –

  • a claim to unsecured debt or;
  •  a claim to any beneficial interest in movable property not in actual or constructive possession of the claimant.

Debt:
The “Debt” includes a sum of money due by one person to another and includes not only the amount payable at the time but also the sum of money which is not immediately due but might become payable after some time. A sum of money which become payable in future due to present obligations will be considered a Debt.

Hence, debt may be of two types; i. secured and ii. Unsecured. 

 Secured Debt:

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 a mortgage, and when debt is secured by immovable property it is secured by pledge or hypothecation. 

Unsecured debt:

 Unsecured debt is exactly the 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 an actionable claim.

Provisions dealing with Actionable Claim under the Transfer of Property Act

  • Under Section 130 of the Transfer of Property Act, the mode of transfer of actionable claims is described. According to Section 130,

· The transfer can be done by only a written instrument;

· And signed by the transferor or his legal agent; and

. The transfer will be complete.

 Exceptions of the Sec 130-Sec 130 do not apply to the transfer of marine and insurance of fire policy.

  • Under Section 132 of the Transfer of Property Act, defines the liability of the transferee of actionable claim. The liabilities and equities of the transferor are transferred to the transferee.

Some examples of actionable claim, these following claims are the actionable claim-:

1. Claim for arrear rent.

2. Claim for rent to fall due in future.

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

4. Book debts or claims

5. The right to claim maintenance.

6. Claim the benefit of the contract.

7. Deposit receipt.

  • 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 134 of the Transfer of Property Act deals with mortgaged debt.
  •  section 135 of the Transfer of Property Act deals with the assignment of rights under the policy of insurance against fire. 
  • Section 136 deals with the incapacity of officers connected with the Court of justice. The person who includes in section 136 are:-

· Legal practitioner;

· Judges of the Court; and

· The legal or officer who is concerned with the justice of the Court.

  • Section 137 describes the saving of negotiable instruments and etc.

Actionable claims include:

  • A maintainer allowance payable at a future date
  • A right to the proceeds of a business
  • A partner’s right to sue for an account of a dissolved partnership
  • Annuities payable under the deed of wakf
  • The price payable by a purchaser of the immovable property before the execution of the conveyance
  • The right to recover the money left in the hands of the vendee
  • An amount due under a policy of insurance
  • An amount due under a letter of credit
  • Right to recover back the purchase money on the sale of being set aside
  • Arrears of rent
  • Future rents
  • A decretal debt or
  • Interest of purchaser of the lottery in the prize money

Non-actionable claims

  • A judgement debt or decree
  • A claim for compensation for a canal constructed by the government on a part of the mining site before the transfer of the mining lease and
  • A claim to mesne profits as they are unliquidated damages

Case laws

The case of Sunrise Associates v. Government of NCT of Delhi relates to the right of an individual to take part in a lottery. Hon’ble Supreme Court held that this right confers a beneficial interest in movable property. This is because the purpose behind such a transaction is to win the draw. A lottery ticket in itself is nothing of value. It derives its value from the fact that it depicts a chance to conditional benefit of winning the lottery prize. Notably, the prize money won is of a value greater than the consideration paid for its transfer. Thus, the transfer of such right is a beneficial interest in movable property. Therefore, the lottery was found to be an actionable claim.

In the case of Moti Lal v. Radhey Law, the Hon’ble Apex Court held that the right of claiming damages, whether it arises out of contract or un-liquidated damages arising out of tortuous liability, cannot be regarded as an actionable claim. This is undoubtedly a monetary obligation but does not amount to unsecured debt. It is attributable to the uncertain sum of money involved. Furthermore, it is also not a limb of an original transaction which is a must for a claim to become actionable. But it includes the principal money and the interest charged thereupon for them being a specific nature of the debt. On the other hand, damages are of uncertain nature and, therefore, not an actionable claim.

Conclusion

The 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 transferees 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.

References

https://www.legalserviceindia.com/legal/article-7212-actionable-
claim.html#:~:text=According%20to%20section%203%20of,either%20actual%20or%20constructive%2C
%20of
https://lawbhoomi.com/actionable-claim-under-transfer-of-property-act/
https://articles.manupatra.com/article-details/Transfer-of-Actionable-Claims-under-the-Transfer-of-
Property-Act-1882

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