Actionable Claim under Transfer of Property

Section 3 of the Transfer of Property Act of 1882 specifies what constitutes an actionable claim. A claim to any debt, other than a debt secured by a mortgage of immovable property or by the hypothecation or pledge of moveable property, or to any beneficial interest in moveable property not in the claimant’s possession, either actually or constructively, is considered an actionable claim under Section 3 of the Transfer of Property Act, regardless of whether the debt or beneficial interest is actual, accruing, or confidential. The court of law recognizes actionable claims in order to grant relief with regard to unsecured debt or a beneficial interest in tangible property.

Do you know that debt is a liquidated or specific amount of money that the debtor owes payment on? It can be in either the present or the future. There are secure and unsecured debts. Debt is referred to as existing debt when it is due now and accruing debt when it is due in the future.


Let’s divide the aforementioned definition into two sections to make it easier to grasp;

An actionable claim is any debt that is not secured by an immovable property mortgage, a pledge or hypothecation of movable property, or any beneficial interest in movable property.

In the aforementioned section, the term “debt” refers to any commitment to pay a specific amount of money and is not limited to loans.

Therefore, there are two forms of debt: secured and unsecured. A secured debt is one in which the creditor, or the person who supplies the debt, obtains security from the debtor, or the person to whom the debt is given, in exchange for payment of its money. The security may be both moveable and immovable property. Mortgages are used to secure the debt against real estate, and pledges and hypothecations are used to secure the debt against real estate. The opposite of a secured debt is an unsecured debt. The debt is considered unsecured if there is no tangible or intangible asset to serve as collateral. Only unsecured debt is an actionable claim under section 3.

Whether such obligation or advantageous interest is actual, accumulating, constrained, or contingent.

Debt could be;

Existent Debt: A debt or sum of money is considered to be existing when it becomes due and must be paid immediately, such as when a claim for unpaid wages is made.

Accruing debt: Since accruing refers to an increase over time, a debt that is due at a later time is said to be accruing. For instance, if Mr. A agrees to give Ms. B a maintenance payment of Rs. 3,000 on the 15th of each month, Ms. B’s claim against Mr. A is considered to be a debt that has accumulated prior to the 15th of that month.

Debt that is contingent or conditional: As the words imply, contingent debt refers to any debt that is dependent on a circumstance that is out of the parties control.

Examples of Litigable Claims

Several instances of assertible claims include:

1. Make a rent arrears claim.

2. Make an insurance policy payment claim.

3. Make a claim for your earnest money back.

4. The right to receive a refund of the purchase price if the sale is put on hold.

5. A partner’s ability to file a claim against the disbanded partnership firm.

6. The right to benefit from an agreement for the sale of goods.

7. The right to receive a business’s profits.

In each of these situations, the lawsuits are brought for a specific and definite sum of money. As a result, these claims fall within actionable claims.

Section 130 exceptions –

Financial market commodities like stocks, shares, and debentures, as well as negotiable instruments like checks, money orders, etc.

Insurance policies for ships.

Insurance against fire.

Any and all situations covered by Section 38 of the Insurance Act of 1938.


Section 130 provides that –

The transfer of an actionable claim (whether with or without consideration) shall be effected only by the execution of a written instrument signed by the transferor or his duly authorized agent. Upon the execution of such instruments, they shall be complete and effective, and all the rights and remedies of the transferor, whether by way of damages or otherwise, shall vest in the transferee

As long as the debtor or other person is not a party to the transfer or has not received express notice of it as provided for below, and dealing with the debt or other actionable claim by the debtor or other person from or against whom the transferor would have been entitled to recover or enforce such debt or other actionable claim is valid as against the transfer. After the signing of the aforementioned transfer document, the transferee of an actionable claim may bring legal action or initiate legal proceedings in his own name without getting the transferor’s approval or adding him as a party.

Every notification of transferable claim must be properly signed by the transferor or his agent, according to Section 131 of the TP Act. The act’s section 132 addresses the transferee’s obligation for an actionable claim. According to Section 133, the transferee is not required to make any guarantees on the solvency of the debtor. According to Section 134, which deals with mortgage debt, any transfer of an actionable claim made through a mortgage to secure a current or future debt must first be used to satisfy the cost of such a realization before the amount secured by the transfer is satisfied. The assignment of rights under an insurance policy is provided by Section 135.

Haryana State Industrial Development Corporation Ltd. v. Indu Kakkar, 1999 (AIR 1999 SC 296C): According to the Supreme Court, the transferee cannot force the company distributing the land to treat him like an allottee. In this instance, the Industrial Development Corporation assigned a site to the allottee for the creation of an industrial unit within a predetermined timeframe. Without the corporation’s permission, the first allottee transferred the plot. According to the Supreme Court, the company could not be forced to treat him as an initial allottee. He lacks the legal standing to contest the corporation’s order of resumption.


An actionable claim is a transferable, movable, intangible asset. It mostly refers to the kinds of claims that can be compensated through legal actions. The term “actionable claim” refers to two categories of such claims, namely, claims on unsecured debt and beneficial interests in moveable property. Such claims may be transferred to another party, although some individuals are prohibited from receiving such transfers. This restriction has been put in place to protect the fairness of court proceedings. All law students should have a firm understanding of the idea of actionable claims.


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Examples of Litigable Claims

Transfer of Actionable Claim


Section 130 exceptions –

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