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ACTIONABLE CLAIM[1]
(Ss. 130 TO 137)
QUESTION BANK
Q.1. What do you understand by an actionable claim? How can it be transferred? Discuss.
SHORT NOTES
1) Actionable claim.
SYNOPSIS
III. Notice to debtor (S. 131):- 127
- Liability of transferee (S. 132):- 128
- Warranty of solvency of debtor (S. 133):- 128
- Mortgaged debt (S. 134):- 128
VII. Assignment of rights under policy of insurance against fire (S. 135):- 129
VIII. Incapacity of officers connected with courts of justice (S. 136):- 129
I. Definition (S. 3):-
Actionable claim resembles to the concept of ‘chose in action’ in England. S. 3 of the Act defines ‘actionable claim’ means:-
| (a) a claim to any debt,
(i) other than the debt secured by mortgage of immovable property, or (ii) by hypothecation or pledge of movable property, or (b) a claim to any beneficial interest in movable property not in possession, either actual or constructive, of the claimant. |
Which the civil courts recognise as affording grounds for relief, |
Whether such debt or beneficial interest be existent, accruing, conditional or contingent[2]. |
In other words, an ‘actionable claim’ is a present right to take proceedings (action) in a court of law for the recovery of debt or interest in the movable property (which is not in his possession)[3].
II. Transfer of actionable claim (S. 130):-
- 130 deals with the procedure, effect and exceptions to the transfer of actionable claims. It lays down that–
(1) Transfer of actionable claim may be with or without consideration,
(2) Transfer can only be made-
(i) by an instrument in writing,
(ii) signed by the transferor or by his duly authorised agent;
(3) Transfer becomes complete and effective when it is executed.
Thus, above is the procedure laid down by the section to transfer actionable claims. There are three parties in the transfer of actionable claims, viz. (1) the transferor, i.e. who transfers the claim, (2) the Transferee to whom the claim is transferred, and (3) the debtor against whom the claim of action is transferred.
The section further lays down the effects of the transfer of actionable claim, i.e. actionable claim transfers:-
| (1) all rights,
(2) all remedies |
Whether damages or otherwise | available to the transferor to the transferee irrespective of notice to the debtor. |
Thus, the transferor gets the right to sue on the actionable claim in his own name. Registration of such transfer is not necessary.
However, there are some exceptions to S. 130. The section does not apply to (i) transfer of marine insurance, (ii) fire policy of insurance or (iii) provisions of S. 38 of the Insurance Act. 1938. Similarly, S. 130 does not apply to stocks, shares or debentures or customary negotiable instruments (S. 137).
(i) A owes money to B, who transfers the debt to C. B then demands the debt from A, who, not having received notice of the transfer as prescribed in S. 131, pays B. the payment is valid, and C cannot sue A for the debt.
(ii) A effects a policy on his own life with the insurance company and assigns it to a bank for securing the payment of an existing or future debt. If A dies, the bank is entitled to receive the amount of the policy and to use it without the concurrence of A’s executor, subject to the proviso in sub-section (1) of S. 130 and to provisions of S. 132.
III. Notice to the debtor (S. 131):-
As provided under S. 130, no notice of transfer is necessary for legal action by the transferee against the debtor; but sending the notice is always good to protect the interest of the transferee. If the transferee does not give notice of the transfer of actionable claim and, in ignorance thereof debtor pays the debt amount to the transferor, the transferee may lose his right. Therefore, the law requires the transferee to give notice of the transfer of an actionable claim to the debtor.
- 131 lays down requirements of valid notice viz:-
(1) it must be in writing,
(2) it must state the name and address of the transferee.
(3) it must be signed by-
(i) the transferor or his agent, or on refusal to sign,
(ii) by the transferee or his agent.
IV. Liability of transferee (S. 132):-
The transferee of an actionable claim shall take it subject to all the liabilities and equities to which the transferor was subject.
Illustrations
(i) A transfers to C a debt due to him by B, A being then indebted to B. C sues B for the debt due by B to A. in such a suit, it is entitled to set off the debt due by A to him; although C was unaware of it at the date of such transfer.
(ii) A executed a bond in favour of B under the circumstances entitling the former to have it delivered up and cancelled. B assigns the bond to C for value and without notice of such circumstances. C cannot enforce the bond against A.
V. Warranty of solvency of debtor (S. 133):-
In all cases, a warranty of the debtor’s solvency is not required from the transferor. However, if the transfer of an actionable claim is for consideration and the transferee requires such warranty of solvency of the debtor, he (the transferee) should not lose his claim. In such a case, the transferor assures the transferee of the debtor’s solvency by giving a warranty of the debtor’s solvency. However, such warranty:-
(i) is limited only for that time of transfer, and
(ii) is limited to the amount of consideration
- if required by the transferor from the transferee.
VI. Mortgaged debt (S. 134):-
The language of this section is ambiguous. However, we may say that it deals with the rights of the transferor and transferee among themselves (i.e., inter se).
The section provides that:-
Where the debt is transferred for the purpose of securing an existing or future debt; the transferred debt, if received by the transferor or recovered by the transferee, is applicable, first, in payment of the costs of such recovery;
Secondly, in or towards satisfaction of the amount for the time being secured by the transfer.
Lastly, residue, if left, belongs to the transferor or other persons entitled to receive the same.
In fact, the transfer of an actionable claim can be made by way of sale or by way of mortgage. The above situation occurs when, instead of a sale, an actionable claim is mortgaged for recovery of any debt or amount due in future. In that case, the amount of debt recovered shall be applied in the manner prescribed in the above order.
In short, S. 134 deals with adjustments of interests among the transferor and transferee of an actionable claim through a mortgage when the amount of the claim or debt is received.
VII. Assignment of rights under policy of insurance against fire (S. 135):-
The section lays down that every assignee of a policy of insurance against fire, in whom the property in the subject insured shall be absolutely vested at the date of the assignment, shall have transferred and vested in him all rights of the suit as if the contract of insurance is made with him.
VIII. Incapacity of officers connected with courts of justice (S. 136):-
- 136 provides that a judge, legal practitioner, or officer connected with any court of justice cannot be assigned an actionable claim.
In short, the section prohibits these persons from getting actionable claims.
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[1] वादयोग्य दावा [कार्रवाई योग्य दावा]
[2] कारवाईयोग्य मागणी हक्क / दावा करण्यायोग्य हक्क म्हणजे असा कि जो-
- कर्ज (येणेसंबंधी) असतो परंतु ते कर्ज तारणाषिवायचे असते, किंवा
- वस्तुत असलेल्या हितासी संबंधीत असतो, परंतु ती वस्तु मगनी करणा-याच्या कब्जात नसते
– कि जेा हक्क मागनी करनारास देण्यायोग्य दिवाणी न्यायाल्ययास वाटतो
– आासा हक्क अस्तित्वात असेल, भावि काळात निर्माण होनार असेल, एखादया अटी ंिकंवा घटनेवर अवलंबुन असेल.
थोडक्यात, दावा करण्याचा अधिकार कि जो तारणाषिवायच्या कर्ज येण्यात अथवा जी वस्तु स्वतरू च्या कब्जात नाही अषा वस्तुतील हक्कासंबंधी असतो
[ वादयोग्य दावा येणे-
१. (ए) किसी भी ऋण का दावा,
(i) अचल संपत्ति के गहाण द्वारा सुरक्षित ऋण के अलावा, या
(ii) चल संपत्ति को दृष्टिबंधक या गिरवी रखकर, या
(बी) चल संपत्ति में किसी भी लाभकारी हित का दावा, जो दावेदार के वास्तविक या रचनात्मक कब्जे में नहीं है।
– जिसे दीवानी अदालतें राहत के लिए उचित आधार के रूप में पहचानती हैं
– ऐसा ऋण या लाभकारी हक अभी मौजूद है, भविष मे उपार्जित होणे वाला है, या सशर्त या आकस्मिक होणे वाला है|-]
[3] दुसरे शब्दमे, चल संपत्ति (जो उसके कब्जे में नहीं है) में ऋण या ब्याज की वसूली के लिए कानून की अदालत में कार्यवाही करने का वर्तमान अधिकार।