Actionable Claims in property act
Interpretation of Transfer of Debt, which the readers wanted to know is informed as follows:
Section 3 of The Transfer of Property Act, 1882 defines that
“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 not in the possession, either actual or constructive, of the claimant , which the civil courts recognize as affordable grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent.
The above was inserted in the Act Act 2 of 1900. S2
Section 130 of The Transfer of Property Act, 1882 in its CHAPTER VIII – OF TRANSFER OF ACTIONABLE CLAIMS explains the transfer of actionable claims as follows:
130. Transfer of actionable claims: (1) 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 authorised agent shall be complete and effectual upon the execution of such instruments, 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 is hereinafter provided by given or not:
Provided that every dealing with the debt or other actionable claim by the debtor or other person from or against whom the transferor would, but for such instrument of transfer as aforesaid, have been entitled to recover or enforce such debt or other actionable claim, shall (save where the debtor or other person is a party to the transfer or has received express notice thereof as hereinafter provided) be valid as against such transfer.
(2) The transferee of an actionable claim may, upon the execution of such instrument of transfer as aforesaid, sue or institute proceedings for the same in his own name without obtaining the transferor’s consent to such suit or proceeding and without making him a party thereto.
Exeption:— Nothing in this section applies to the transfer of a marine or fire policy of insurance [or affects the provisions of section 38 of the Insurance Act, 1938 (4 of 19380]
X owes 1 Lac to Y,
Y transfers the debt to Z, (without giving notice to X as per sec 131 of the Transfer of Property Act, 1882)
Y demands 1 Lac from X,
X pays 1 Lac to Y
The payment is valid, Z can not sue X for the debt.
Section 131 Notice to be in writing, signed:— Every notice of transfer of an actionable claim shall be in writing, signed by the transferor of his agent duly authorised in this behalf, or, in case the transferor refuses to sign, by the transferee or his agent, and shall state the name and address of the transferee.
Section 132 Liability of transferee of actionable claims:— The transferee of an actionable claim shall take it subject to all liabilities and equities and to which the transferor was subject in respect thereof at the date of the transfer.
A transfers to C a debt due to him by B
A being then indebted to B.
C sues B for debt due by B to A
In suit, B is entitled to set off the debt due by A to him: although C was unaware of it at the date of such transfer.
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