Professional Documents
Culture Documents
ACKNOWLEDGEMENT
I express my gratitude and deep regards to my teacher, Dr. Amandeep Singh, for giving me
such a challenging topic and also for her exemplary guidance, monitoring and constant
encouragement throughout the course of this project.
I also take this opportunity to express a deep sense of gratitude to my seniors in the college
for their cordial support, valuable information and guidance, which helped me in completing
this task through various stages.
Property Law – II Project || 2021-22
CONTENTS
ACKNOWLEDGEMENT.........................................................................................................2
INTRODUCTION......................................................................................................................3
Unsecured Debt......................................................................................................................5
Existent Debt..........................................................................................................................5
Accruing Debt........................................................................................................................5
CONCLUSION........................................................................................................................10
REFERENCES.........................................................................................................................11
Property Law – II Project || 2021-22
INTRODUCTION
The Transfer of Property Act was enacted in the year 1882 with the objective of codifying
the laws relating to transfer of properties. This Act is not exhaustive in nature, as it does not
cover all kinds of transfers, or all types of properties. The Transfer of Property Act, 1882
does not incorporate all the rules relating to the different modes of transfer, neither does it
include the transfer of all properties. There are other Acts which codify the laws regarding
different types of property such as the Sale of Goods Act, 1930.
This Act also does not deal with transfers by operation of law, which includes transfers in
execution of a Court’s decree. [1] This Act only covers inter vivos transfers which are
transfers between living persons by act of parties through express or implied contracts. Also,
the Act mainly deals with transfer of immovable properties, but some of the provisions of the
Act are also applicable to movable properties.
So, to know whether the Transfer of Property Act, 1882 will apply to a particular transaction
or not, it is necessary to determine the mode of transfer as well as the type of property being
transferred. One of the intangible properties that the Act deals with is actionable claim that is
discussed further in detail.
Actionable claim is defined in Section 3 of the Transfer of Property Act, which was included
in the Act by the Amending Act II of 1990. Actionable claim is an intangible movable
property, and its transfer is dealt with in Chapter VIII of the Act.
Unsecured Debt
Unsecured debt refers to all monetary obligations of a certain amount, and that is not covered
by any security in the form of mortgage, pledge or hypothecation. This is not just limited to
the concept of loans forwarded by a creditor to a principal debtor. It extends to all kinds of
monetary obligations, such as rent or payment on sale of property etc.
1. Monetary obligation
2. No security
1. Existent Debt
2. Accruing Debt
This is the kind of debt that has already become due, and is payable and enforceable in the
present. For instance, if Mr. A sells a house to Mr. B in present, and the monetary
consideration has to be paid then and there, then the consideration becomes payable right
then, and this is existent debt.
Accruing Debt
If a monetary obligation is due in present, but becomes payable on a future date, then that is
accruing debt. For example, if Mr. A is the employee of Mr. B and he gets his salary on the
last day of every month, then his salary is accruing debt during that month, as it is due
throughout the month, but it becomes payable only on the last day of the month. So, if Mr. B
fails to pay the salary, then Mr. A can approach the Court to claim it only after the last date
of the month, when it becomes payable.
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It is called conditional debt when the stipulation is in control of the parties. For example, an
agreement between A and B that A will pay Rs. 1000 if B buys C’s house, then this is a
conditional debt. Here, Rs. 1000 becomes payable and B can claim it only after he fulfills the
condition.
On the other hand, when the stipulation is beyond human control, then it is called a
contingent debt. For instance, if A promises to pay a particular amount to B if C’s ship sinks,
then since the sinking of the ship is beyond the control of the parties, so it is a contingent
debt.
If a person has the right to possess a movable property, then it is said that he has beneficial
interest in that movable property. But if that property is not in his possession, then he has an
actionable claim. So, the requirements to constitute this type of actionable claim are:
1. Movable property;
But if the movable property is already in the possession of the claimant, either actual or
constructive, then he cannot claim possession. So, if in the previous example, A had given
the car keys to B, then it can be said that B has constructive possession, and hence, B cannot
approach the Court to claim possession.
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Moreover, the right to possess of the Claimant must be a legal right, which is recognized by
the law. For instance, if a person of unsound mind or a minor, A sells 100 bags of wheat (or
any other movable property) to Mr. B, and Mr. B also forwards the consideration from his
side, that is Mr. B fulfills his obligations, then also Mr. B cannot claim possession. This is so
because Mr. B does not have a legal right to possess, as A does not have the capacity to
contract, and the agreement between A and Mr. B is void ab initio. Now, since the right to
possess of Mr. B is not recognized legally, so this is not covered under the heading of
actionable claim.
4. Right to get back the purchase money when the sale is set aside. [6]
5. Right of a partner to sue for an account of the dissolved partnership firm. [7]
6. Right to claim benefit under a contract for the purchase of goods. [8]
Various types of claims are not covered under the head of actionable claim, and hence cannot
be transferred under the Transfer of Property Act.
The right to claim damages, whether arising out of a tortuous or contractual liability are not
actionable claims. [10] This right is not an unsecured debt, even though it is a monetary
obligation because of two reasons. First of all, it is an uncertain amount of money, and
second, it is not a part of the original transaction. Actionable claim under the category of
unsecured debt only covers the amount in the original transaction. Hence, it covers the
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principal amount and the interest upon that principal, as these are of a certain amount.
Whereas, damages is uncertain, and hence, does not come under actionable claim.
In the case of Jai Narayan v. Kishun Dutta [11], it was held that a claim for mesne profits is
not an actionable claim, as mesne profits are unliquidated damages and it is not a claim to
any beneficial interest in moveable property, not in the possession, either actual or
constructive, of the claimant. Thus, it was a “mere right to sue” and not an actionable claim.
Rights such as copyright [12], patent or trademark are not actionable claims because they
already vest in the person who has it. These have their own governing Acts and are not
transferable as they are the intellectual property of the claimant, and any other person cannot
be allowed to claim that.
There are certain types of rights and claims which are not recognized as actionable claims,
and hence cannot be transferred. Some examples of this type of claims are:
1. Right to get damages under the law of torts or for the breach of a contract: Since
these are uncertain amounts of money and hence, this cannot be transferred. [13]
2. Claim for mesne profits: This is also uncertain, and so cannot be allowed to be
transferred. [14]
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3. Copyright, patents and trademarks: These rights are personal in nature, as these
are available to that particular person. [15]
Section 136 of the Transfer of Property Act, 1882 declares certain groups of people who
cannot deal in the transfer of actionable claims. Section 136 states that-
“No judge, legal practitioner or officer connected with any Court of Justice shall buy or
traffic in, or stipulate for, or agree to receive any share of, or interest in, any actionable
claim, and no Court of Justice shall enforce, at his instance, or at the instance of any person
claiming by or through him, any actionable claim so dealt with by him as aforesaid.”
This Section bars Judges, legal practitioners or officers of Court from receiving any share or
interest in any actionable claim, and hence they cannot be the transferee in transfer of
actionable claim. Section 6(h)(3) provides that any property cannot be transferred to a person
who is legally disqualified from receiving that property, that is, transfer cannot be made to
legally disqualified transferees, and Section 136 legally disqualifies these persons from being
transferees of actionable claims and hence, actionable claims cannot be transferred to this
class of people.
The reason behind this prohibition is to ensure impartiality of the judiciary. The Privy
Council illustrated the importance of this prohibition in the case of Kerakoose v. Serle [17]
by stating that- “It is of great importance that no officer of a Court of Justice should be even
exposed to the suspicion that in the discharge of his official duties his conduct may be
influenced by any personal consideration.”
Actionable claim is an intangible movable property. This can be inferred from the
interpretation of Section 2(7) of the Sale of Goods Act, 1930, which reads as follows-
“‘goods’ means every kind of moveable property other than actionable claims…”
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Section 2(7) of the Sale of Goods Act, 1930 defines “goods”, wherein it states that goods
include all kinds of movable property, except for actionable claims. This Section provides for
an exception clause to exclude ‘actionable claims’ from the category of movable property.
This exclusion would not have been required if the actionable claim was an immovable
property. Hence, the interpretation of Section 2(7) of the Sale of Goods Act, 1930 shows that
an actionable claim is a movable property.
CONCLUSION
REFERENCES
[4] Varjivan Das v. Magan Lal, AIR 1937 Bom 382; Sunrise Associates v. Govt. of NCT
Delhi, AIR 2006 SC 1908.
[8] Zaffar Mehar Ali v. Budge-Budge Jute Mills, (1907) 34 Cal 289; Shah Mulji v. Union of
India, AIR 1957 Nag 31.
[10] Moti Lal v. Radhey Lal, (1933) All 642; Inder v. Raghubir Singh, (1930) 5 Luck 547.
[13] Moti Lal v. Radhey Lal, (1933) All 642; Inder v. Raghubir Singh, (1930) 5 Luck 547.