The Transfer of Property Act, 1882, governs the transfer of various types of property, including "actionable claims." An actionable claim is a claim to any debt (not secured by mortgage or pledge) or any beneficial interest in movable property that can be enforced by a court. Sections 130 to 137 of the Act explain how these claims can be transferred, the rights and responsibilities of the parties involved, and the legal limitations placed on such transfers.
Debts are classified into two types:
- Secured Debt (backed by security, such as a mortgage, pledge, or hypothecation)
- Unsecured Debt (not backed by any security)
Secured Debt
- Pledge: Movable property is given as security. (Covered under Sections 148-181 of the Indian Contract Act)
- Mortgage: Immovable property is given as security. (Covered under Sections 58-104 of the Transfer of Property Act)
- Hypothecation: A loan is taken to purchase an asset, and if the borrower defaults, the lender can seize the asset. (Governed by the SARFAESI Act, 2002)
Unsecured Debt
A debt is unsecured if it does not involve any security (pledge, mortgage, or hypothecation). It includes:
- Rental dues
- Sale price of goods/property
- Monetary obligations without security
Beneficial Interest in Movable Property
- Movable property includes anything except immovable property, as per Section 3(36) of the General Clauses Act.
- Beneficial interest means a person has the right to possess movable property but does not have actual possession.
- If a person has the right to possession but lacks actual possession, they can claim it as an actionable claim.
Transfer of Actionable Claims
As per Section 130, actionable claims can be transferred either for some payment (with consideration) or even without it. But the transfer must always be in writing and signed by the person who is transferring the claim (or their authorized agent). Oral transfers are not valid in law. However, registration of the written document is not necessary. After the transfer, the new person (transferee) gets all the rights and legal remedies that the original owner (transferor) had.
Section 131: Informing the Debtor
Once the claim is transferred, a written notice must be given to the debtor — the person who owes the money or duty. This notice can be signed either by the transferor or the transferee. Although the Act doesn’t fix a deadline, the notice should be sent within a reasonable time so the debtor knows who to pay or deal with.
Section 132: Legal Responsibility of the Transferee
The transferee, after receiving the actionable claim, steps into the shoes of the transferor. This means they take on both the rights and any related liabilities of the transferor. If any legal duty or obligation was attached to the claim, it now becomes the responsibility of the transferee.
Section 136: Judicial Officers Cannot Transfer Claims
To maintain fairness and avoid misuse of legal position, judges, lawyers, and court officers are not allowed to buy or transfer actionable claims. This section ensures that there is no conflict of interest or unethical practices in the legal system.
Section 137: Special Rule for Negotiable Instruments
This section clearly states that things like cheques, promissory notes, and bills of exchange are not covered under these rules. Instead, they are governed by a separate law the Negotiable Instruments Act, 1881.
Conclusion
The provisions from Section 130 to 137 of the Transfer of Property Act ensure a proper, fair, and systematic method for transferring actionable claims. They aim to protect the interests of the parties involved while preventing misuse of the process. By requiring written documentation and notice to the debtor, and by assigning legal rights and responsibilities to the transferee, the law provides a strong framework for such transactions. These rules also make sure that judicial officers stay away from such transfers to maintain the integrity of the legal system.
