Mode of Transfer.....Execution of Instrument in writing

Effect of Transfer....All rights,remedies and equities vests in transfree

Case Laws

S.3 OF TOPA....DEFINETION .......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 affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional o contingent;]

•“ACTIONABLE CLAIM” is a claim for which action can be initiated in a court of law for relief.

•Claim to unsecure debt

•Beneficial interest in moveable property not in possession of claimant

•In English law known as “Chose in Action”


Case Laws


•This section shall not be applicable to transfer of actionable claims by operation of law.AIR 1943 Pat.218

  • There must be present transfer of an existing actionable claim.(AIR 1926.Nag.206 (207)


•PLD 1970 DACCA 155

130. Transfer of actionable claim. (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 authorized agent, shall be complete and effectual upon the execution of such instrument, 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 be 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 proceedings and without making him a party thereto. Exception. IV of 1938. 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]. Illustrations (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 section 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 an 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 sue on it without the concurrence of A's executor, subject to the proviso in subsection (1) of section 130 and to the provisions of section 132.

130A. Transfer of policy of marine insurance. (1) A policy of marine insurance may be transferred by assignment unless it contains terms expressly prohibiting assignment, and may be assigned either before or after loss. (2) A policy of marine insurance may be assigned by endorsement thereon or in any other customary manner. (3) Where the issued person has parted with or lost his interest in the subject-matter insured, and has not, before or at the time of so doing, expressly or impliedly agreed to assign the policy and subsequent assignment of the policy is inoperative. Provided that nothing in this sub-section affects the assignment of the policy after loss. (4) Nothing in clause (e) of section 6 shall affect the provisions of this section.

131. Notice to be in writing, signed. Every notice of transfer of an actionable claim shall be 'i writing, signed by the transferor or his agent duly authorized 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.

132. Liability of transferee of actionable claim. The transferee of an actionable claim shall take it subject to all the liabilities and equities to which the transferor was subject in respect thereof at the date of the transfer. Illustrations (i) A transfers to C a debt due to him by B, A being then indebted to B. C sues for the debt by B to -y In such 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. (ii) A executed a bond in favour of B under 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.

133. Warranty of solvency of debtor. Where the transferor of a debt warrants the solvency of the debtor, the warranty, in the absence of a contract to the contrary, applies only to his solvency at the time of the transfer, and is limited, where the transfer is made for consideration, to the amount or value of such consideration. 134. Mortgaged debt. Where a debt is transferred for the purpose of securing an existing or future debt, the debt so transferred, 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; and the residue, if any, belongs to the transferor or other person entitled to receive the same. 135. Assignment of rights under policy of insurance. Every assignee, by endorsement or other writing, of the 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 suit as if the contract contained in the policy had been made with himself. 135-A. Assignment of rights under policy of marine insurance. (1) Where a policy of marine insurance has been assigned so as to pass the beneficial interest therein, the assignee of the policy is entitled to sue thereon in his own name; and the defendant is entitled to make any defence arising out of contract which he would have been entitled to make if the action had been brought in the name of the person by or on behalf of whom the policy was effected. (2) Where the insurer pays for a total loss, either of the whole, or in the case of goods, of any apportionable part, of the subject-matter insured, he thereupon becomes entitled to take over the interest of the insured person in whatever may remain of the subject-matter so paid for, and he is hereby subrogated to all the rights and remedies of the insured person in and in respect of that subject-matter as from the time of the casualty causing the loss. (3) Where the insurer pays for a partial loss, he acquires no title to the subject-matter insured, or such part of it as may remain, but' he is thereupon subrogated to all rights and remedies of the insured person as from the time of the casualty causing the loss, in so far as the insured person, has been indemnified by such payment for the loss. (4) Nothing in clause (e) of section 6 shall affect the provisions of this section.

136. Incapacity of officers connected with Courts of Justice. 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.

137. Saving of negotiable instruments, etc. Nothing in the foregoing sections of the Chapter applies to stocks, shares or debentures, or to instruments which are for the time being by law or custom, negotiable, or to any mercantile document of title to goods. Explanation. The expression 'mercantile document of title of goods includes a bill of lading, dock-warrant, ware-house-keeper's certificate, railway-receipt, warrant or order for the delivery of goods, and any other document used in the ordinary course of business as proof of the possession or control of goods, or authorizing or purporting to authorize, either by endorsement or by delivery, the possessor of the document to transfer or receive goods thereby represented.