An actionable claim is defined in the Transfer of Property Act (TPA), which deals with the transfer of properties in India. According to Section 3 of the TPA. This PPT explains the topic in a better way

1. ACTIONABLE CLAIM
SECTION 3

2. INTRODUCTION
Actionable Claim in general terms signifies a claim or a debt for which you can take an
action, which means there’s a claim and you can approach the court for the enforcement
of the same. Here it signifies a debt and the actionable claim holder can move to the
court for the recovery of that debt.
Examples: 1. A lends Rs. 1, 00,000/- to B without any security. The debt given by A is an
actionable claim and in case of failure on the part of B to repay it, A can move to the
court.
2. A lends Rs. 1, 00,000/- to B. B keeps his property X as a security, which is worth Rs.
10, 00,000/-. This debt is not an actionable claim. Also, there is no need on the part of A
to approach the court for the recovery of the same as he already has a security that is
worth more than the debt itself. It doesn’t mean that A cannot approach the court. But
this case will be covered under the mortgage.

3. CONTD.
Section 3 of Transfer of Property Act, 1882: Section 3 of Transfer of Property Act, 1882
defines Actionable Claim. According to Section 3, an actionable claim is a claim to:
1. any debt which is not secured by:
❖ Mortgage of immovable property, or
❖ Hypothecation, or pledge of movable property Or
2. Any beneficial interest in movable property, which is not in possession of the
claimant. The possession can be actual or constructive
And the civil court recognizes these claims to be the affording ground for relief. The
debt or beneficial interest can be: 1. Existent, 2. Accruing, 3. Conditional 4. contingent
In brief, it can be said that an actionable claim means a claim to an unsecured debt or
any interest in movable property which is not in the possession of the claimant

4. 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.
The three requirements for a transaction to qualify as unsecured debt are:
1.Monetary obligation
2.No security
3.Certainty of amount of money obligated

5. CONTD.
According to Sunrise Associates v. Govt. of NCT of Delhi, an actionable claim
may be existent in praesenti, accruing, conditional or contingent. So, the three
types of unsecured debt are:
1.Existent Debt
2.Accruing Debt
3.Conditional or Contingent Debt
Existent 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.

6. CONTD.
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.
Conditional or Contingent Debt
A debt is conditional or contingent if it becomes payable on the fulfillment of a condition or contingency.
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.

7. BENEFICIAL INTEREST IN MOVABLE PROPERTY
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;
2.The movable property is not in the possession of the claimant;
3.The claimant has the right to possess that movable property.
For example, if A sells his car to B and B has completed his obligation, that is, B has
forwarded the consideration from his side, then B has the right to possess the car; but if
B is unable to acquire possession, then B can approach the Court to claim this
possession.

8. CONTD.
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.
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.

9. INSTANCES OF ACTIONABLE CLAIMS
Some examples of actionable claims are:
1.Claim for arrears of rent. (Daya Debi v. Chapla Debi, AIR 1960 Cal 378)
2.Claim for money due under insurance policy. (Varjivan Das v. Magan Lal, AIR 1937 Bom 382;
Sunrise Associates v. Govt. of NCT Delhi, AIR 2006 SC 1908)
3.Claim for return of earnest money. (Lalchand v. Hussainio, (1927) 97 IC 257).
4.Right to get back the purchase money when the sale is set aside. (Chinnappa Reddy v.
Venkatramanappa, AIR 1942 Mad 209).
5.Right of a partner to sue for an account of the dissolved partnership firm. (Bharat Prasad v. Paras
Singh, AIR 1967 All 15)
6.Right to claim benefit under a contract for the purchase of goods. (Zaffar Mehar Ali v. Budge-Budge
Jute Mills, (1907) 34 Cal 289; Shah Mulji v. Union of India, AIR 1957 Nag 31)
7.Right to get the proceeds of a business. (Alkash Ali v. Nath Bank, AIR 1951 Assam 56).
In all of these instances the amount for which the suits are filed are certain and definite. So, such claims
are transferable under actionable claims.

10. CLAIMS NOT COVERED UNDER ACTIONABLE CLAIM
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. 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
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.
Moreover, in cases of tortious liability such as defamation, or nuisance, the damages is
uncertain and personal or attached with immovable property, and hence cannot be
transferred.

11. CONTD.
For instance, if A defames B, then B has the right to sue A for defamation; this right is
personal in nature as B has been defamed and so, only B can have the right to sue A. So,
this right cannot be transferred and it is not an actionable claim. An instance of nuisance
would be if person X’s neighbour, Y, let his drain pipes overflow into X’s lawn. Here, X
has the right to sue for damages for the nuisance caused by Y because of virtue of
ownership that X has over his lawn. Hence, X is the only person who has this right to
sue and so, it is not a transferable actionable claim. But, if X sells his property to a third
person, Z, then Z, along with the property, will also receive this right to sue Y for
nuisance.
In the case of Jai Narayan v. Kishun Dutta, AIR 1924 Pat 551 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.

12. INSTANCES OF CLAIMS NOT RECOGNIZED AS
ACTIONABLE CLAIMS
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. (Moti Lal v. Radhey Lal,
(1933) All 642).
2.Claim for mesne profits: This is also uncertain, and so cannot be allowed to be transferred.(Jai
Narayan v. Kishun Dutta, AIR 1924 Pat 551).
3.Copyright, patents and trademarks: These rights are personal in nature, as these are available to
that particular person.(Savitri Devi v. Dwarka Prasad, (1939) ALJ 71) Rights such as copyright,
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.
4.Decree or judgment of debt: This cannot be transferred under actionable claim, as after the
judgment has been pronounced, no action subsists that could be transferred.

13. OF TRANSFER OF ACTIONABLE CLAIM
An actionable claim is transferrable. Transfer of Actionable claim is dealt with
under Chapter VIII of Transfer of Property Act, 1882. Chapter VIII is the last
chapter of TPA and it covers from Section 130 to Section 137.
Section 130 describes the mode of transfer of Actionable Claim. According to it:
1. The transfer can be done only by:
2. An instrument in writing,
3. Signed by the transferor or his duly assigned agent.
4. The transfer can be with or without consideration.
5. The transfer will be complete and effective when executed.
6. The transfer vests all the rights and remedies of the transferor in the transferee.

14. CONTD.
The section further provides that-
▪The notice of the transfer to the debtor is not necessary. The payment made by
the debtor to the principle creditor would be valid.
▪The transferee of the actionable claim has the right to sue on the claim so
transferred in his own name. For suing or for claiming the debt, the consent of
the transferor would not be needed.
Example: A lends money to B. A transfers the debt to X. The notice of the
transfer is provided to B. X demands money from B. B doesn’t pay the debt. X
can sue B claiming the payment of the debt without obtaining consent from A.

15. ESSENTIAL OF A VALID TRANSFER OF ACTIONABLE
CLAIMS
(i)Mode – Sec. 130, T.P. Act, prescribes the mode of assigning or alienation an
actionable claim. The assignment may be by way of sale, mortgage, gift or exchange.
The transfer must be effected by an instrument in writing signed by the transferor or his
fully authorized agent. An endorsement on the back of a document comprising the
actionable claim in enough.
(ii)Effect – The assignment takes effect from the date of the execution of the writing and
its effect is to vest all the rights a remedies of the transferor in the transferee [sec.130
(1)]. The transferee may sue for the actionable claim in his own names without obtaining
transferor’s consent without making him a party to the suit (Cl. 2). After the assignment,
the transferee is the only person who is entitled to recover the claim. The assignment has
also the effort of subjecting the transferee to all the liabilities and equities to which the
transferor was subject in thereof at the date of the transfer (Sec.132). For instance, a
debtor has a right to set off any counter claim against the transferee which he could have
done against the transferor.

16. CONTD.
(iii)Notice – Although a notice of transfer to the debtor is not necessary to perfect
the title to the transferee, but until the debtor receives notice of the transfer in
accordance with law, his dealings with the original creditor will be protected. The
transferee, therefore, in his own interest, must give notice of the transfer to the
debtor as early as possible. Once he does this the debtor becomes liable to pay
the debt to him alone. However, in respect of transfer of ‘arrears of rent’, such
notice will not be necessary.
Sec.131 lays down that every notice of transfer of an actionable claim shall be in
writing signed by the transferor (or his agent) or in case the transferor refuses to
sign, by the transferee or his agent, and shall state the name and address of the
transfer.

17. CONTD.
Exceptions to the Section are:
1. Negotiable instruments, stocks, shares, debentures
2. The marine policy of insurance
3. Fire insurance policy
Cases falling under Section 38 of Insurance Act, 1938.

18. CONCLUSION
Actionable claim is an intangible movable property, and it is transferable. It
mainly refers to the types of claims that can be recovered through proceedings in
Courts. Out of multiple such kinds of claims, the concept of actionable claim
includes two types, which are claims on unsecured debt and beneficial interest in
movable property. Such claims can be transferred to another person, but certain
people are barred from becoming transferee of actionable claims. This bar has
been imposed in order to maintain the integrity of Court proceedings. The
concept of actionable claims is a highly important one that all law students must
be clear with.