INTERNATIONAL JOURNAL OF BUSINESS POLICY AND ECONOMICS

Vol. 4, No. 2, (2011) : 409-415

ACTIONABLE CLAIM
Anju Harbansh
Student, Fourth Year, Hidayatullah National Law University, Raipur, Chhattisgarh

INTRODUCTION

The term actionable claim is that every kind of claim in a movable property
which would be enforced through the courts. But such a wide meaning created
confusion.
For example, under this meaning all debts whether secured or unsecured
were actionable claims whereas a debt secured by mortgage of immovable
property is, strictly speaking, an interest in land.
Similarly, under this meaning any claim of money whether the amount
was fixed amount or uncertain, was an actionable claim. Because of such
confusions there used to be conflicting decisions and the law was neither clear
nor uniform.
Actionable claim is a claim to any debt, other than a debt secured by mortgage
of immovable property or by hypothecation or pledge of moveable property, or
to any beneficial interest in moveable property not in possession either actual
or constructive, of the claimant, which the civil courts recognize as affording
grounds of relief whether such debt or beneficial interest be existent, accruing
or conditional or contingent.
ACTIONABLE CLAIM

As Per Section 3 of the Transfer of Property Act, 1882

Actionable Claim1 is a claim to any debt, other than a debt secured by mortgage
of immovable property or by hypothecation or pledge of moveable property, or
to any beneficial interest in moveable property not in possession either actual
or constructive, of the claimant, which the civil courts recognize 2 as affording
grounds of relief whether such debt or beneficial interest be existent, accruing
or conditional or contingent.
A person is said to have notice3 of a fact when he actually knows that fact,
or when, but for willful abstention from an enquiry or search which he ought to
have made, or gross negligence, he would have known it.
Explanation I: Where any transaction relating to immovable property is
required by law to be and has been effected by a registered instrument, any
person acquiring such property or any part of, or share or interest in, such
property shall be deemed to have notice of such instrument as from the date of

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registration or, where the property is not all situated in one sub-district, or
where the registered instrument has been registered under sub-section (2) of
section 30 of the Indian Registration Act, 1908 (16 of 1908), from the earliest
date on which any memorandum of such registered instrument has been filed
by any Sub-Registrar within whose sub-district any part of the property which
is being acquired, or of the property wherein a share or interest is being acquired,
is situated:
PROVIDED that(1) The instrument has been registered and its registration completed in
the manner prescribed by the Indian Registration Act, 1908 (16 of 1908),
and the rules made there under,
(2) The instrument of memorandum has been duly entered or filed, as the
case may be, in books kept under section 51 of that Act, and
(3) The particulars regarding the transaction to which the instrument
relates have been correctly entered in the indexes kept under section
554 of that Act.
Explanation II: Any person acquiring any immovable property or any share
or interest in any such property shall be deemed to have notice of the title, if
any, of any person who is for the time being in actual possession thereof.
Explanation III: A person shall be deemed to have had notice of any fact if
his agent acquires notice thereof whilst acting on his behalf in the course of
business to which that fact is material:
PROVIDED that, if the agent fraudulently conceals the fact, the principal
shall not be charged with notice thereof as against any person who was a party
to or otherwise cognizant of the fraud.
Actionable claim means a claim to any debt other than a debt secured under
a mortgage or hypothecation or pledge on any immovable or moveable property 5,
possession of which is given to person or institution which gave the loan.
An Actionable Claim is a plain unsecured debt which can be claimed by a
person against another person and which can be enforced in civil courts according
to law. Right to benefit of a contract falls within the definition of Actionable
Claim. An Actionable Claim is transferable and inheritable and it is deemed to
be a property in the hands of the person who has the claim.
Actionable claim,6 a claim to a debt, whether existent, accruing, contingent
or conditional (the latter two types being future debt), are capable of being
transferred in present. It is recommended that this position be clarified by virtue
of an amendment to the Transfer of Property Act.
Simply stated7, an actionable claim means a claim to any unsecured debt or
a claim to any beneficial interest in movable property, not in the possession of
the claimant. The debt or beneficial interest may exist, accruing, conditional or
contingent.
For example, A borrows Rs. 5000/- from B at 12% per annum interest on
1st April, 2006 and promises to pay back the amount with interest on 1st July,
2006. Till 1st July, 2006, the debt is an accruing debt and is an actionable
claim.

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It may be noted that a person can have a actionable claim, even without
consideration. Further such persons claim will not be affected by claim of a
subsequent transferee with consideration.
CONDITIONS OF ACTIONABLE CLAIM

Two conditions of actionable claim is that

(1)Unsecured Money Debt: A debt is an obligation8 to pay a liquidated
or definite sum of money. Such debt may me: (1) existent, (2) conditional,
(3) contingent. If it is now due and owing it is existent. If it is a present debt but
payable in the future it is accruing. A debt which will be due only if a condition
be fulfilled or if a certain specified thing happens is a conditional debt 9.
Contingent debts are debt which are payable on a certain contingency, e.g., an
amount due under a policy of insurance.
Types of Debts
Existent Debt: Where a debt or sum of money10 has already become due and is
payable (enforceable) at present, the debt is existent. For example, claim of
arrears of maintenance allowance or the claim of arrears of salary is existent
debt because a definition sum of money has already become due in the past and
now it is payable.
Accruing debt: Where a debt or sum of money is at present due but it is payable
not now but on a future date, the debt is accruing. Accruing debt is due at present
but becomes payable only on a future date. For example if A promises to pay
Rs. 100 to B as maintance allowance on fifth of every month, the claim for salary
to fall due in the next month is an accruing debt and such an actionable claim.
Conditional or Contingent debt: Where the claim for a sum of money exists
but the payment depends upon the fulfillment of any condition, the debt is
condition. If A promises to give Rs. 1000 to B provided he marries within one
year, than Bs claim for Rs. 1000 is conditional because it is subject to a condition
to be fulfilled by him in future.
Similarly, where the claim of money is subject to some uncertain future
event which may or may not happen, the claim is contingent, For example,
Where A promises to give Rs. 1000 to B provided Bs first child is a son, the
claim of B for Rs. 1000 is contingent claim (debt).
Debts secured11 by a mortgage of immovable property or by a pledge of
movable property are excluded from the definition of actionable claim. Actionable
claim therefore under the section means a claim to unsecured debt. A claim for
damages, i.e. for an unascertained sum of money or a claim for mesne profits
does not come within the definition of actionable claim.
Illustrations
(1) A owes Rs. 1000 to B. Bs claim is an actionable claim.
(2) A borrows Rs. 1000 from B and mortgages his house to him. The mortgage
debt is not actionable claim.
(3) A contracted to buy goods from B. On the due date, a fails to take delivery
and B sells the goods in the open market at a loss Rs. 10000. B has a right
to claim the damages from A but this claim is not an actionable claim.

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(2) Claim to Benificial Interest not in Possession of the Claimant

Right of a person to take the possession of a movable property from the possession
of the another, is the actionable claim of that person provided claimant has
beneficial interest(i.e. right of possession) in that property. Following condition
are necessary for an actionable claim:
(a) The claim is in some movable property.
(b) The movable property is in possession of another person.
(c) The beneficial inters or the right of the possession of the claimant is
recognized by the court.
A person can claim possession of a movable property of which he has right
to possess but it is not in his possession. If a property is already in his actual or
constructive possession there is no question of claiming its possession, Therefore,
if a movable property is proved to be in actual or constructive possession of the
claimant, there is no actionable claim. Moreover, the claimant must also have
right of possession i. e. the law recognizes that he has beneficial interest in that
movable property. If he has no legal right of possession, the claim is not actionable
claim.
Beneficial interest of movable property: A claim12 to any beneficial interest
in movable property, not in possession of the claimant, is included in the present
definition. Thus, a right to claim the benefit of a contract for the purchase of
goods is a beneficial interest in movable property.
Illustration
1. A agrees to sell to B bales of cotton deliverable on a future day. B has a
beneficial interest in the goods and it is an actionable claim.
2. A has sold fifty bags of wheat to B. The bags of wheat are in the godown of
A. Bs right to take possession of the bags of wheat from the godown of A is
his (Bs) Actionable claim.
3. A has fifty bags of wheat in his godown. A has not sold these bags to B or
the contract of sale is not valid. B has not beneficial interest in those bags
of wheat. Claim of B, if made by him, is not his actionable claim.
Transfer of Actionable Claim
Beneficial interest in movable property is intangible movable property.
Therefore, actionable claim is regarded as property.
Some instance of actionable claim:
(1) The right to claim benefit of the contract for the purchase of goods 13.
(2) A claim to money under an insurance policy 14.
(3) A share in partnership.15
(4) A claim for arrears of rent16.
(5) A claim for return of earnest money 17.
(6) Right to get back the purchase-money when the sale is set aside. 18
(7) Muslim women claim for her unpaid dower. 19
(8) Right to get the proceeds of a business. 20

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Instances of claims which are not actionable claim:

(1) A debt is an actionable claim, but a debt which has passed into a decree
is not an actionable claim.21
(2) The right to recover damages for breach of contract. 22
(3) A claim to mesne profits.23
(4) A copyright.24
(5) Where a decree provides for a future decree, this future decree is also
not actionable claim.25
JUDICIAL PRONOUNCEMENTS

Sadasook Ramprotap v Hoare Miller & Corporatio 26 in this case contains a very
special scheme which has some of the features of both the English common law,
and of equity. Thus, in equity, debts were assignable, and also contingents
interest and future property when the assignable was for valuable consideration.
Chowne v Bayliss Corporation Bank27 in the case the procedure adopted for
reducing them into possession. Legal chose, in action were those enforceable by
action at law, such as promissory notes, bills of exchange or policies of insurance.
Re Bainbridge, Ex parte Fletcher 28 in this case editable closes in action,
sometime called chose in equity, were enforced by action in equity, e.g.
a beneficial interest in a partnership.
Hammond v Stewar29 in this case remedy of the assignee was imperfect at
law, he had to sue in the name of the assignor on giving him and indemnity
against costs. In equity he could sue in his own name, but there had to be
consideration for the assignment, and the assignee could not sue the debtor in
equity, but had to sue in law in the name of the assignor, unless the assignor
had refused to allow the assignee to sue in his name.
Loknarayan Sethia v state Bank of jaipur 30 in this case the Supreme Court
was called upon to decide whether an irrevocable power of attorney in favor of
a creditor to execute a decree on behalf of the debtor - decree-holder constituted
an equitable assignment. The court held that it did, as it was an engagement to
pay out of a specific fund, viz the decrial amount.
Bharat Nidhi Ltd v Takhatma31 in this case held that an irrevocable power
of attorney authorizing the creditor-Bank to receive moneys due or that may
become due to the borrows, coupled with a bill endorsed in favor of the bank for
collection, constitution an equitable assignment.
Anraj vs Government of Tamil Nadu 32 was overruled prospectively with
effect from the date of the judgment (see A draw without a chance to win is
meaningless, in Business Line, May 6). A three-judge Bench had agreed with
the decision in the Anraj case, when deciding the Vikas Sales Corpn case. There,
it was held that REP licenses/Exim scrips are not actionable claims and,
therefore, sale of such licence/scrip was not liable to sales tax. The Constitution
Bench has now overruled the Anraj case and held that a sale of a lottery ticket
amounts to the transfer of an actionable claim.
The court, however, clarified that the order of reference in Sunrise vs NCT,
Delhi was limited to the question whether lottery tickets are goods and that

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the court had not been called upon to answer the question whether REP licenses
(or the DEPB which has replaced the REP licenses) are goods and having
regard to the limited nature of the reference, the court did not decide the
issue. Even while clarifying as above, the Bench held that the assumption in
the Vikas Sales case that actionable claims are not transferable for value and
that that was the difference between actionable claims and those other goods
which are covered by the definition of goods in the Sale of Goods Act, 1930 and
the sales tax law was fallacious and the conclusion insofar as it was based on
this erroneous perception was held equally wrong. The apex court has, however,
clarified in its judgment that the Anraj case is overruled only prospectively
with effect from April 28, 2006. However, nothing has been specifically mentioned
about the pending cases, levies already made but not collected.
CONCLUSION

Actionable claim is a claim to any debt, other than a debt secured by mortgage
of immovable property or by hypothecation or pledge of moveable property, or
to any beneficial interest in moveable property not in possession either actual
or constructive, of the claimant, which the civil courts recognize as affording
grounds of relief whether such debt or beneficial interest be existent, accruing
or conditional or contingent.
Actionable claim is a claim to any debt, other than a debt secured by mortgage
of immovable property or by hypothecation or pledge of moveable property, or
to any beneficial interest in moveable property not in possession either actual
or constructive, of the claimant, which the civil courts recognize as affording
grounds of relief whether such debt or beneficial interest be existent, accruing
or conditional or contingent. So the actionable claim is a very important for the
transfer of property act.
Notes
1.

http://www.lawzonline.com/legalencyclopedia/a/Actionable-Claim.html

2.

Subharaos G.C.V. Transfer of Propert Act 15th Edition 2006.

3.

http://dolr.nic.in/Acts & Rules %5C Transfer of Property Act (1882).htm

4.

Section 55 Rights and Liabilities of Buyer and Seller of Transfer of Property Act.

5.

http://www.hindu.com/pp/2006/05/20/stories/2006052001250300.htm viewed on

6.

http://www.rbi.org.in/scripts/PublicationReportDetails.aspx?UrlPage=&ID=166

7.

http://www.xomba.com/gift_and_actionable_claim.

8.

Sukla S. N., The Transfer of Property Act, 26th Edition 2007.

9.

Supra.

10. Sinha R. K., The Transfer of Property Act, 9th Edition 2006.
11. Ibid.
12. Ibid.
13. Zaffar Mehar Ali v. Budge-Budge Jute Mills, (1907), 34, Cal. 289.
14. Varjivan Das v. Magan Lal, A. I. R., (1937), Bom. 382.
15. Bharat Prasad v. Pras Sibgh Jute Mills, (1907), 34, Cal. 289.

Actionable Claim
16. Daya Debi v. Chapla Debi, A.I.R. (1960), Cal. 378.
17. Lalchand v. Hussainio, (1927), 97, I.C. 257.
18. Chinnappareddi v. Venkataramanappa, A.I.R. (1942), Mad. 209.
19. Amir Hasan Khan v. Muhammad Nazir Hussain, A.I.R. (1932), All. 345.
20. Alkash Ali v. Nath Bank, A.I.R. (1951), Assam 56.
21. Gvindarajulu v. Ranga Rao, A.I.R. (1921), Mad. 113.
22. Moti Lal v. Radhey Lal, (1933), ALL, 642.
23. Jai Narayan v. Kishun Dutta, A.I.R. (1924), Pat. 551.
24. Savitri Devi v. Dwarka Prasad, (1939), A.L.J. 71.
25. Jugalkishor Saraf v. Raw Collon Co. Ltd. A.I.R. (1955), S.C. 376.
26. 1923, (27), Cal WN, 733.
27. 1862, (31), Beav, 351.
28. 1878, (8), Ch D 218.
29. 1838, (9), Sim 327, p. 332.
30. 1969, (1), SCR 122.
31. 1969, (1), SCR 595.
32. 1986, (61), STC, 165 SC.

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