transfer of property avinash

Transfer Of Property Act, 1882Actionable Claim

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INDORE INSTITUTE OF LAW(Affiliated to D.A.V.V. & Bar Council of India)

B.A.LL.B. (HONS)Project on

(Subject)_______________________________

Topic: 01_______________________________

Submitted to:

Asst. Prof._____________________________

Submitted by: Name ____________________Signature______

Year _____ Semester ______

Date-:___/___/____


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ACKNOLEDGEMENT

A research work of such great scope and precision could never have been possible without great co-

operation from all sides. Contributions of various people have resulted in this effort. Firstly, I would like

to thank God for the knowledge he has bestowed upon us.

I would also like to take this opportunity to thank Asst. Prof.______________________________

without whose valuable support and guidance, this project would have been impossible. Also, I would

like to extend sincere gratitude to my parents, who guided me at every point during the research of this

project. I would also like to thank the library staff for having put up with my persistent queries and

having helped me out with the voluminous materials needed for this work. I would also like to thank my

seniors for having guided me and culminate this acknowledgement by thanking my friends for having

kept the flame of competition burning, which spurred me on through these days.

And finally my parents, who have been a support to us throughout my life and have helped me, guided me to perform my best in all interests of our life, my grandparents who have always inculcated the best of their qualities in me.

Avinash Rai VIIth Semester


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CERTIFICATE

THIS IS TO CERTIFY THAT SHIVAM SRIVASTAVA HAS SUCESSFULLY COMPLETED THE PROJECT

WORK TITLED “Actionable Claim”

IN PARTIAL FULFILLMENT OF REQUIREMENTS FOR THE KNOWLEDGE OF

______________________PRESCRIBED BY INDORE INSTITUTE OF LAW.

THIS PROJECT IS THE RECORD OF AUTHENTIC WORK CARRIED OUT DURING THE ACADEMIC

YEAR 2016-2017

Teacher's signature....................

DATE....................


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DECLARATION

I , Avinash Rai student of B.A.LLB.(H) 7THsem studying at INDORE INSTITUTE OF LAW declare that the project work entitled “ was carried by me on my own research .”

This project was undertaken as a part of academic curriculum according to the university rules and regulations and it has no commercial interest and motive, it is my original work. It is not submitted to any other organization for any other purpose.


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ContentsABSTRACT................................................................................................................................................2

OBJECTIVE OF RESEARCH....................................................................................................................3

RESEARCH METHODOLOGY................................................................................................................3

INTRODUCTION TO ACTIONABLE CLAIM.........................................................................................4

ACTIONABLE CLAIM..............................................................................................................................4

CONDITIONS OF ACTIONABLE CLAIM...............................................................................................6

Types of Debts............................................................................................................................................6

In what context are terms Pledge, Hypothecation and Mortgage Used:.....................................................8

Pledge, Hypothecation and Mortgage Under Indian Law............................................................................9

Difference Between Pledge, Hypothecation and Mortgage at a Glance....................................................10

Transfer of Actionable Claim....................................................................................................................10

DEFINITION OF ACTIONABLE CLAIM:.............................................................................................11

DEFINITION OF GOODS:.......................................................................................................................12

JUDICIAL PRONOUNCEMENTS...........................................................................................................16

CONCLUSION.........................................................................................................................................19


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ABSTRACTActionable Claim is a complicated area of law that requires a researcher to master not only a

large volume of complex legislation, but because of its ‘accessory-law’ nature also requires good

knowledge of many other areas of law (both statutes and common law). This assignment

provides an overview to actionable claim research in the Indian context. It begins by introducing

the actionable claim in Part 1 before moving on to discuss how to find the law and material with

legally enforceable consequences in Part 2. The assignment, in part 3, discusses whether

actionable claim can be considered as goods? Part 4 discussed whether sales tax can be levied on

actionable claim?


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OBJECTIVE OF RESEARCH1. Whether actionable claim can be considered as goods? 2. Whether sales tax can be levied on actionable claim?3. What is significance of actionable claim and what are the legal attributes thereof insofar

as the law in India is concerned?

RESEARCH METHODOLOGY“DESCRIPTIVE” Method of Research” has been relied upon for conducting the research given the availability of resources and time. The researcher has relied mainly upon secondary sources, including books available in Library, Databases, Journals, Articles and case laws.


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INTRODUCTION TO ACTIONABLE CLAIMThe 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, 1882Actionable 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 recognize2 as affording grounds of relief whether such debt or beneficial interest be existent, accruing or conditional or contingent”.

“A person is said to have notice”3 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 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

1 http://www.lawzonline.com/legalencyclopedia/a/Actionable-Claim.html 2 Subharao’s G.C.V. “Transfer of Propert Act” 15th Edition 2006.3 http://dolr.nic.in/Acts & Rules %5C Transfer of Property Act (1882).htm


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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 property5 , 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.

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 on6 http://www.rbi.org.in/scripts/PublicationReportDetails.aspx?UrlPage=&ID=1667 http://www.xomba.com/gift_and_actionable_claim.


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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. It may be noted that a person can have a actionable claim, even without consideration. Further such person’s claim will not be affected by claim of a subsequent transferee with consideration.

CONDITIONS OF ACTIONABLE CLAIMTwo 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 debt9 . Contingent debts are debt which are payable on a certain contingency, e.g., an amount due under a policy of insurance.

Types of DebtsExistent 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 B’s 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 B’s first child is a son, the claim of B for Rs. 1000 is contingent claim (debt).

8 Sukla S. N., “The Transfer of Property Act”, 26th Edition 20079 Sukla S. N., “The Transfer of Property Act”, 26th Edition 200710 Sinha R. K., “The Transfer of Property Act”, 9th Edition 2006.


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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. B’s 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.

2. Claim to Beneficial 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.

11 Sinha R. K., “The Transfer of Property Act”, 9th Edition 2006.12 Sinha R. K., “The Transfer of Property Act”, 9th Edition 2006.


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2. A has sold fifty bags of wheat to B. The bags of wheat are in the godown of A. B’s right to take possession of the bags of wheat from the godown of A is his (B’s) 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.

In what context are terms Pledge, Hypothecation and Mortgage Used:These terms are used for creating a charge on the assets which is given by the borrower to the lender as a security for any loan. Thus, one of these terms will be normally used whenever an individual or a business firm avails any loan and the bank keeps some assets as a security, so that it will be able to sell the same in case that individual or the firm defaults in repayments.

MEANING

Pledge, Hypothecation, and Mortgage1) Pledge is used when the lender (pledgee) takes actual possession of assets (i.e. certificate,

goods). Such securities or goods are movable securities. In this case the pledgee retains the possession of the goods until the pledger (i.e. borrower) repays the entire debt amount. In case there is default by the borrower, the pledgee has a right to sell the goods in his possession and adjust its proceeds towards the amount due (i.e. principal and the interest amount). Some examples examples of pledge are Gold /Jewellery Loans, Advance against goods,/stock, Advances against National Saving Certificates etc.

2) Hypothecation is used for creating charge against the security of movable assets, but here the possession of the security remains with the borrower itself. Thus, in case of default by the borrower, the lender (i.e. to whom the goods / security has been hypothecated) will have to first take possession of the security and then sell the same. The best example of this type of arrangement are Car Loans. In this case Car / Vehicle remains with the borrower but the same is hypothecated to the bank / financer. In case the borrower, defaults, banks take possession of the vehicle after giving notice and then sell the same and credit the proceeds to the loan account. Other examples of these hypothecation are loans against stock and debtors. [Sometimes, borrowers cheat the banker by partly selling goods hypothecated to bank and not keeping the desired amount of stock of goods. In such cases, if bank feels that borrower is trying to cheat, then it can convert hypothecation to pledge i.e. it takes over possession of the goods and keeps the same under lock and key of the bank]

3) Mortgage : is used for creating charge against immovable property which includes land, buildings or anything that is attached to the earth or permanently fastened to anything attached to the earth (However, it does not include growing crops or grass as they can be


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easily detached from the earth). The best example when mortage is created is when someone takes a Housing Loan / Home Loan. In this case house is mortgaged in favour of the bank / financer but remains in possession of the borrower, which he uses for himself or even may give on rent.

Pledge, Hypothecation and Mortgage Under Indian LawPledge : Section 172 of the Indian Contract Act defines pledge as "The bailment of goods as a security for the payment of a debt or performance of a promise" The bailor in this case is called a Pawnor and the bailee is called Pawnee

To create a valid pledge in the eyes of Law, the three important points needs to be noted :

(a) Delivery of Possession : As in bailment, in pledge too delivery of possession is required. For exmaple, in Revenue Authority vs Sundarsanam Pictures, AIR 1968, it was held NOT to be pledge because the film producer borrowed a sum of money from a financier and agreed to deliver the final prints of the film when ready. Thus, there was no delivery of the goods at the time of agreement;

(b) Delivery is in return of a loan or promise to perform something. Therefore, if your friend gives you his Motor-cycle to go to college, it is not pledge but can be called simple bailment;

(c) It should be in pursuance of a contract : The delivery must be done under a contract (oral or written). However, it is not necessary that delivery and loan take place at the same time. Delivery can be made even after the loan is received.

Hypothecation: was not defined under Indian Law for long time and was used more on the basis of practice. However, now under the Secruitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, hypothecation is defined as "a charge in or upon any movable property, existing or future, created by a borrower in favour of a secured creditor without delivery of possession of the movable property to such creditor, as a security for financial assistance, and includes floating charge and crystallization into fixed charge on movable property".

Mortgage : is defined in Section 58 of the "Transfer of Property Act 1882". It is the transfer of an interest in specific immovable property for the purpose of securing payment of money advanced by way of loan.


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Difference Between Pledge, Hypothecation and Mortgage at a Glance Pledge Hypothecation MortgageType of Security Movable Movable Immovable

Possession of the security

Remains with lender (pledgee)

Remains with Borrower

Usually Remains with Borrower

Examples of Loan where used

Gold Loan, Advance against NSCs, Adv against goods (also given under hypothecation)

Car / Vehilcle Loans, Adv against stock and debtors

Housing Loans


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Transfer of Actionable ClaimBeneficial 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 goods13 .

(2) A claim to money under an insurance policy14 .

(3) A share in partnership.15

(4) A claim for arrears of rent16 .

(5) A claim for return of earnest money17 .

(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

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

13 Zaffar Mehar Ali v. Budge-Budge Jute Mills, (1907), 34, Cal. 289.14 Varjivan Das v. Magan Lal, A. I. R., (1937), Bom. 38215 Bharat Prasad v. Pras Sibgh Jute Mills, (1907), 34, Cal. 289.16 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. 20919 Amir Hasan Khan v. Muhammad Nazir Hussain, A.I.R. (1932), All. 345.20 Alkash Ali v. Nath Bank, A.I.R. (1951), Assam 5621 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. 7125 Jugalkishor Saraf v. Raw Collon Co. Ltd. A.I.R. (1955), S.C. 376.


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DEFINITION OF ACTIONABLE CLAIM:Section 3 of Transfer of Property 1882 defines “Actionable claim”. As per Mulla’s T.P. Act an actionable claim is a claim to any unsecured debt. Such a debt should be other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property (because these are not transfers of claim but of the property itself) or a claim to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant. The claim should be such as Civil Court would recognise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent; Such transfer of an actionable claim shall be effected only by execution of an instrument is writing by the assignor to the assignee. [Section 130 of Transfer of Property 1882].

DEFINITION OF GOODS: Definition of goods under Sale of Goods Act 1930 - “Goods” means every kind of

movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale. [section 2(7)].

Definition of goods under Central Sales Tax Act 1956- “Goods” includes all materials, articles, commodities and all other kinds of movable property, but does not include newspapers, actionable claims, stocks, shares and securities. [section 2 (d)]

ISSUE I & II: DETERMINATION WHETHER ACTIONABLE CLAIM OR GOODS WITH THE HELP OF RELEVANT CASE LAWS

H. Anraj v. State of Tamil Nadu (1986) 1 SCC 414

Issue: Whether sales tax can be levied by a State Legislature on the sale of the Lottery Tickets in the concerned State?

The Supreme Court held that the lottery tickets, to the extent they comprise an entitlement to participate in a draw, are "goods" as they constitute a dealer's (in lottery tickets) stock in trade which is capable of being bought and sold in the market (and that there is a transfer of property in goods in every sale of the same). Lottery tickets are goods and not actionable claims. Both were held to be beneficial interests in moveable property, the former in present, and the latter in future, depending on the contingency.

Vikas Sales Corporation v Commissioner of Commercial Taxes AIR 1996 SC 2082

Issue: Whether transfer of import license (REP) by the holder to another person constitute sales of goods?

S.C examined if it does, it is eligible to sales tax, otherwise not. The features of REP licence include an innate value and freely transferable. These features make it a marketable commodity.


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Thus it held that it was a highly attractive and sought after instrument/means for importing goods. Infact, those licenses were being traded freely in the market and for that reason alone those were goods. Also, when they have a value of their own unrelated to the goods which can be imported there under, it is idle to contend that they are in the nature of actionable claims.

Sunrise Associates vs. Govt. of NCT of Delhi & Ors 2006 (5) SCC 603

Issue: Whether decision in Anraj case that lottery tickets are goods for purposes of levying sales tax was correct?

S.C. held that the lottery ticket has no value in itself as it is mere piece of paper. Its value lies in fact that it represents chance or right to conditional benefit of winning prize of greater value than consideration paid for transfer of that chance. It is nothing more than token or evidence of this right. Three ingredients in the sale of lottery tickets, namely, (i) prize; (ii) chance; and (iii) consideration. So, when one purchases a lottery ticket, he purchases for a prize, which is by chance and the consideration is the price of the ticket. The distinction drawn in H. Anraj case between the chance to win and the right to participate in the draw was held to be unwarranted and specious. Even if taken as a separate right, it would still be considered to be an actionable claim. A Constitutional Bench of the S.C. overturned the decision in the H Anraj case, holding that the sale of lottery tickets is, at best, an actionable claim.

Yasha Overseas v. Commissioner of Sales Tax (2008)

Issue: Whether the decision in Vikas case can be said to be impliedly overruled by the Constitution Bench decision in Sunrise? If no, whether Vikas case is still a good law and apply to cases of DEPB?

S.C. held that It was indeed true that the Constitution Bench in Sunrise Associates’ case (supra) did not approve the decision in Vikas Sales Corpn.’s case (supra) insofar as it gave their free transferability as an additional reason to hold that REP licences were not actionable claims but ‘goods’ properly so called. But there this question did not come for reference and hence no decision was given on this issue. Decision in Vikas sales still holds good and is applicable to DEPB as well.

State of Kerala and Ors. v. Mini Shamsudin and Ors. (2009)

Issue: Whether decision in Sunrise case is correct?

H.C. upheld the decision of Sunrise case. It held that actionable claims are `goods' and movable property but not for the purpose of the Sales Tax Acts. Consequently, an actionable claim is movable property and ‘goods’ in the wider sense of the term but a sale of an actionable claim would not be subject to the sales tax law.


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What is significance of actionable claim and what are the legal attributes thereof insofar as the law in India is concerned?

As the expression "Actionable Claim" itself denotes, it is a claim on which action lies for certain reliefs in the law courts. It excludes, the claims which have been already adjudicated or decreed so that no further action can be based thereon and also the claims, through actionable are secured by mortgage or pledge or hypothecation. This exclusion is reflected in the definition of "Actionable Claim" contained in Section3 of Transfer of Property Act.


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JUDICIAL PRONOUNCEMENTSSadasook Ramprotap v Hoare Miller & Corporation26 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 jaipur30 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 Nadu32 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.

26 1923, (27), Cal WN, 73327 1862, (31), Beav, 35128 1878, (8), Ch D 218.29 1838, (9), Sim 327, p. 332.30 1969, (1), SCR 12231 1969, (1), SCR 595.32 1986, (61), STC, 165 SC.


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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 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.


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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 han 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. Debts secured by mortgage etc. are excluded from the definition of “Actionable Claim” because such debts are not the claims to property but the property itself.


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BIBLIOGRAPHY AND WEBLIOGRAPHY

1) Sinha R. K., “The Transfer of Property Act”, 9th Edition 2006.

2) Sukla S. N., “The Transfer of Property Act”, 26th Edition 2007

3) Subharao’s G.C.V. “Transfer of Propert Act” 15th Edition 2006.

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

5) http://www.hindu.com/pp/2006/05/20/stories/2006052001250300.htm

6) http://www.rbi.org.in/scripts/PublicationReportDetails.aspx

7) P.N. MISRA 9TH EDITION Rights and Liabilities of Buyer and Seller of “Transfer of Property Act”