Actionable claim
Also called: Assignment of debt, Chose in action
A claim to an unsecured debt, or to a beneficial interest in movable property not in the claimant's possession, which the civil courts recognise as affording grounds for relief.
Explained
Section 3 of the Transfer of Property Act, 1882 defines an actionable claim as 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, actual or constructive, of the claimant, which the civil courts recognise as affording grounds for relief, whether the debt or interest is existent, accruing, conditional or contingent. It corresponds broadly to the English chose in action.
Two categories follow. The first is an unsecured debt, such as money due under a contract or a book debt. A secured debt is excluded because the creditor has rights in the security itself. The second is a beneficial interest in movable property that the claimant does not possess, such as the right to receive goods under a contract that the seller still holds. Actionable claims are excluded from "goods" by Section 2(7) of the Sale of Goods Act, 1930, so they are transferred under the TPA and not sold as goods.
Chapter VIII (Sections 130 to 137) governs transfer. Under Section 130 the transfer, with or without consideration, must be by an instrument in writing signed by the transferor or his authorised agent, and it is complete and effectual on execution of that instrument; notice to the debtor is not needed for completeness, though a debtor who pays the transferor without notice is protected. Section 131 requires a notice of transfer to be in writing and signed. Section 132 makes the transferee take subject to all liabilities and equities against the transferor at the date of transfer. Under Section 133 a warranty of the debtor's solvency applies only to solvency at the time of transfer. Section 136 bars Judges, legal practitioners and court officers from buying or trafficking in actionable claims. Section 137 excludes stocks, shares, debentures, negotiable instruments and mercantile documents of title to goods from the Chapter.
Examiners usually test what is excluded from the definition, the writing requirement in Section 130 and the exclusions in Section 137.
What the law says
[“actionable claim” means a claim to any debt, other than a debt secured by mortgage of immoveable property or by hypothecation or pledge of moveable property, or to any beneficial interest in moveable property not in the possession, either actual or constructive, of the claimant, which the Civil Courts recognise as affording grounds for relief, whether such debt or beneficial interest be existent, accuring, conditional or contingent:]
Definition 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 authorised 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.
Mode of transfer by signed written instrument
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 B for the debt due by B to A. 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.
Transferee takes subject to equities
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.
Bar on court officers dealing in actionable claims
Nothing in the foregoing sections of this 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 to goods” includes a bill of lading, dock-warrant, warehouse 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 authorising or purporting to authorise, either by endorsement or by delivery, the possessor of the document to transfer or receive goods thereby represented.]
Excluded instruments and documents
(7) “goods” means every kind of moveable 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;
(8) a person is said to be “insolvent” who has ceased to pay his debts in the ordinary course of business, or cannot pay his debts as they become due, whether he has committed an act of insolvency or not;
(9) “mercantile agent” means a mercantile agent having in the customary course of business as such agent authority either to sell goods, or to consign goods for the purposes of sale, or to buy goods, or to raise money on the security of goods;
Section 2(7): actionable claims excluded from goods
Example
Illustration to Section 132: A transfers to C a debt due to him by B while A is himself indebted to B. In C's suit against B, B may set off the debt A owes him.
For the exam
- Secured debts (mortgage, hypothecation, pledge) are not actionable claims.
- Transfer needs a signed written instrument and is complete on its execution (Section 130 TPA).
- Transferee takes subject to all equities against the transferor (Section 132).
- Negotiable instruments, shares and debentures are outside Chapter VIII (Section 137).
- Judges and legal practitioners cannot buy actionable claims (Section 136).
102 questions in the Law Maker question bank use this term. Practise Transfer of Property Act questions
Related terms
- Transfer of propertyUnder Section 5 of the TPA, an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself and one or more other living persons.
- Movable propertyUnder Section 2(21) of the BNS, property of every description except land and things attached to the earth or permanently fastened to anything attached to the earth. Other Acts frame it differently.
- GoodsUnder Section 2(7) of the Sale of Goods Act, 1930, every kind of movable property other than actionable claims and money, including stocks and shares, growing crops and things to be severed from land.
- Negotiable instrumentA promissory note, bill of exchange or cheque payable either to order or to bearer (Section 13(1) of the Negotiable Instruments Act, 1881).
- MortgageThe transfer of an interest in specific immovable property to secure the payment of money advanced or to be advanced as a loan, an existing or future debt, or an engagement giving rise to a pecuniary liability.
- PledgeThe bailment of goods as security for payment of a debt or performance of a promise (Section 172 of the Contract Act). The bailor is called the pawnor and the bailee the pawnee.
Further reading
Checked 6 November 2026. Statutory text is quoted from the Bare Acts library, taken from India Code. See the full glossary.