ACTIONABLE CLAIM & CHARGE

Admin

2 years ago

Advertisements

Spread the love

This Article is written by Ritika Sahni of 3rd year of Meerut College, Intern under Legal Vidhiya

INTRODUCTION

The term Actionable Claim & Charge has been derived from the concept of Transfer of Property Act 1882.

The Transfer of Property Act came into existence on 1^st July 1882 in an Indian Legislation which usually regulates the Transfer of Property Act in India.

In basic terms Transfer of Property is usually defined as the Transfer of Something or we can say that it is the Conversion of a Property from ‘One Individual to the Another Individual’.

What Property Means?

A Property can be defined as Anything which has its Physical & Virtual Entity which is usually owned by an Individual or the Group of People or Individuals.

A property can easily be transferred from one Individual to another Individual by the transferring of its Rights, Ownership, or Possession Ingredients which the One Individual can satisfy after he receives the Property.

Usually, the Transfer of Property is being classified into 2 Types:

The First Method by which the Transfer of Property can be done is by ‘The Act of the Parties’.
The Second Method by which the Transfer of Property can be done is by ‘The Act of Law’.

Background of The Transfer of Property Act 1882.

During the Earlier period under the British Raj System in India, Hindus & Muslims were usually governed by their own personal laws related to the Transfer of Property.

At that time when Britishers involved themselves under the Indian Legal System, at that time they introduced the Informal Courts in which Clear & Concrete Law was Missing as the Law which was established in England.

At that time, various High Courts requested & expressed their opinions for the Creation of the Specific Acts which is being related to the concept of Transfer of Property.

The Principle of a Good Conscience, Equity & Justice was quite confusing at that time which created a lot of Uncertainties in that, so the Privy Council ensured that it noted all the Uncertainties & the Problem arising there and ensured that the Authorities are required to take the Immediate Action in this Matter of Problem.

So, a lot of Amendments were being introduced in this Act to expand its scope & to avoid the Existing Errors problem. [1]blog.ipleaders.in

MEANING OF TRANSFER OF PROPERTY

As, the term Transfer of Property is defined under ‘Section 5 of the Transfer of Property Act,1882’.

It usually refers to the Transferring of the Property and its Rights from one Individual to another Individual effectively.

Or, in other words it means an act which is performed by the Living Person who is conveying his property to one or more Individuals by himself or by the one or more Individuals who are there in the Present & Future as well.

Illustration Related to The Transfer of Property Act, 1882

Suppose Hira is the Grandson of Daya Lal Singh. Hira owns 3 Estates out of which he wants to Transfer his one of his Estate to his Grandpa Daya Lal Singh who died 2 Years Ago.

So, here the Transfer of Property won’t be valid because the Transfer of Property only takes place between the Living Persons only.

Here, Living Persons usually refers to the Company, an Association or the Body of the Individuals whether it is incorporated or not.

Transfer of Property Consists of:

Immovable Property – The Transfer here takes place between the Living-to-Living Persons.

It is defined under the Transfer of Property Act, 1882.

2. Movable Property – The Transfer here takes place between the Living-to-Living Persons.

It is defined under the Sales for Good Act, 1930.

3. Immovable Property & Movable Property – It takes place between Dead-to-Living.

It is defined under the Indian Succession Act, 1925.

Transfer of Property Consists of 2 types of Properties:

Immovable Property: Immovable Properties are those which can’t be moved from one place to another. In other words, the things that remain attached to its land & roots as well.

Example: Standing Timber, Growing of Crops, or Grass, A Building can’t be moved from its place etc.

B) Movable Property: Movable Properties are those which can be moved from one place to another place.

Example: Books, Utensils, Furnitures, Vehicles, Ownership, Jewlery these can easily be transferred from one place to another place.

Key Elements of the Transfer of Property Act, 1882-

The key elements which are being necessary in the Transfer of Property Act are as follows:

The Transfer of the Property must be done by the Competent person only. The Person should not be Intoxicated, he must have a Sound mind & the Person should not be Disqualified by the Law.

The transfer should not be done before the Title unless the Person who is present in the Transfer of the Property is Not Present.

The Transfer must be performed between the 2 Living Persons only.

For the Transferring of the Property, the Property should be ‘Transferrable’.

The Transfer of the Property must take place during the Lifetime of an Individual.

The Transfer of the Property to an Unborn Child is not Allowed. It is only possible when the Child is Born.

The Transfer of the Property can be done through the Verbal or the Oral Agreement, but in some cases, it is required in the Written Agreement.

Seller’s Responsibilities During the Transfer of the Property.

Section –54 of the Transfer of Property Act 1882 defines the ‘Sales’ as the Transfer of the Ownership of Property in exchange of a Price Promised or Paid.

The Seller must disclose all the Documents of the Title which are related to the Property to the person who is going to purchase the Property.

2.If there are any kind of Defects in the Property, the Seller must ensure that he discloses that fact in front of the Buyer who is going to purchase the Property.

3. The Seller must Completely transfer the Possession of the Property to its Buyer.

4. The Seller must ensure that he elaborates all the Necessary information & responds to all the Questions which are asked by the Buyer.

5. The Seller must ensure that he has paid all the Rent & Dues of the Property up to the Date of Sale of that Particular Property.

Buyer’s Responsibilities at the Time of Transfer of Property

While purchasing of the Property, the Buyer must ensure that his responsibilities towards the Purchasing of the Property are as follows:

If the Buyer knows certain facts about the Property such as The Property Prices & its Values, which the Seller does not aware of. In such a case, the Buyer must disclose this Relevant Information to the Seller.

After the Property Ownership, has been transferred to the Buyer, and if the Buyer bears any Losses, Injury or Decrease in the Value of the Property in such a case the Seller will not be held Responsible for it because the Ownership has been already Transferred.

The Buyer must pay the Final Amount to the Seller at the Exact Place & Time during the Completion of the Sale of The Property.

Features of Transfer of Property Act,1882
The Transfer of Property Act,1882 provides a Uniform & Clear Law which is related to the Concept of the Transfer of Property Act 1882 which includes the Transfer of the Movable Property from one Individual to the other Individual (Living Persons).

The Concept of Transfer of Property Law is not the copy of the ‘English Transfer of Property Laws’ which was introduced based on the Socio-Economic Conditions of the Country.

The Transfer of Property Act, 1882 is not to be considered as a Totally Exhaustive; as it also covers the Transfer of Immovable Properties.
The Transfer of Property Act, 1882 consists of 5 types of Transfer of Immovable Property which are as:

A) Mortgage

B) Gift

C) Sale

D) Actionable Claims

E) Lease

5. The Transfer of Property Act, 1882 is usually governed by the Various Principles such as Justice, Equity, & Good Conscience.

6. The Transfer of Property Act, 1882 is usually based upon the General Law. So, therefore it can’t prevail the Special Laws which usually passed by the Parliament. [2]www.magicbricks.in

CASE LAWS

CASE LAW 1.

V. Dhanapal Chettiar vs Yasoda Ammal on 23^rd August 1979

Under this case, the Transfer of Property Act is related to the Subject of ‘Leases of Immovable Property’. Also, this case was not directly related to the case in relation to Section 106 of the Transfer of Property Act.

CASE LAW 2.

Delhi Motor Company and Ors vs U.A. Berserker and Ors on 8^th January 1968

Under this case, the Transfer of Property Act 53A was clearly inapplicable because the Company could easily be debarred from the Supreme Court of India. [3]https://indiankanoon.org

ACTIONABLE CLAIM

Meaning of The Actionable Claim:

The term Actionable Claim has been defined under Section 3 of the Transfer of Property Act, 1882.

An Actionable Claim usually means the Claim to any Debt, other than
A debt which is usually secured up by the Mortgage of the Immovable Property,
Or any Beneficial Interest in Movable Property which is not in Possession.

Where the Civil Courts usually recognize such Claims as the Affording Grounds for the Relief.
What is Debt in Actionable Claim States?

Debt is usually defined as a Liquidated form of Money which the Debtor is Allowed to pay at the time of the Payment.

Debt is usually a kind of loan which is taken by the Debtor for fulfilling his needs. Like a Farmer taking the Loan for the Purchasing of the Crops for his Field.

Debt can be Secured or Unsecured in Nature. It totally depends upon the Condition of the Present & Future.

When the Debt is due in Present it is usually termed as the ‘Existing Debt’.

When the Debt is due in the Future it is usually termed as the ‘Accruing Debt’.

The Debt is classified into 2 types which are as follows:

Unsecured Debts: These are those Debts which are usually unsecured in Nature. The Debtor must pay the amount at any cost in any condition. It usually contains 2 Conditions:

a. When in a Security of an Immovable Property, the Debt is being Secured up by the Mortgage.

b. When in a Security of the Movable Property, that property is Pledge & Hypothecation.

Secured Debts: These are those Debts in which the Debtor is allowed to pay his own Debts under the Certain Payable Conditions. In these kinds of Debts there is no pressure on the Debtor and no time limit is there to pay the Certain Amount. These Debts are also known as the ‘Conditional Debt’.
What Does Actionable Claims Consists of?

The Actionable Claims includes the following:

A Maintainer Allowance which is allowed to be Payable in Future.
Right to proceed for a Business.
Annuities which are to be payable under the Deed of Wakf.
Amount which is due under the Policy of the Insurance.
An Amount which is due under the Letter of Credit.
It also includes the Areas of the Rent
A Decretal Debt.
Claims which are not Recognized as the Actionable Claims:

The Claims which are not being recognized under the Actionable Claims are as follows:

Right to Claim for the Damages under the Breach of the Contract. As these amounts are usually to be considered as uncertain in Nature, these amounts cannot be transferred under the Actionable Claims.

Claiming for the Mesne Profits, under this also the Claimants is not allowed.

Copyrights, Patents & Trademarks. These are to be considered as the Personal Rights of an Individual or a Company. So, these are only available to the Particular Individual only.

Decree or Judgment of a Debt, this also can’t be transferred under the Actionable Claims; as the Judgement is being pronounced, no action could be transferred in such a Condition.
Example of Actionable Claim:

Example 1:

A owes Rs. 1000 to B. So, here B’s claim is an Actionable Claim.

Example 2:

A borrows Rs.1000 from B and Mortgage his own House to him. Here, Mortgage Debt is not an Actionable Claim. [4]blogipleaders.in

CASE LAW

Godavari Bai vs. Controller of Estate Duty

Under this case, the Transfer which was done for the Transaction was an Actionable Claim. The Transfer could only be affected only by an instrument which was in Writing and was signed by the Transferor for the Transfer of the Actionable Claim.

Therefore, the Transferor included the amount of Rs 3 Lakh in the Value of the estate of the Deceased person who was passed on his Death.

In an Appeal, the Accountable Person who was the Appellate Controller of the Estate Duty held that there was no affective transfer of the Actionable Claim under this Case. [5]https://www.casemine.com

ACTIONABLE CLAIM & CHARGE

CHARGE

Meaning of Charge:

In simple terms, Charge is defined as the Claim against an Immovable Property which is Acquired by the One Person as the Security for the Payment to the Another Person. Here the Property is not Mortgaged.

A Charge on Immovable Property is usually created to Secure the Payment of the Money.

Usually, Section 100 of the Transfer of the Property Act, 1882 defines the term Charge.

Example of Charge:

Krish has 2 daughters named Pari & Khushi. Krish decides to give his entire property to Khushi and puts a Condition that Khushi is allowed to pay Rs 10,000 to Pari every month out of the Property.

Here, the amount of the Money would be constituted as a Charge which is in Favour of the Pari.

If Khushi decides to sell the entire property to Mohan the Buyer, Pari can simply enforce her right against the Mohan & can show him the Notice of the Charge.

Essentials of a Charge:
Immovable Property of one Person is made as the Security for the Payment of the Money to The Another Person: Here, it states that the Charge can only be secured by the Specific Immovable Property; otherwise, the Charge is said to be Null & Void.

By the Act of Parties: It usually states that there must be an Agreement between the Parties which creates the Charge between that Parties. There is no form of Language or Words which are usually used to create the term Charge.

Transaction Amount Doesn’t Lead to the Mortgage: Charge neither represents the Transfer of Property nor the Transfer of Rights but it creates the Right to Payment Obligation out of a Specified Property. It is important to note that all the ‘Mortgages have a Charge, but no Charges are Mortgages’.

Kinds of Charges:

The Charges are Divided into 2 Types which are:

Fixed Charge: These are those Charges which are usually created upon the Assests like Building, Machinery, Copyright etc.

These are those Charges which don’t change with the Duration of the Time.

In these Charges, the Borrower doesn’t have the Right to Sell, Transfer the Property.

In such Charges, it is mandatory to pay the Due Amount First.

Floating Charge: These are those Charges which are usually created upon the Uncertain able Assets such as Vehicles, Debtors etc.

Here, the Borrower has the Right to Sell, Transfer the Property or Dispose of & no Permission is Required.

These are the Charges which are usually Dynamic in Nature.

There is No Obligation to pay off the Due Amount First. [6]www.writinglaw.com

CASE LAWS

CASE LAW

Kartick Kumar Chatterjee & Ors vs The State of West Bengal & Arn on 10^th June 2022

Under this Case, the opinion was made that the Consideration of the Charge must be Fixed. A complainant was present, however the Magistrate learned that the Consideration on the Charge must remain fixed.

CASE LAW

Dattatraya Shanker Mote & Ors vs Anand Chintaman Datar & Ors on 3^rd October 1974

Under this Case, the Buyer who was the Transferrer made the Consideration without the Notice of the Charge.

The action was being taken against that person who has made the Consideration without the Notice of the Charge. [7]https://indiankannon.org

CONCLUSION

Hence, we have discussed about the topics: