Report No. 70
8.11. Position under the Contract Act.-
We are not, at the moment, concerned with the modes of assignment of the benefit of a contract1. But the broad and general proposition that a benefit of a contract is a species of an actionable claim should, in our opinion, find a place in the definition of that expression in the Transfer of Property Act, to make it more expressive and self-contained.
1. Ibrahim v. Union of India, AIR 1966 Guj 6 (13), paras. 7 and 8.
8.12. Such an amendment would not, of course, mean that contractual or statutory restrictions on assignment, or non-assignability arising by reason of the nature of the subject-matter, would thereby be rendered nugatory1. What actionable claims can be assigned is a matter which is dealt with not by the definition but mainly by the provisions of section 6 and, though indirectly, by section 130 and succeeding sections. This is true even of those items of property which are undoubtedly actionable claims under the present definition.
For example, the salary of an employee2 and also his pension is an actionable claim. But this proposition is subject to section 6(g) prohibiting the transfer of certain pensions-a prohibition which does not apply to pensions payable by a foreign State remitted to pensioner in India.3 Then, an insurance policy creates an actionable claim, but there are special provisions relating to its assignment-for example, in the Marine Insurance Act.4-5
1. Section 6.
2. Section 6.
3. Bishamber Nath v. Imdad Ali, 1891 ILR 18 Cal 216 (PC).
4. Sections 17, 52, and 79 of the Marine Insurance Act, 1963.
5. Union of India v. Alliance Insurance Company, AIR 1964 Cal 31.
On the above reasoning, we recommend that in the definition of "actionable claim", after the words "not in the possession, either actual or constructive, of the claimant", the words "including the benefit of a contract otherwise than one relating to immovable property" should be added. After this amendment, the last portion of the definition which reads-"whether such debt or beneficial interest be existent, accruing, conditional or contingent" will still apply to the benefit of a contract; as also the restrictions indicated by the words "which the civil courts recognise as affording grounds for relief".
8.14. Mere right to sue.-
A question often arises whether a particular claim is an actionable claim or a mere right to sue which cannot be transferred by reason of section 6(e). Much depends on the manner in which the instrument of assignment is drafted. In a Nagpur case1, these were the fact.-
On the 25th of March, 1920, the defendant Mst. Nakhela executed a document in favour of one Raoji, which had been described as a chitti, in which it was recited that she had borrowed a cart, bullocks, a silk dupata and a sari, the total value of which things was Rs. 200, to use in the marriage of her son. In the chitti, Mst. Nakhela promised to return the article when done with, when she would be entitled to get back her chitti. On the 2nd of June, 1921, according to the case of the plaintiffs, Raoji executed in their favour a sale deed by which he transferred to the plaintiffs Kokaya and Durga the chitti with all the rights thereunder. The following are extracts from the deed of sale:
"You are at liberty to recover the amount of these articles from Nakhela, either privately or through the Civil Court. It also stipulated that if you do not recover this amount from Nakhela, I shall be liable to pay it to you."
It was held that this was a transfer of a mere right to sue-a personal claim which could not be transferred. A claim for damages for breach of Contract, after breach, is not an actionable claim. The actual decision, will respect, is correct on the language of the instruments. But the following discussion of the law, as found in the judgment, seems to be wider than is the correct position:-
"For the applicant it is contended that all that Raoji could recover was either the original articles lent or damages for breach of contract to return them and I have no doubt that this contention is a correct one. So far as Raoji's right to recover the goods lent is concerned, that a personal claim and there is ample authority for holding that such a personal claim is a right which cannot be transferred. It is also cleat that, failing the recovery of the original goods, what was recoverable was money in the form of damages and that this money was not a debt.
No doubt, the value of the article was specified in the chitti but the chitti would only be the evidence of the value of the articles and there is no promise in the chitti to pay Rs. 200. It would be open to the defendant to prove that the goods were in reality worth less than Rs. 200. What was transferred therefore by Raoji to the plaintiff was a mere right to sue for damages and there is ample authority for holding that such a transfer is against the provisions of section 6 of the Transfer of Property Act."
1. Nakhela v. Kokava, AIR 1923 Nag 67 (2).
8.14A. We may comment that if the right to recover the goods is transferred, it would be transfer of a claim to beneficial interest in movable property not in possession, actual or constructive.
We have discussed at length the latter part of the definition of actionable claim in view of the fact that the statutory provision does not mention it specifically. This does not mean that the earlier half of the definition relating to "debt" is not important. In practice, questions do arise with reference to this part of the definition also, namely, whether a particular demand is within this part. The answer must depend largely on what may be understood to be comprehended by "debt", since a claim to a debt is an actionable claim. "Debt" in its primary sense, means a liquidated monetary obligation which is usually recoverable by a suit. There is a series of rulings to that effect in India1-2.
This also seems to be the English law, where the aspect of certainty (liquidated amount), the aspect of money and the aspect of recoverability in law, have been emphasised in the judicial decisions.
In English law, it is an essential feature of an action for debt that it should be for a liquidated or certain sum of money. "In general", says Blackstone3, "whenever a contract is such as to give one of the parties a right to receive a certain and liquidated sum of money from the other (as in the case of a bond for payment of money, or an implied promise to pay for goods supplied so much as they shall be reasonably worth), a debt is then said to exist between these parties; while, on the other hand, if the demand be of an uncertain amount, as when an action is brought against a bailee for injury done through his negligence to an article committed to his care, it is described not as a debt, but as a claim for damages."
1. Moti Lai v. Rndhey Ltd, ILR 55 All 814.
2. Ram Charan Das v. Naseeran, AIR 1935 All 342.
3. Blackstone, cited by Gour.