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Transfer of Property Act, 1882 · Chapter VIII: Of Transfers of Actionable Claims

Section 130: Transfer of actionable claim

In plain words

An actionable claim, such as an unsecured debt, can be transferred only by a written instrument signed by the transferor or their agent. The transfer is complete when signed, and the transferee gets all the transferor's rights and remedies.

  • Until the debtor gets notice of the transfer, the debtor's dealings with the original creditor, such as payment, remain valid.
  • The transferee can sue in their own name without the transferor's consent.
  • This does not apply to marine or fire insurance policies, and section 38 of the Insurance Act, 1938 is unaffected.

Example: B transfers a debt owed by A to C. A, not yet notified, pays B. The payment is valid and C cannot sue A.

A simplified explanation, prepared with AI assistance from the official text below and checked automatically against it for numbers and cross-references. The official text is the law and prevails over this summary. Not legal advice.

Official text

1(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 debt or 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.

Exception.— Nothing in this section applies to the transfer of a marine or fire policy of insurance [or affects the provisions of section 38 of the Insurance Act, 1938 (4 of 1938).]

Illustrations

(i) A owes money to B, who transfers the debt to C. B then demands the debt from A, who, not having received notice of the transfer, as prescribed in section 131, pays B. The payment is valid, and C cannot sue A for the debt.

(ii) A effects a policy on his own life with an Insurance Company and assigns it to a Bank for securing the payment of an existing or, future debt. If A dies, the Bank is entitled to receive the amount of the policy and to sue on it without the concurrence of A's executor, subject to the proviso in sub-section (1) of section 130 and to the provisions of section 132.

Source: India Code (indiacode.gov.in), the consolidated text published by the Legislative Department, Government of India. Text as updated on India Code on 15 October 2026. Words in square brackets [ ] were inserted or substituted by later amending Acts, and *** marks words omitted by an amendment. The amendment footnotes are not reproduced here. Official text on India Code.

Supreme Court judgments citing the section 130