(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.
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).
Legal Commentary & Landmark Judgments: Section 130
Section 130 of the Transfer of Property Act, 1882 governs the transfer of actionable claims, mandating an instrument in writing and transferring all rights and remedies directly to the transferee.
Under Section 131, notice of assignment must be in writing and signed; under Section 132, the transferee takes the claim subject to all equities and set-offs which the debtor had against the transferor at the date of transfer.
Section 130 is the legal bedrock of factoring, debt assignment, and securitization in Indian finance. When banks sell non-performing assets (NPAs) to Asset Reconstruction Companies (ARCs), the transfer deed under Section 130 operates to transfer the entire debt, securities, and right of recovery to the ARC, enabling the ARC to step directly into the bank's shoes in court.