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Section 132: Liability of transferee of actionable claim

Transfer of Property Act • Official Statutory Text & Practice Guide

Statutory Regulation
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Competent Court / Tribunal
Act 1882
Section 131 All 137 Sections of Transfer of Property Act Section 133

Legal Commentary & Landmark Judgments: Section 132

Section 132 codifies the rule that the transferee of an actionable claim takes it subject to all liabilities and equities to which the transferor was subject at the date of the transfer.

  • Equities and Set-Offs Attachment: 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.
  • Debtor Defenses Preserved: Debtor can plead against the assignee any set-off, cross-claim, payment, or fraud that existed against the original creditor at the date of assignment.
  • Nemo Dat Principle in Choses in Action: Assignee acquires no higher or better title to the debt than the assignor possessed.
Key Landmark Precedents:
  • Union of India v. Sri Sarada Mills Ltd., (1972) 2 SCC 877: The Supreme Court affirmed that under Section 132, the assignee of an actionable claim takes subject to all pre-existing equities and set-offs available to the debtor against the assignor.
  • Nahar Industrial Enterprises Ltd. v. Hong Kong & Shanghai Banking Corp., (2009) 8 SCC 646: Reaffirmed that commercial debt assignees cannot escape counterclaims accrued prior to assignment.
Courtroom Practice & Strategic Litigation Guidance:

Before purchasing an actionable claim or loan book, conduct thorough due diligence to verify that the debtor does not hold counterclaims or set-offs that would wipe out the debt under Section 132.

Section 131 All 137 Sections of Transfer of Property Act Section 133