Do you know what is legal and equitable assignment? In banking, an actionable claim is the subject of assignment. It is permissible under Section 130 and 136 of the Transfer of Property Act, 1882 to assign “actionable claims” to anyone except to a judge, a legal practitioner or an officer of the Court of Justice.
Section 3 of the Transfer of Property Act 1882 defines actionable claim as.
“Actionable claim means a claim to any debt other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property or to any beneficial interest in movable property not in the possession either actual or constructive, of the claimant, which the Civil Courts recognize as affording grounds for relief, whether such debt or beneficial interest be existent, accruing conditional or contingent”.
Assignment may be legal or equitable.
What is legal and equitable assignment
In order to be legal and assignment of an actionable claim must be in writing and signed by the assignor. It must not be by way of charge only. It is to be absolute. A written notice of assignment containing the name and address of the assignee is to be sent by the assignor the debtor or the borrower that the debt has been assigned to him (banker) asking for his acknowledgement of the notice and for confirmation of the balance due.
If an assignment does not fulfill any of the requirements of a legal assignment, it is an equitable assignment. For example, where a debtor issues an order in favour of his creditor, on his debtor asking him to pay such funds to his creditors, it will result in creation of an equitable charge of the creditors, it will result in creation of an equitable charge of the creditors over such funds. In the case of a legal assignment, the assignee can sue in his own name but not so if it is an equitable assignment. A legal assignee can also give a valid discharge for the debt without the concurrence of the assignor but the assignee of an equitable assignment cannot do so.
You May Like Also:
- Some defects of Assignment as Security in bank
- Necessary Precautions of Equitable Assignment of bank security
- Bank Loan against Book Debts
- Advance Against Fixed Deposit Receipts