Transfer of Property Act Section 132 — Liability of transferee of actionable claim
CHAPTER VII OF GIFTS
General
Summary
When you receive an actionable claim—such as a debt or a right to sue for money—through a transfer, you take it exactly as the original holder held it. This means any existing liabilities or claims that could have been raised against the original holder at the time of the transfer can also be raised against you. For example, if the original holder owed money to the person who owes the debt, that person can deduct their own claim from what they owe you, even if you did not know about it. Similarly, if the original holder had no right to enforce the claim because of circumstances that would cancel it, you cannot enforce it either, even if you paid for the transfer in good faith.
Official Text
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. Illustrations
(i) A transfers to C a debt due to him by B, A being then indebted to B. C sues B for the debt due by B to A. In such suit B is entitled to set off the debt due by A to him; although C was unaware of it at the date of such transfer.
(ii) A executed a bond in favour of B under circumstances entitling the former to have it delivered up and cancelled. B assigns the bond to C for value and without notice of such circumstances. C cannot enforce the bond against A.