Transfer of Property Act, 1882 | Chapter VIII - Transfers of Actionable Claims

Section 137 - Saving of Negotiable Instruments, etc.

Section 137 of the Transfer of Property Act, 1882 excludes certain financial interests, negotiable instruments and commercial documents of title from the preceding provisions of Chapter VIII concerning transfers of actionable claims. The section includes a specific explanation defining mercantile documents of title to goods.

Complete text of Section 137

137. Saving of negotiable instruments, etc. - Nothing in the foregoing sections of this Chapter applies to stocks, shares or debentures, or to instruments which are for the time being, by law or custom, negotiable, or to any mercantile document of title to goods.

Explanation. - The expression "mercantile document of title to goods" includes a bill of lading, dock-warrant, warehouse-keeper's certificate, railway-receipt, warrant or order for the delivery of goods, and any other document used in the ordinary course of business as proof of the possession or control of goods, or authorizing or purporting to authorize, either by endorsement or by delivery, the possessor of the document to transfer or receive goods thereby represented.

Meaning and legal effect of Section 137

Chapter VIII of the Act contains rules for transfer of actionable claims. Section 130 ordinarily prescribes a signed written instrument for transferring an actionable claim, while Section 131 deals with notice and Section 132 deals with liabilities and equities. Section 137 clarifies that those foregoing rules do not govern the excluded categories of property and documents. This does not mean those assets are freely transferable in every situation: the applicable special statute, commercial usage and contractual restrictions must be considered.

What categories are excluded?

Stocks, shares and debentures: Transfer of corporate securities and related interests is governed by applicable company, depository and securities laws, rather than the foregoing Chapter VIII rules.
Negotiable instruments: Instruments negotiable under law or established custom are excluded. For example, the Negotiable Instruments Act, 1881 governs relevant promissory notes, bills of exchange and cheques.
Mercantile documents of title to goods: These documents represent possession or control of goods, or authorise the holder to transfer or receive goods through endorsement or delivery in ordinary commercial practice.

Mercantile documents of title: statutory examples

The explanation expressly names a bill of lading, dock-warrant, warehouse-keeper's certificate, railway-receipt, and a warrant or order for delivery of goods. Its wording is inclusive, not exhaustive: another document can qualify if used in the ordinary course of business as evidence of possession or control of goods, or if it authorises or purports to authorise transfer or receipt of the represented goods by endorsement or delivery.

Practical illustrations

Example 1 - Cheque: A cheque transferred in accordance with the applicable negotiable-instruments law is not subject to the ordinary Chapter VIII assignment procedure merely because it represents a monetary claim.

Example 2 - Goods in transit: A bill of lading representing shipped goods may be transferred in the manner recognised by the applicable shipping and commercial law. Section 137 preserves that distinct legal treatment.

Example 3 - Company shares: A transfer of shares must satisfy the applicable requirements for those securities, including company and depository law where relevant, rather than treating shares as ordinary actionable claims under Section 130.

Distinction from ordinary actionable claims

Under Section 3 of the Transfer of Property Act, an actionable claim broadly includes a claim to an unsecured debt or a qualifying beneficial interest in movable property not in the claimant's possession that civil courts recognise as grounds for relief. Section 137 nevertheless carves out the listed securities, negotiable instruments and commercial title documents from the preceding Chapter VIII provisions. The legal character of a document depends on its actual rights and applicable law, not solely on its label.

Legal note: Section 137 is an exclusion from the preceding sections of Chapter VIII, not an exemption from all legal formalities. Check the governing instrument and applicable special legislation for each transaction.

Frequently asked questions

Does Section 130 assignment procedure apply to negotiable instruments?

Section 137 excludes instruments that are negotiable by law or custom from the preceding sections of Chapter VIII. Their transfer is governed by the applicable special law and the nature of the instrument.

Are stocks, shares and debentures covered by Chapter VIII transfer rules?

Section 137 excludes stocks, shares and debentures from the preceding sections of Chapter VIII; applicable securities and company laws govern their transfer.

What is a mercantile document of title to goods?

The statutory explanation includes bills of lading, dock warrants, warehouse-keeper certificates, railway receipts and other business documents evidencing control of goods or authorising their delivery or transfer.

Does Section 137 repeal other laws on transfer of instruments?

No. It is a saving provision that excludes specified assets and documents from the foregoing sections of Chapter VIII; other applicable laws continue to govern them.

Official resources

Refer to the India Code for the Transfer of Property Act, 1882, the Negotiable Instruments Act, 1881 and related legislation, and the Legislative Department for central legislative materials.