The distinction between assignment and pledge under Section 130 of the Transfer of Property Act.

Alfred Henry Lionel Leach, C.J.

1. The appellant in this case is the Official Assignee of Madras, who represents the estate of one C Subramania Iyah, an insolvent. Before his adjudication, the insolvent borrowed a sum of Rs. 300 from the respondent, who is a money-lender and as security for the loan deposited with him two policies of insurance on his life. The deposit was evidenced by a document in writing and the question which arises in this appeal is whether this document amounts to an assignment of the insolvents interest in the policies. It was held by Somayya, J., that the document constitutes an assignment and the appellant challenges the correctness of this finding.

2. The document is in the, form of a letter signed by the insolvent in favour of the respondent and commences thus:

I have taken from you a loan of Rs 300 in words Rupees Three Hundred only at 1 1/2 pies per rupee per mensem on the pledge of the articles noted below on the following conditions.

3. It will be sufficient for the purposes of this appeal to state three of the conditions, namely, Nos. 4, 6 and 7, which read as follows:

4. I authorise you to hold and retain the below mentioned jewels with you as a collateral security for a general balance of account, i.e., not only for the aforesaid debt but also for any sums that I might have borrowed or may borrow from you or for any balance of account that may be due to you.

6. I have received to-day a copy of this letter giving full description of the pledge.

7. If I fail to redeem the articles within six months, or if I fail to pay interest for six months you may realize your dues either by sale or by public auction of all or any of the pledged properties after seven days notice by post or by personal service or by. registered post to the address given above. I shall be responsible for any deficiency and you will refund the surplus if any.

4. Immediately following the signature are these words:

Particulars of Pledge.

One Postal Endowment Assurance Policy No. 22786 for Rs. 1,500.

One National Insurance Company Table No. Ill Endowment Assurance sum assured Rs. 1,000 Policy No. E. 114692.

5. The letter was in fact a printed form used by the respondent for an advance on the security of jewellery with certain details filled in by pen. No attempt was made to alter this very inappropriate form to make it read as a transfer of the respondents interest in these policies.

6. The learned Judge has rightly pointed out that it is well established that the transfer of an actionable claim referred to in Section 130 of the Transfer of Property Act may be one of absolute assignment or by way of security. His reasons for holding that the letter signed by the insolvent operates as a transfer are that the law does not require any particular form of writing and that he was satisfied that there was here a writing by which security was created. We find ourselves unable to concur in the opinion of the learned Judge that the document operates as an assignment. It is quite true that the form of the instrument or words used are not of importance, provided that it is clearly indicated that the owner of the actionable claim is transferring his interest. A mere intention to create a pledge would not amount to an assignment within the meaning of Section 130 of the Transfer of Property Act. This was pointed out by the Privy Council in Mulraj Khatau v. Visvanath Prabhuram Vaidya (1912) 24 M.L.J. 60 : L.R. 40 IndAp 24 : I.L.R. 37 Bom. 198 . In that case the appellant claimed to be entitled to an insurance policy which had been assigned to him in writing. The respondent also claimed to be entitled to it on the ground that it had been deposited by the owner with him by way of pledge, but Lord Moulton in delivering the judgment of the Board pointed out that a pledge does not satisfy the requirements of Section 130.

7. Now when the document in this case is read, what dues it amount to? It amounts to an instrument evidencing the deposit of the policies