Section 134 of The Transfer of Property Act, 1882
Where a debt is transferred for the purpose of securing an existing or future debt, the debt so transferred, if received by the transferor or recovered by the transf eree, is applicable, first, in payment of the costs of such recovery; secondly, in or towards satisfaction of the amount for the time being secured by the transfer; and the residue, if any, belongs to the transferor or other person entitled to receive the same.
Summary
- This section regulates the transfer of an existing or future debt when it is transferred for the purpose of securing another debt.
- Any money recovered from this transferred debt must first be used to pay for the costs incurred in recovering that money.
- The next portion of the recovered money must be applied to satisfy the debt that is being secured by the transfer.
- Any remaining balance or residue from the recovered money belongs to the original transferor or the person entitled to receive it.
Practical examples
FAQ
1. What is the main purpose of Section 134 of the Transfer of Property Act, 1882?
The main purpose of Section 134 of the Transfer of Property Act, 1882 is to lay down the rules for how recovered money must be distributed when a debt is transferred to secure an existing or future debt.
2. Under the Transfer of Property Act, 1882, Section 134, who is entitled to the leftover money after the secured debt and costs are paid?
Under the Transfer of Property Act, 1882, Section 134, any leftover money, known as the residue, belongs to the transferor who secured the debt or any other person entitled to receive it.
3. According to Section 134 of the Transfer of Property Act, 1882, what has the first priority when money is recovered from a secured debt transfer?
According to Section 134 of the Transfer of Property Act, 1882, the first priority of any recovered money is the payment of the costs incurred in recovering that debt.
4. Does Section 134 of the Transfer of Property Act, 1882 apply to future debts as well as existing debts?
Yes, Section 134 of the Transfer of Property Act, 1882 explicitly applies when a debt is transferred to secure either an existing debt or a future debt.
Test yourself
Q1.Under Section 134 of the Transfer of Property Act, 1882, when a debt is transferred to secure another debt, in what order must the recovered money be applied?
Q2.Under Section 134 of the 1882 Act, if a transferee recovers a secured debt of 15,000 rupees, spends 1,000 rupees on recovery costs, and the secured debt was 10,000 rupees, how much residue is the transferor entitled to receive?
Q3.Under Section 134 of the Transfer of Property Act, 1882, to which of the following scenarios does the rule of distribution apply when a debt is transferred?
Q4.Under Section 134 of the Transfer of Property Act, 1882, if the transferor himself receives the money from the debtor instead of the transferee recovering it, how must that money be applied?