Section 137 of The Transfer of Property Act, 1882
1[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 authorising or purporting to authorise, either by endorsement or by delivery, the possessor of the document to transfer or receive goods thereby represented.]
Summary
- This section exempts specific financial and commercial documents from the general rules governing the transfer of actionable claims under Chapter VIII.
- The exemption applies directly to corporate stocks, shares, and debentures.
- Instruments that are negotiable by law or custom, meaning they can be transferred by delivery or endorsement, are also excluded.
- Any mercantile document of title to goods is entirely exempt from these transfer rules.
- The explanation defines a mercantile document of title as any document used in business to prove possession, control, or authority to transfer goods, including bills of lading, dock-warrants, and railway receipts.
Practical examples
FAQ
1. What types of assets are saved from the transfer of actionable claim rules by Section 137 of the Transfer of Property Act, 1882?
Under Section 137 of the Transfer of Property Act, 1882, stocks, shares, debentures, negotiable instruments, and mercantile documents of title to goods are saved and exempted from these rules.
2. How does Section 137 of the Transfer of Property Act, 1882 define a mercantile document of title to goods?
Section 137 of the Transfer of Property Act, 1882 defines it as any document used in the ordinary course of business as proof of possession or control of goods, or authorising the possessor to transfer or receive the goods.
3. Are railway receipts and bills of lading covered under Section 137 of the Transfer of Property Act, 1882?
Yes, the Explanation to Section 137 of the Transfer of Property Act, 1882 explicitly lists bills of lading, dock-warrants, warehouse keeper's certificates, and railway receipts as examples of mercantile documents of title to goods.
4. Does a negotiable instrument require a formal written assignment under Chapter VIII of the Transfer of Property Act, 1882?
No, Section 137 of the Transfer of Property Act, 1882 saves negotiable instruments from the foregoing transfer provisions of Chapter VIII, allowing them to be transferred according to their own laws or custom.
Test yourself
Q1.Under Section 137 of the Transfer of Property Act, 1882, how does the exemption for negotiable instruments interact with Section 134 of the same Act, which governs the transfer of a mortgaged debt?
Q2.Under Section 137 of the Transfer of Property Act, 1882, if an advocate connected with a Court of Justice buys shares in a public company, does Section 136 of the same Act apply to prevent this transaction?
Q3.Under Section 137 of the Transfer of Property Act, 1882, which of the following is NOT explicitly listed in the Explanation as a mercantile document of title to goods?
Q4.Under Section 137 of the Transfer of Property Act, 1882, how can a mercantile document of title authorise its possessor to transfer or receive the goods it represents?