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This case will answer the argument advanced that in cases of equitable assignment there ought to be a tripartite agreement. It is now fairly settled that even when a debtor enters into an agreement that the debt shall be paid out of a specific fund coming to the debtor himself even then there can be an equitable assignment to the fact that in this case the debtor sells the stamps and there is no specific person from whom the 2nd defendant has to recover some money. When it is conceded that by the sale of stamps the debtor himself would come in possession of specific funds and if he undertakes to pay the debt out of such a specific fund, it would my opinion , satisfy the requirements of an equitable assignment.

(17) In Ramu Aiyar v. Parthasarathy Chetty, 43 Ind Cas 385 : (AIR 1918 Mad 172) a Full Bench of the Madras High Court in a case where a defendant authorised plaintiff to collect certain decrees and to pay a certain sum out of the proceeds to himself held that this amounted to an equitable assignment of the decrees in the plaintiffs favour". It was also held that an agreement between an assignor and an assignee that a debt should be paid out of a specific fund or an undertaking to pay over to another moneys to be received from a particular source, amounts to an equitable assignment". It is clear from this case also that it is not necessary to constitute an equitable assignment that there should be three parties to such an agreement. Even when the specific fund reaches the hand of the debtor and he undertakes to pay over to another, moneys which he thus receives, would also satisfy the requirements of an equitable assignment. It is perhaps pertinent to note that in his judgment Seshagiri Aiyar, J. stated :

I think that Courts in India ought not to perpetuate distinctions between legal rights and equitable rights and should not hold that there might be an equitable assignment which is a thing distinct from a legal assignment."
Further on the learned Judge observed :
"I am unwilling that in India the assignment of a right to receive money's or a chose in action should be called an 'equitable assignment' instead of using unambiguous expressions showing the exact right assigned".

These observations indicate that the term 'equitable assignment' does not have the same connotation in all respects in India ; nevertheless the equitable assignment are recognised in India, but they must be effected in accordance with the provisions of S. 130 In this regard it is profitable to refer to Mulraj Khatau v. Vishwanath Vaidya , ILR 37 Bom 198 (PC).

This decision therefore settles the question once for all. It is clear that equitable assignment now forms part of actionable claim and can be effected only in accordance with A. 130 of the Act. Such equitable assignments can either be absolute transfers, or can be effected by way of security. In this case there is not question of security. It is a case of an assignment of specific fund for the purpose of discharging the debt, which is an equitable assignment and as it has been effected in accordance with S. 130 of the Act the transfer in valid.