Indian Contract Act Section 59 — Application of payment where debt to be discharged is indicated

CHAPTER IV OF THE PERFORMANCE OF CONTRACTS — Appropriation of payments

Commercial / Corporate

Summary

If a person owes several separate debts to the same creditor and makes a payment, the debtor can specify which particular debt the payment should go toward. This can be done either by clearly stating it at the time of payment, or through the surrounding circumstances that make the intention obvious. If the creditor accepts the payment, the creditor must apply it to that specified debt as the debtor intended.

Official Text

Where a debtor, owing several distinct debts to one person, makes a payment to him, either with express intimation, or under circumstances implying, that the payment is to be applied to the discharge of some particular debt, the payment, if accepted, must be applied accordingly.