Indian Contract Act Section 60 — Application of payment where debt to be discharged is not indicated

CHAPTER IV OF THE PERFORMANCE OF CONTRACTS — Appropriation of payments

Commercial / Corporate

Summary

If a debtor makes a payment but does not say which debt it should go towards, and there is nothing else to show which debt they meant, the creditor can choose which debt to apply the payment to. The creditor may pick any lawful debt that is actually due and payable from the debtor. This applies even if that debt is old enough that it could no longer be enforced in court because of the law on time limits for filing suits.

Official Text

Where the debtor has omitted to intimate and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitation of suits.