State the Rules Regarding Appropriation of Payment.
Rules Regarding Appropriation of Payment: Appropriation of payment refers to the application of payment to a particular debt. In case where the debtor owes several debts to one creditor then if he does not expressly specify to which the payment needs to be applied for can cause a problem. Sections 59 to 61 specify the following rules for the appropriation of payments:
Where there is an express or implied intimation by the debtor (Section 59): Where the debtor who owes several debts to one creditor, has the. right to instruct the creditor to which the particular debt the payment needs to be applied to. In case of no intimation, the circumstances of the case need to be studied. For example: A owes B, among other debts, Rs. 1,000 upon a promissory note which falls due on Oct. 1. He owes B no other debt of that amount. On Oct. 1. A pays to B Rs. 1,000. The payment is to be applied to the discharge of the promissory note.,
Where there is no express or implied intimation: While making the payment if the debtor does not specify and there are no circumstances indicating to which debt the payment needs to be applied, then the creditor has the option of applying the payment to any lawful debt due from the debtor, even to a time barred debt.
Where neither party appropriates: Where there is no appropriation from the debtor or the creditor then the payment should be applied in discharge of the debts in order of time, whether or not they are time-barred.