Section 59 The Indian Contract Act, 1872
📘 Section 59 – The Indian Contract Act, 1872
Title: Application of payment where debt to be discharged is indicated
🔹 Bare Act 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.”
🧾 Explanation:
This section deals with situations where a debtor owes multiple debts to a single creditor.
If the debtor specifies which debt the payment is meant for, the creditor must apply it to that particular debt.
It ensures that intent of the debtor is respected, as long as the creditor accepts the payment.
📌 Illustration:
X owes Y three separate debts: ₹2,000, ₹3,000, and ₹5,000.
X sends ₹3,000 to Y and clearly mentions it is for the second debt.
Y must apply the payment toward the ₹3,000 debt, not the others.
⚖️ Legal Principle:
This is the first rule under the "Appropriation of Payments" provisions (Sections 59–61).
It gives priority to the debtor’s choice, when explicitly made.
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