Section 60 The Indian Contract Act, 1872

Here is the detailed explanation of:

πŸ”Ή Section 60 – The Indian Contract Act, 1872

πŸ“˜ Section Title: Application of payment where debt to be discharged is not indicated

πŸ” Text of the Section:

"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."

βœ… Explanation:

This section deals with situations where a debtor owes multiple debts to the same creditor, and the debtor makes a payment without specifying which debt the payment is meant to discharge.

In such a case:

The creditor has the right to apply the payment to any of the debts that are:

Lawful

Due and payable

Even if that debt is time-barred under the Limitation Act

πŸ“š Example:

A owes B three debts:

β‚Ή10,000 (from 2022)

β‚Ή5,000 (from 2019, time-barred)

β‚Ή15,000 (from 2023)

A pays β‚Ή5,000 without stating which debt it is for.
πŸ‘‰ B can apply this amount to any of the three debts, including the time-barred β‚Ή5,000.

πŸ” Related Sections:

Section 59 – If debtor specifies which debt to apply the payment to, the creditor must follow.

Section 61 – If neither party specifies, and circumstances don’t indicate it, payment is applied to debts in order of time.

 

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