Section 61 of ICA : Section 61: Application Of Payment Where Neither Party Appropriates

Explanation using Example

Imagine Rahul has borrowed Rs. 10,000 from Priya in January, another Rs. 15,000 in March, and a further Rs. 20,000 in July. Rahul makes a payment of Rs. 10,000 to Priya in December without specifying which debt he is repaying. According to Section 61 of The Indian Contract Act, 1872, since Rahul did not specify which debt the payment was for, Priya can apply this payment towards the debt of January first since it is the oldest debt. If the debts were all incurred on the same date, Priya could choose to split the payment proportionally across all three debts.