Section 59

Section 59 of the Indian Contract Act, 1872, states: 'Where a debtor, owing several distinct debts to one person, makes a payment to him, either with or without specifying the debt to which the payment is to be applied, and the person to whom the payment is made accepts the payment from the debtor, the payment, if accepted, must, in the absence of express instructions from the debtor to the contrary, be applied to the discharge of the debt which is earliest in point of time. If two or more debts are of equal standing, the payment must, unless the contrary appears, be applied to the discharge of all such debts rateably.' This section deals with the situation where a debtor makes a payment to a creditor without specifying the debt to which the payment is to be applied. The courts have held that the payment must be applied to the discharge of the debt that is earliest in point of time, unless the debtor gives express instructions to the contrary. In the case of B. K. Srivastava vs. M. K. Srivastava, the court observed that the payment must be applied to the discharge of the debt which is earliest in point of time.