3. Appropriation of Payments and Performance by Joint Promisors
This post answers two practical questions the Act deals with directly: when a debtor owes several separate debts to the same creditor, which debt does a part-payment go towards? And when several people jointly promise to do something, who can be made to perform, and who can sue?
The Problem This Topic Solves
Both situations are common in real life. A shopkeeper who owes a supplier money on three separate invoices makes one payment — which invoice gets cleared? Three friends jointly borrow money to start a business — if the business fails, can the lender recover the whole amount from just one of them, or must all three be sued together? Sections 59 to 61 answer the first question; Sections 42 to 45 answer the second.
Appropriation of Payments — the Debtor's Right (Section 59)
Where a debtor, owing several distinct debts to the same creditor, makes a payment either with express intimation, or under circumstances implying that the payment is to be applied to a particular debt, the payment, if accepted, must be applied to that debt. The choice belongs to the debtor first.
Where the Debtor Does Not Specify — the Creditor's Right (Section 60)
If the debtor does not indicate which debt a payment is meant for, the creditor may apply it to any lawful debt actually due from the debtor — including a time-barred debt (one that could not otherwise be recovered through a suit because of the Limitation Act). The creditor's discretion is wide, but must be exercised honestly.
Where Neither Party Appropriates — the Chronological Rule (Section 61)
If neither the debtor nor the creditor makes an appropriation, the law applies the payment in discharge of the debts in order of time, whether or not they are time-barred — the earliest debt is treated as paid off first. If the debts are of equal standing, the payment is applied proportionately to each. This default rule mirrors the logic of the English rule in Clayton's Case (1816), which similarly treats sums paid into a running account as discharging the earliest-standing entries first.
Appropriation Order at a Glance
| Section | Who Chooses | Rule |
|---|---|---|
| 59 | Debtor | If the debtor indicates a specific debt, the payment must go there |
| 60 | Creditor | If the debtor doesn't indicate, the creditor may apply it to any lawful debt, even a time-barred one |
| 61 | Neither — the law decides | Earliest debt is discharged first; equal debts are paid proportionately |
Devolution of Joint Liabilities — Section 42
When two or more persons make a joint promise, all of them must jointly fulfil the promise, unless a contrary intention appears from the contract. If one of the joint promisors dies, his legal representative must join the surviving promisors to fulfil the promise; if all the original promisors die, the representatives of all of them must jointly fulfil it.
Any One Joint Promisor May Be Compelled to Perform — Section 43
Unless the contract provides otherwise, the promisee may compel any one or more of the joint promisors to perform the whole of the promise. This is the rule of joint and several liability. Where one joint promisor is compelled to perform (or pays) more than his own share, he has a right to claim an equal contribution from the other joint promisors. If any joint promisor defaults in paying his share of the contribution, the remaining promisors must bear the loss caused by the default in equal shares among themselves.
Effect of Release of One Joint Promisor — Section 44
If the promisee releases one of the joint promisors from liability, this does not discharge the other joint promisors — they remain liable to the promisee. It also does not free the released promisor from his own responsibility to contribute to the other joint promisors, unless the contract provides otherwise.
Devolution of Joint Rights — Section 45
Where a promise is made to two or more persons jointly, the right to claim performance rests with all of them jointly during their lives. After the death of any one of them, the right rests with his representative jointly with the survivors; after the death of the last survivor, the representatives of all of them jointly have the right to claim performance.
- Section 59 — debtor's right to appropriate first, if he expresses or implies an intention
- Section 60 — creditor's right to appropriate, including to a time-barred debt, if the debtor doesn't specify
- Section 61 — chronological (earliest-first) rule if neither party appropriates
- Section 42 — joint promisors must jointly fulfil the promise; on death, representatives step in jointly with survivors
- Section 43 — joint and several liability; right of contribution between joint promisors
- Section 44 — releasing one joint promisor does not automatically release the others, and does not free the released promisor from his contribution duty to co-promisors
- Section 45 mirrors Section 42, but for the promisee's side (joint rights, not joint liabilities)
A Practical Example
Ramesh owes a wholesaler ₹20,000 on an old invoice from three years ago (now time-barred) and ₹15,000 on a fresh invoice from last month. He pays ₹15,000 without saying which invoice it is for. The wholesaler, applying Section 60, is legally entitled to apply this payment to the old, time-barred debt instead of the recent one — since Ramesh gave no direction, the choice is the creditor's, and the Act specifically allows appropriation even to a time-barred debt.
Quick Revision Points
- Appropriation order of choice: debtor first (Sec. 59) → creditor next (Sec. 60) → chronological by law (Sec. 61)
- Creditor may appropriate even to a time-barred debt under Section 60
- Joint promisors are jointly and severally liable (Sec. 42–43) — any one can be made to perform the whole promise, subject to a right of contribution
- Releasing one joint promisor doesn't release the rest (Sec. 44)
- Joint promisees hold the right to performance jointly, devolving on representatives after death (Sec. 45)
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