Basavashree College of Law

Law of Contract - I
UNIT - III

3.1 DISCHARGE OF CONTRACT

Discharge of contract means a contract ceases to operate. The rights and obligations
created by the contract come to an end and the termination of the contractual relationship
between the parties. A contract may be discharged in any of the following ways:

1.Impossibility of Performance

In England, the law regarding the discharge of contract is based on what is popularly known as the
Doctrine of Frustration.

Grounds of Frustration

1. Destruction of the subject-matter of the contract

Where the performance of the contract becomes impossible by the destruction of the specific
thing essential to that performance that contract is discharged.

2. Non-occurrence of a particular state of thins

The doctrine of frustration has also been applied in cases of non-performance of a

particular event which is essential for the performance of the contract.

3. Death or Incapacity of the party

Where the performance of a contract depends upon the personal service of a party, the
death or incapacity of such a party may be treated to be a valid ground for frustration of contract.

4. Change of circumstances

If the change of circumstances makes the performance of the contract impossible, the contract
will frustrate and parties will be discharged from their obligations under the contract. If despite
the change of circumstances, the performance is till possible, the contract will not be deemed to
have been discharged.

5. Building contracts

Where the execution of the contract is delayed or otherwise becomes impossible by the happing
of an external event, the contract is discharged. But much will depend upon the facts and
circumstances and each case has to be judged on its own merits.

6. Change in Law
 The performance of a contract may also become legally impossible by the change in law.
If the performance becomes legally impossible, the contract will be discharged. The change in the
law must be such as to strike at the root of the agreement, and not merely to suspend or hinder
its operation in part.

Theories of FrustrationFollowing are the main theories of Frustration

1. The Theory of Implied Term

According to this theory, the courts, after examining the circumstances under which the contract
was made find that it was made on the footing that a particular state of things would continue to
exist though it may not be expressly written in the contract, and if such a state of things ceases to
exist.

2. Criticism of the theory of implied term

1. If used in a subjective sense it is difficult to see how the parties can be taken.
2. The frustration may take place irrespective of individuals concerned, their temperaments
and failings, their interest and circumstances.

3. Disappearance of the foundation of the contract

Discharge of contract means a contract ceases to operate. It also means the rights and
obligations created by the contract come to an end and termination of the contractual
relationship between the parties. A contract may be discharged in any of the following ways:

2. Discharge by Performance of Contract

If the foundation of the contract disappears, the contract is discharged. If the foundation
of contract goes, either by the destruction of the subject-matter or by reason of such long
interruption or delay that the performance is really in effect that of a different contract, and the
parties have not provided what in that event is to happen, the performance of the contract is to
be regarded as frustration.

3. Theory of just and reasonable solution

Section 37 provides that the parties to a contract must perform or offer to perform, their
respective promises, unless such performance is dispensed with or excused under the provisions
of this Act or any other law.

4. Change in the obligation of the parties

Frustration occurs whenever the law recognizes that without default of either party a
contractual obligation has become incapable of being performed because the circumstances in
which the performance is called for would render it a thing radically different from that which was
undertaken by the contract.

Section 56 of the Act says that an agreement to do an act impossible in itself void.
Ex: A agrees with B to discover treasure by magic. The agreement is void.

A contract to do an act which, after the contract is made, become impossible, or by

reason of some event which the promisor could not prevent, unlawful, becomes void when the
act becomes impossible or unlawful.

Ex: A and B contract to marry each other. Before the time fixed for the marriage, A goes mad. The
contract becomes void.

Exception to the doctrine of Impossibility of Performance

Where one person has poremised to do something, which he knew, or, with reasonable
diligence, might have known, and which the promise did not know to be impossible or unlawful,
such promisor must make compensation to such promise for any loss which such promise sustains
through the non-performance of the paromise.

In Satyabarata Ghose v/s Mugneeram Bangur and Company

In this case, the Supreme Court held that the doctrine of frustration makes the promisor
liable to pay compensation to the promise for non-performance of the promise. Thus if the
promisor knew or could know with ordinary diligence that he promised to do something which
was impossible or unlawful and the promise did not know, he must pay compensation to the
promise for the loss sustained by him for the non-performance of the promise.

1. Discharge by Performance of Contract

Section 37 provides that the parties to a contract must perform or offer to perform, their
respective promises, unless such performance is dispensed with or excused under the provisions
of this Act or any other law.

The promises bind not only the promises but also their representatives if they die before
performing their promises. But the representatives of the promisors shall not be bound by the
promises if a contrary intention appears from the contract.

Ex: A promises to deliver goods to B on a certain day on payment of Rs. 1,000. a dies before that
day. A's representatives are bound to deliver the goods to B and B is bound to pay the Rs.1, 000 to
A's representatives. But if A promises to paint a picture for B by a certain day at a certain price
and if he dies before that day the contract cannot be enforced either by A's representatives or by
B, because in this case the intention of the contract is that the picture is to be pained by A and A
alone.

By whom contracts must be performed?

1. by promisor himself of his representatives

Section 40 of the Act provides that if it appears from the nature of the case that it was intention of
the parties to any contract that any promise contained should be performed by the promisor
himself, such promisor must be performed by the promisor. In other cases the promisor for his
representatives may employ a competent person to perform it.

Ex: A promises to pay a sum of money. A may perform this promise, wither by personally paying
the money to B or by causing it to be paid to B by another; and, A dies before the time appointed
for payment, his representative must perform the promise, or employ some proper person to do
so.

2. Devolution of joint liabilities

Where the promise is made jointly by two or more than two persons, all the said persons must
fulfill the promise during their joint lives. In case any one of them dies then the promise must be
performed by his representative jointly with the survivors as the case may be. In case all the
promisors die before the performance, the promise must be performed jointly by their
representatives.

3. Any one of joint promisors may be compelled to perform

Section 43 of the Act says when two or more persons make a joint promise, the promise
may, in the absence of express agreement to the contrary, compel any one or more of such joint
promisors to perform the whole of the promise.

Ex: A, B and C jointly promise to pay D 3,000 rupees, D may compel either A, or B or C to pay him
3,000 rupees. In case where one of the joint promisors has been compelled to perform the whole
of the promise, he may compel every other joint promisor to contribute equally with himself to
the performance of the promise.

Effect of release of one joint promisor

Section 44 provides that the where two or more persons have joint made a joint promise,
a release of one of such joint promisors does not discharge the other joint promisor or joint
promisors: neither does it free the joint promisor so released from responsibility to the joint
promisor or promisors.

Devolution of joint rights

Section 45 of the contract Act provides that when a person has made a promise to two or
more persons jointly, then, unless a contrary intention appears from the contract, the right to
claim performance rests, as between him and them: during their joint lives, and, after the death of
any of them with the representative of such deceased person jointly with the survivor or
survivors, and, after the death of the last survivor, with the representatives of all jointly.

Ex A, in consideration of 5,000 rupees, lent to him by B and C promises B and C promises B and C
jointly to repay them that sum with interest on a day specified. B dies the right to claim
performance rests with B's representatives jointly with c during C's life and after the death of C
with the representatives of B and C jointly.

2. Discharge of Contracts by Agreement

Section 62 of the Act provides that if the parties to a contract agree to substitute a new contract
for it or to rescind or alter it, the original contract need not be performed. If parties substitute a
new agreement for the old, revoke it or alter it the original contract iis discharged.

Ex: A owes money to B under the contract. It is agreed between A, B and C that B shall henceforth
accept C as his debtor, instead of A. the old debt of A to B is at an end, and a new debt from C to B
has been contracted.

NovationNovation may be of two types:

1. Novation Involving Changing of Parties

It contemplated in section 62 of the Contract Act involves an annulment of one debt and the
creation of another. In such cases the court has to consider not only whether the new debtor has
consented to assume liability but also whether the creditor has agreed to accept the liability of
the new debtor in substitution of the original debtor. Novation is not consists with the original
debtor remaining liable in any form, since the essential element of novation is that the rights
against the original contractor shall be relinquishment and the liability of the new contracting
party accepted in its place, under law one of the requires to novation is the agreement of the
parties of the new contract

2. Novation Involving the Substitution of a new contract for old

Section 62 of the Act provides that novation may also involve the substitution of a new contract
for the old.

Ex: A owes B 10,000 rupees. A enters into an agreement with B, and gives B a mortgage of his
estate for 5,000 in place of the debt of 10,000 rupees. This is a new contract and extinguishes the
old.

In Indian Bank, Madras v/s S. Krishnaswamy and others

In this case, the respondent's plaintiff gave certain securities in respect of certain
financial facilities given by the appellant bank to Sree Bharathy Mills ltd. Pondicherry.
Subsequently mill was taken over by government and fresh agreement was entered into between
government and Mill. Surety was not informed of this agreement. The Division Bench of the
madras High Court held that surety was discharged from liability.

Rescission and Alteration

A contract may also be discharged if the parties agree to alter or rescind the contract. Alteration
of rescission may also be implied. Much will depend upon the facts and circumstances and the
intention of the parties.
Promise may dispense with or remit performance of promise:

Section 63 of the Act provides that every promise may dispense with or remit wholly or
in part, the performance of the promise made to him, or may extend the time for such
performance or may accept instead of it any satisfaction which he thinks fit.

Important points

1. The promise may dispense with or remit the performance.

2. He may extend the time of performance
3. He may accept any satisfaction he thinks fit.

Ex: 1. A promise to paint a picture for B. B afterwards forbids him to do so. A is no longer bound
to perform the promise.

2. A owes B, 2,000 rupees, and is also intended to other creditors. A makes an agreement with his
creditors, including b to pay them a composition of eight annas in the rupees upon their
respective demands. A payment to B 1,000 rupees is a discharge of B's demand.

Consequences of Rescission of Viodable Contracts

Section 64 of the Act provides that when a person at whose option a contract is voidable
rescinds it, the other party thereto need to perform any promise therein contained on which he is
promisor. The party rescinding a voidable contract shall, if he has received any benefit, so far as
may be, to the person from whom it was received.

Section 39 of the Act provides that when a party to a contract has refused to perform, or
disabled himself from performing his promise in its entirety, the promise may put an end to the
contract.

Essential elements

1. When a person, at whose option a contract is voidable, rescinds

2. The other party to the contract need not perform it.
3. The party rescinding a voidable contract shall restore any benefits received under the
contract.

It is true that even if time was not originally of the essence, the appellants could by
notice served upon the respondent call upon him to take the conveyance within the time fixed
and intimate that in default of compliance with the requisition the contract will be treated as
cancelled.

In Koyana Suryanarayana Reddy v/s Chellayamma

In this case Andhra Pradesh High Court observed that once the condition is not fulfilled as
contemplated by the terms of the agreement when time is made the essence of the contract
originally or subsequent thereto, the failure to perform the contract within the stipulated time
gives a right to avoid the contract. That is the true effect of Section 55 of the Act.

Obligation of person receiving advantage under void agreement or contract that becomes void

Under section 65 says when an agreement is discovered to be void or when a contract

becomes void, any person who has received any advantage under such agreement or contract is
bound to restore it, or to make compensation for it, to the person from whom he received it.

Ex: 1. A pays B 1,000 rupees in considerations of B's promising to marry C A's daughter. C is dead
at the time of the promise. The agreement is void, but B must repay the 1,000 rupees.

2. A contracts with b to deliver to him 250 maunds of rice before the first day of May. A delivers
130 maunds only before that day, and none after. B retains the 130 maunds after the first May. He
is bound to pay A for them.

Section 65 provides restitution or compensation in two cases:

1. Where an agreement is discovered to be void.

2. Where a contract becomes void.

The word when a contract becomes void would include the contract of following
categories:

1. Contracts that becomes void if consent of one party of them has been obtained by coercion,
fraud, misrepresentation or undue influence.
2. Where both parties are under mistake as to a matter of fact.
3. An agreement by which a person is restrained from exercising a lawful profession, trade or
business of any kind.
4. A contract to do an act which, after the contract is made becomes impossible, or by reason
of some event which the promisor could not prevent, unlawful.
5. It may also include a contract that becomes void due to unauthorized alterations in the
deed of contract.

Mode of communicating or revoking, rescission of viodable contract

If any promise neglects or refuses to afford the promisor reasonable facilities for the
performance of his promise, the promisor is excused by such neglect or refusal as to any non-
performance caused thereby. Thus any non-performance of the promise caused by the neglect or
refusal of the promise to afford reasonable facilities to the peomisor shall be excused or in other
words to that extent he shall be discharged from his obligations under the contract.

Ex: A contracts with B to repair B's house. B neglects or refuses to point out to A the places in
which his house requires repair. A is executed for the non-performance of the contract, if it is
caused by such neglect or refusal.

3. Discharge of Contract by Breach

 If one of the parties to a contract breaks an obligation which the contract imposes, a new
obligation will in every case arise a right of action conferred upon the party injured by the breach.
Besides this, there are circumstances in which the breach not only gives rise to a cause of action
but will also discharge the injured party from such performance as may still be due from him.

Breach may be of two types

1. Anticipatory Breach

Anticipatory breach arises when one of the parties, to a contract repudiates the contract before
the time of performance.

In Hochester v/s Dela Tour

In this case, the plaintiff was engaged by the defendant to enter into his service as a
courier and go along with him on a tour. The service of the plaintiff was to start on 1 st June. On
11th May he was informed by the defendant that his services were no longer required. The plaintiff
brought an action even before the time of performance has arrived. It was held that plaintiff was
entitled to bring action even before the time of performance

When a party to a contract has refused to perform or disabled himself from performing, his
promise in its entirely the promise may put an end to contract, unless he has signified by words or
conduct, his acquiescence in its continuance.

2.During Performance

If one of the parties to a contract refuses to perform his part of the contract during
performance, the other party is discharged from any further performance of his obligations under
the contract and may also bring an action for the breach.

Ex: a, a singer, enters into a contract with b, the manager of the theatre, to sing at his theatre two
nights in every week during the next two months, and B engages to pay her 100 rupees for each
night's performance. On the sixth night A willfully absents herself from the theatre. B is at liberty
to put an end to the contract. But in case of acquiescence, the promise cannot afterwards put an
end to the contract although he may claim damages for the loss sustained by his through the non-
performance by the promisor. Thus in the above case, if with the assent of b, A signs on the
seventh night, b having signified his acquiescence in the continuance of the contract, b cannot
now put an end to or although he is entitled to compensation for the damages sustained by him
through A's failure to sing on the sixth night.

Discharge of Contract by Operation of LawThe instance of the discharge by operation of law are
following:

1. Merger
 If in the place of a lower security, a higher security is accepted, the lower security will be
deemed to be merged in the higher security and the party concerned shall be discharged from its
obligations in respect of the lower security.

2. Discharge by the Judgment of a Court

A contract may also be discharged by the judgment of a court of competent and

appropriate jurisdiction in favour of the plaintiff.

3. Alteration or cancellation of a written instrument

A contract may also be discharged by alteration or cancellation of a written instrument.

An alteration here is different than provided under section 62 of the Act. The Act says the
alteration is made with the consent of the parties so as to discharge them. But alteration here is
unauthorized alteration such as addition or ensure of the contract in writing. If a party erases or
alters the written instrument, the other party is discharged from its obligations under the
contract.

4. Bankruptcy

When a person is adjudged a bankrupt by the court, he is thereby discharged from his
debts and other obligations. Thus bankruptcy may also operate to discharge the obligations of a
party to a contract.

3.2 PERFORMANCE OF CONTRACTS

Section 37 provides that the parties to a contract must perform or offer to perform, their
respective promises, unless such performance is dispensed with or excused under the provisions
of this Act or any other law.

The promises bind not only the promises but also their representatives if they die before
performing their promises. But the representatives of the promisors shall not be bound by the
promises if a contrary intention appears from the contract.

Ex: A promises to deliver goods to B on a certain day on payment of Rs. 1,000. a dies before that
day. A's representatives are bound to deliver the goods to B and B is bound to pay the Rs.; 1,000
to A's representatives. But if A promises to paint a picture for B by a certain day at a certain price
and if he dies before that day the contract cannot be enforced either by A's representatives or by
B, because in this case the intention of the contract is that the picture is to be pained by A and A
alone.

By whom contracts must be performed?

1. by promisor himself of his representatives

Section 40 of the Act provides that if it appears from the nature of the case that it was intention of
the parties to any contract that any promise contained should be performed by the promisor
himself, such promisor must be performed by the promisor. In other cases the promisor for his
representatives may employ a competent person to perform it.

Ex: A promises to pay a sum of money. A may perform this promise, wither by personally paying
the money to B or by causing it to be paid to B by another; and, A dies before the time appointed
for payment, his representative must perform the promise, or employ some proper person to do
so.

2. Devolution of joint liabilities

Where the promise is made jointly by two or more than two persons, all the said persons must
fulfill the promise during their joint lives. In case any one of them dies then the promise must be
performed by his representative jointly with the survivors as the case may be. In case all the
promisors die before the performance, the promise must be performed jointly by their
representatives.

3. Any one of joint promisors may be compelled to perform

Section 43 of the Act says when two or more persons make a joint promise, the promise
may, in the absence of express agreement to the contrary, compel any one or more of such joint
promisors to perform the whole of the promise.

Ex: A, B and C jointly promise to pay D 3,000 rupees, D may compel either A, or B or C to pay him
3,000 rupees. In case where one of the joint promisors has been compelled to perform the whole
of the promise, he may compel every other joint promisor to contribute equally with himself to
the performance of the promise.

Effect of release of one joint promisor

Section 44 provides that the where two or more persons have joint made a joint promise,
a release of one of such joint promisors does not discharge the other joint promisor or joint
promisors: neither does it free the joint promisor so released from responsibility to the joint
promisor or promisors.

Devolution of joint rights

Section 45 of the contract Act provides that when a person has made a promise to two or
more persons jointly, then, unless a contrary intention appears from the contract, the right to
claim performance rests, as between him and them: during their joint lives, and, after the death of
any of them with the representative of such deceased person jointly with the survivor or
survivors, and, after the death of the last survivor, with the representatives of all jointly.

Ex A, in consideration of 5,000 rupees, lent to him by B and C promises B and C promises B and C
jointly to repay them that sum with interest on a day specified. B dies the right to claim
performance rests with B's representatives jointly with c during C's life and after the death of C
with the representatives of B and C jointly.
Time and Place of Performance

1. where no time specified and no application is to be made

Where, by the contract, a promisor is to perform his promise without application by the
promise and no time for performance is specified the agreement must be performed within a
reasonable time.

2. Time and place of performance where time is specified but no application is to be made

Section 47 provides that when a prtomise is to be performed on a certain day, and the promisor
has undertaken to perform it without application by the promise, the promisor may perform it at
any time during the usual hors of business on such day and at the place at which the promise
ought to be performed.

3. When performance to be made on certain day at proper time and place

Section 48 of the Act provides that when a promise is to be performed on a certain day, and the
promisor has not undertaken to perform it without application by the promise, it is the duty of the
promisee to apply for performance at a proper place and within the usual hours of business.

4. where no place fixed and no application to be made for performance

When a promise is to be performed without application by the promise and no place is

fixed for the performance of it, it is the duty of the promisor to apply to the promise to appoint a
reasonable place for the performance of the promise and to perform it at such place.

Ex: A undertakes to deliver one thousand maunds of jute to B on fixed day. A must apply to B to
appoint a reasonable place for the purpose of receiving it, and must deliver it to him at such place.

5. Performance to be in manner or at time prescribed or sanctioned by the promise

Section 50 lays down the promisor is to perform the promise in any manner, or at any
time which the promise prescribes or sanctions.

Consequence of failure to perform at fixed time in a contract in which time is essential

Section 55 of the Act provides that when a party to a contract promises to do a certain
thing at or before a specified time, or certain things at or before specified times, and fails to do
any such thing at or before the specified time, the contract, or so much of it as has not been
performed, becomes voidable at the option of the promise, if the intention of the parties was that
time should be the essence of the contract.

Bhudra Chand v/ Betts

In this case, related to the agreement wherein the defendant undertook the
responsibility to deliver an elephant to the plaintiff for capture of wild elephants. The elephant
was to be delivered on October 1, 1910. Later on, the defendant requested for extension of date
of delivery which was allowed to be till 6th of October but he failed to deliver even by that time.
He ultimately offered to deliver the elephant on 11th October, 1910. But the buyer now rejected to
accept. It was held the court that in this case time was the essence of the contract and the
plaintiff was therefore justified in refusing to accept the delivery.

The law is well settled that in transactions of sale of immovable properties, time is not
the essence of the contract. Even if it is not the essence the court may infer that it is too be
p[performed in a reasonable time if the conditions are:

1. from the express terms of contract

2. from the nature of the property

3. from the surrounding circumstances

Ex: The objection of making the contract.

Performance of Reciprocal Promises

Reciprocal means in return or inversely correspondent. A contract comprising of

reciprocal promises is a contract wherein there is an exchange of promise. Section 51 provides
when a contract consists of reciprocal promises to be simultaneously performed no promisor
need perform his promise unless the promise is ready and willing to perform his reciprocal
promise.

Ex: A and B contract that A shall deliver goods to b to be paid for by B on delivery. A not deliver
the goods, unless B is ready and willing to pay for the goods on delivery. B need not to pay for the
goods, unless A is ready and willing to deliver them on payment.

Order of Performance of Reciprocal Promises

Section 52 of the Act provides that in the absence of any express provision in the contract to that
effect, they shall be performed in the order which the nature of the transaction requires.

Section 54 of the Act provides that when a contract consists of reciprocal promises, such as that
one of them cannot be performed or that its performance cannot be claimed till the other has
been performed and the promisor of the promise last mentioned fails to perform it, such
promisor cannot claim the performance of the reciprocal promise and must make compensation
to the other party to the contract for any loss which such other party may sustain by the non-
performance of the contract.

Ex: A hires B's ship to take in and convey, from Calcutta to the Mauritius, a cargo to be pro vided
by A, B receiving certain freight for its conveyance. A does not provide any cargo for the ship. A
cannot claim the performance of B's promise, and must make compensation to B for the loss
which B sustains by the non-performance of the contract.

Reciprocal promise to do thins legal as well as illegal

 Section 57 of the Act provides that where persons reciprocally promise, firstly to do
certain things which are legal, and secondly, under specified circumstances, to do certain other
things which are illegal, the first set of promises is a contract, but the second is a void agreement.

Ex: A and B agree that A shall sell B a house for 1,000 rupees but that, if B uses it as a gambling
house he shall pay a 50,000 rupees for it. The first set of reciprocal promises namely to sell the
house and to pay 10,000 rupees for it is contract and can be enforce but the second set is for an
unlawful object namely, that B may use the house as gambling house and is a void agreement.

Contract shall be void to the extent of the performance of illegal branch

Ex: If in a contact A and B agree that A shall pay B 1,000 rupees, for which B shall afterwards
deliver to a either rice or smuggled opium the contract shall be valid and enforceable so for as the
delivery of rice is concerned but it will be void regarding the delivery of opium.

Appropriation of payments

1. where a debtor, owing several distinct debts to one person, makes a payment to him, either
with express intimation, or under circumstances, implying 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.

Essential Elements

1. Where the debtor owes several debts to one person.

2. The debts in question must be distinct.
3. The debtor must intimate the creditor expressly or impliedly that the payment be applied to
the discharge of some particular debt.
4. If the above conditions are satisfied, the creditor is bound to apply the payment for the
discharge of the debt as intimated to him by the debtor.

Ex: A owes to B, among other debts, 1,000 rupees upon a promissory note, which fall due on the
1st June. He owes B on other debt of that amount. On the 1st June a pays to B 1,00 rupees. The
payment is to be applied to the discharge of the promissory note.

1. Application of payment where debt to be discharged is not indicated

In case of the debtor does not intimate the creditor either expressly or impliedly as to which the
payment is to be applied, the creditor gets the discretion to apply it to any debt. He may even
apply for the debts whose recovery has become barred by the law of limitation in force for the
time being.

In Syndicate Bank v/s M/s. West Bengal Cements Ltd.

In this case, the plaintiff Syndicate Bank filed the suit for the recovery of rupees 33,
39,026.75p. During the pendency of the suit the defendants paid rupees 7, 40,000 to the plaintiff
Bank in the year 1983-84. While paying the said amount the defendants did not give any special
instructions to the plaintiff as it how the said amount was to be adjusted. The High Court held that
the defendants in law cannot insist that the amount is liable to be adjusted against the principal
amount in the absence of any such instructions.

2. Application of payment where neither party appropriates

A situation wherein the debtor makes the payment and does not indicate, either
expressly or impliedly as to its application to a particular debt and the creditor also does not
appropriate for discharge of any debt. In such a case, the payment is to be applied in discharge of
the debt in the order of time and where the debts are of equal standing, the payment shall be
applied in discharge of each proportionately.

Section 61 of the Act says essential elements

1. Where the debtor dose not indicate the application of the payment for the discharge of
particular debt.
2. The creditor does not appropriate it to discharge of any distinct debt due.
3. The payment shall be applied in discharge of the debts in order of time.
4. Irrespective of the fact as to whether they are or not barred by the law in force for the time
being as to the limitation of suits.
5. If the debts are of equal standing, the payment shall be applied in discharge of each
proportionately.