Whether creditor can decide appropriation ???
Ritika singh
(Querist) 08 November 2012
This query is : Resolved
the loan agreement executed between a bank and a company . the appropriation clauses on default call for applicability of the agreement or in absence of the same sections 59-61 of the indian contract act .......can in anyway the creditor/lender/ bank determine the same on default???.......can the terms of laon agreement be altered for the same as far as appropriation is concerned??
Ms.Nirmala P.Rao
(Expert) 09 November 2012
As per section 59-61 of The Indian Contract Act if the debtor owes several debts to creditor, after payment of one of the debts by the debtor, the creditor can appropriate the same in accordance with the debtor's wish in discharge of a particular debt and if there is no agreement as to the payment of debts, the payment by the debtor is to be applied in discharge of a particular debt as per creditor's wish the creditor even though it is time barred, If there is a new contract between the debtor and creditor regarding discharge of the debts, the creditor has right to determine payment of the debt by the debtor for discharge of a particular debt as per the mew agreement. New contract between the debtor and creditor gets substituted in pl;ace of the old agreement/contract. Accor4dingly if power is given to the creditor to decide appropriation of debt in a particular manner he is entitled to do so as per the altered contract between the creditor and the debtor in default of payment by the debtor.Virtually the terms of the new contract or altered contract entered by the creditor with the debtor with the debtor's consent determine the rights and liabilities of the parties regarding appropriation by creditor as to the discharge of debtor's debts as per the altered co9ntractual terms between them..
Ms.Nirmala P.Rao
Legal Expert
Ritika singh
(Querist) 09 November 2012
thank you very much mam.
