Chapter IV - Of the Performance of Contracts
Section 60
Section 60: Payment allocation by the creditor
Section 60 permits creditor allocation when the debtor gives no indication and the circumstances do not identify the debt. The discretion is limited to lawful debts actually due and payable from that debtor.
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Need advice on Section 60?
This article is for general information. Refer to the Indian Contract Act, 1872 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
Where the debtor has omitted to intimate and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitation of suits.
Rule and business relevance
Within those conditions, the creditor may allocate to a lawful due debt even where recovery is barred by limitation. The rule differs from Section 59, which requires respect for an accepted debtor-indicated allocation.
Limits and related provisions
Do not use this provision to override an express or implied debtor instruction or to allocate to a debt not actually due and payable. Allocation to a time-barred debt is not a general statement that every such debt can separately be sued upon.
Hypothetical business example
Hypothetical: a customer with several overdue invoices sends an unallocated lump sum with no identifying circumstances. The creditor assesses Section 60 and records which lawful due debt receives the payment.
Practical decision flow
Confirm there is no express or contextual debtor indication.
Identify lawful debts actually due and payable to the creditor.
Record the chosen allocation clearly and distinguish it from any separate limitation issue on recovery.
Check the applicable legal framework
This guide explains the central provision. Applicable State amendments, the agreement, transaction date and other governing laws can affect its application. Check the current legal framework before relying on it for a commercial decision.
Practical checklist
Do
- Confirm there is no express or contextual debtor indication.
- Identify lawful debts actually due and payable to the creditor.
- Record the chosen allocation clearly and distinguish it from any separate limitation issue on recovery.
Avoid
- Do not use this provision to override an express or implied debtor instruction or to allocate to a debt not actually due and payable. Allocation to a time-barred debt is not a general statement that every such debt can separately be sued upon.
Glossary
- Creditor discretion
- The choice of allocation within Section 60's conditions.
- Due and payable debt
- An existing debt presently owing for which this allocation power is available.
Frequently asked questions
Can the creditor override the debtor's stated allocation?
Not under Section 60; its conditions require absence of debtor indication and identifying circumstances.
Can a time-barred debt receive the allocation?
The section expressly permits allocation to the qualifying debt whether recovery is barred by limitation or not.
Does this revive every separate right to sue on that debt?
Do not infer that from this allocation rule; limitation and any revival question require separate analysis.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026