Application of payment where neither party appropriates
Section 61 of the Indian Contract Act, 1872 deals with application of payment where neither party appropriates. Where neither party makes any appropriation, the payment shall be applied in discharge of the debts in order of time, whether they are or are not barred by the law in force for the time being as to the limitation of suits. The Act came into force on 01 Sep 1872.
Where neither party makes any appropriation, the payment shall be applied in discharge of the debts in order of time, whether they are or are not barred by the law in force for the time being as to the limitation of suits. If the debts are of equal standing, the payment shall be applied in discharge of each proportionally.
Section 61, The Indian Contract Act, 1872 (Act 9 of 1872).
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
-
Ircon International Ltd. vs M.moolji (bombay)
Court's Decision & Legal Precedent
The Division Bench held that Sections 59 to 61 of the Contract Act govern appropriation only at the pre-decretal stage, and that where the debtor makes a partial payment without intimating the debt to be discharged, the creditor retains the discretion to appropriate it; once a decree exists, the general rule of appropriation (costs, then interest, then principal) applies to partial payments made towards satisfaction of the decree, and the burden lies on the party asserting an agreement to the contrary.
On this section: It applies Section 61's default rule where neither debtor nor creditor has appropriated, and marks the boundary beyond which the section ceases to govern because the debt has merged in a decree.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Judgments citing this section
These may be obiter dicta or a precedent, for you to study. These are the judgments where this section is quoted.
-
… There is not a scintilla of clarity on the number of Invoices that have been settled as there is mention of details of Invoices in the plaint. This indicates that the respondent has raised its claims in the suit by merely adhering to the accounting principle as explained in Section 60 and 61 of the Indian Contract Act for apportioning the money received from the defendant against the total recoverable amount in its statement of Ledger and claiming the balance amount. To the contrary, the appellant asserted that payment was against the specific Invoices, which becomes a matter of evidence. The recovery …
Questions about Section 61
What have the courts held on Section 61 of the Indian Contract Act?
Ircon International Ltd. vs M.moolji (bombay) (27 Feb 2012) is the leading judgment on this section among those set out below: It applies Section 61's default rule where neither debtor nor creditor has appropriated, and marks the boundary beyond which the section ceases to govern because the debt has merged in a decree.
How do I find court cases under Section 61 of the Indian Contract Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Contract Act 61, section 61 Contract Act, section 61 of the Indian Contract Act. People searching for it also type indian contract act section 61. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 1 reported judgment on this section is set out on this page, beginning with Ircon International Ltd. vs M.moolji (bombay) (27 Feb 2012).
When did Section 61 of the Indian Contract Act come into force?
Section 61 of the Indian Contract Act, cited as Contract Act 61, came into force on 01 Sep 1872, having been enacted on 25 Apr 1872. It is in force as at the date shown on this page.
Other sections of this Act
- 73. Compensation for loss or damage caused by breach of contract1822 words
- 23. What considerations and objects are lawful, and what not596 words
- 74. Compensation for breach of contract where penalty stipulated for577 words
- 28. Agreements in restraint of legal proceeding void512 words
- 25. Agreement without consideration, void, unless it is in writing and registered, or is a promise to compensate for something done, or is a promise to pay a debt barred by limitation law423 words
- 16. "Undue influence" defined397 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.