Q: Discuss Section 59 of Indian Contract Act when money is demanded by creditor ?

Ans: According to section 59 of Indian Contract Act, 1872, when a debtor makes a payment with either express and implied intimation that the payment is to be applied to discharge of some particular debt, the payment if accepted and must be applied accordingly.

Scenario: Azam owes to Babar, among other debts; the sum of Rs 567 and there are four debts i.e., Rs 300, Rs 567, Rs 853 and Rs 950. 

Babar writes to Azam and demands payment of the sum of Rs 567.

Azam sends to Babur sum of Rs 567.

Appropriation: The payment is applied to the discharge of debt of which Babur had demanded .

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