Legal Question in Banking Law in India

1) The Rules relating to the appropriation of payments made by a debtor, who owes a number of distinct debts to his creditor are contained in Sections 59 to 61 of the Indian Contract Act, 1872.

2) Appropriation of payment is a right primarily of the debtor and for his benefit. If the debtor expressly intimates at the time of actual payment that the payment must be applied towards the discharge of a particular debt, the creditor must do so.

3) This not running CD but CC a/c to apply FIFO.

28.05.2016

Dear Sir / Madam,

Since the original person who has availed of the Cash Credit facility remains primarily liable to repay and settle it, the guarantors liability remains secondary. Whether to permit revocation and release of a guarantor remains at the Bank's discretion and purview.

Regards,

Your suit for revocation will have effect for future borrowings and not for the accumulated liability in the account. The bank will freeze the account and claim the out standings from you. Question of applying clayton's rule does not arise.