Multiple choice

Where the debtor has omitted to intimate, and there are no other circumstances indicating to which debt the payment is to be applied, _________________

  1. the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, provided its recovery is not barred by the law.

  2. it is to be applied in discharge of the debts in order of time.

  3. it is to be applied in discharge to the debts in order of time provided they are not barred by the law of limitation.

  4. 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 suit.
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D Correct answer
Explanation

Option (4) is correct. The payment can be appropriated as per discretion of creditor. Option (1) is incorrect because it contains the condition whether its recovery is not barred by law. It may be barred or not barred by law. Option (2) is applicable when appropriation is made by debtor expressly or impliedly. Option (3) is applicable as appropriation by law when both the parties make any appropriation.

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