N. S. Toor Solutions for Chapter: Banking Law and Practice, Exercise 18: TEST YOUR SELF

In case of a cash credit account, the first credit will be adjusted against which of the following?

Under which of the following situations, Clayton's rule relates to?

Clayton's rule applies to the following type of loan accounts:

Where neither the debtor gives any direction nor the creditor uses its discretion to appropriate the amount deposited by the borrower, the principle of Rule in Clayton is to be followed.

Under which of the following circumstances, a bank should rule off the account showing debit balance with the bank and stop any operations to avoid the application of Rule in Clayton's case?

Where the debtor, while depositing the amount, does not give any direction as to where to credit, the banker can appropriate as per its discretion.

C/C account of M/s Ramesh Chander Sham Kumar is showing a debit balance of Rs. 150000. One of the partners died on Jan 31, 2004. In order to see that the business of the firm does not suffer, the bank allowed operations in the account by the surviving partners deposited Rs. 60000 and withdrew Rs. 35000 in different transactions. What is the extent of liability of the legal heirs, to settle the account?

Provisions regarding the right of appropriation are available under Section 59, 60 and 61 of Indian Contract Act.