If the debts are of equal standing, the payment shall be applied in discharged of each proportionally.

Effect of novation, rescission and alteration of contract Effect of novation,,rescision and alteration of contract .-If the parties to a contract agree to substitute a new contract for it or to rescind or alter it, the original contract need not be performed.

Illustrations.

1. (a) A owes money to B under a contract. It is agreed between A,B and C that B shall thenceforth accept C as his debtor, instead of A. The old debt of A to B is at an end, and a new debt from C to B has been contracted.
2. (b) A owes B 10,000 rupees. A enters into an agreement with B, and gives B a mortgage of his (A's) estate for 5,000 rupees in place of the debt of 10,000 rupees. This is a new contract and extinguishes the old.
3. (c) A owes B 1,000 rupees under a contract. B owes C 1,000 rupees. B orders A to credit C with 1,000 rupees in his books, but C does not assent to the agreement.