(delivering the Judgment of the Court): This is an appeal from the decision of Abdul Razak J. setting aside the appellants writ of seizure and sale seeking to attach the respondents poultry farm in order to enforce a judgment which they obtained against the respondents.

The appellants are suppliers of chicken feed to the respondents poultry farm. Their business relationship began in 1981. The chicken feed was supplied on 30 days credit term from the date of invoice and the credit limit granted to the respondent was $ 60,000.00. The appellants kept a running account in respect of these supplies.

On April 10, 1982 the appellants obtained a judgment in default of appearance against the respondents for $ 139,804.55 [cent] inclusive of costs. However, despite this judgment the parties carried on their business relationship; the appellants continuing to supply the chicken feed on the same 30 days credit terms and, indeed, their credit limit was increased to$ 200,000.00. Considering that the judgment remained unsatisfied on April 23, 1984, the appellants applied for and obtained a writ of seizure and sale to enforce the judgment. The respondents on the other hand contending that they had fully satisfied the judgment by paying on various occasions between April 20, 1982 and August 24, 1983 a total sum of $ 157,716.87 [cent] applied to the court for the setting aside of this writ.

Abdul Razak J. who heard the respondents application gave judgment in favour of the respondents and hence this appeal.

The rule as to the payment of debt by a debtor who owes several distinct debts is governed by section 60, 61 and 62 of the Contracts Act. (See also 9 Halsburys Laws of England, 4th edition, paras 505 and 506). Under these sections the debtor has the right when he makes a payment toappropriate it to any of the debts, and the creditor is bound, if he accepts the payment, to apply it in the manner directed by the debtor. If, however, the debtor does not make any appropriation at the time when he makes the payment, the right of appropriation devolves on the creditor, who is entitled to apply the payment to any lawful debts actually due whether statute-barred or not. The appropriation can be made in express terms but it must be communicated. However, an intention to appropriate it can also be inferred from the nature of the transaction or the circumstances of the case. Where neither the debtor nor the creditor makes any appropriations the payment shall be applied in discharge of the debts in order of time, whether they are or are not statute-barred. If the debts are of equal standing, the payment should be applied in discharge of each debt proportionally.

There is no dispute that the respondents in addition to the judgment debt owed the appellants other debts. They owed a total sum of $ 70,800.00 in respect of their dishonoured cheques and also new debts arising out of the supplies of feeds delivered after the date of the judgment. There is also no dispute that the respondents made no appropriation when they made the payments totalling $ 157,716.87 [cent] which they claimed to have discharged the judgment debt. The appellants, however, contended that they had made the appropriation to the effect that the payments were to be applied first to satisfy the amount of dishonoured cheques, then secondly to the amount of new debts, which arose from the continuing supplies delivered after the date of the judgment and that only if there was a remainder would the payment be applied to the judgment debt. The basis of this submission is a letter which they wrote to the respondents dated March 31, 1982 -- exhibit TS 2(b), which is as follows:

"NAM JOO HONG CHAN FEEDMILLS SDN BHD Head Office: 56 Jalan Roger, Kuala

Lumpur

March 31, 1982.

Mr. Lee Soon Chong & Mr. Soh Hue Tan,

t/a Soon Hup Poultry Farm,

Lot 6093, 51/4 Miles Jalan Meru,

Klang, Selangor.

Dear Sirs,

Re: Your Ou