Section 8 explanation limits reappropriation of open payments, but settled accounts cannot be reopened.

Explanation I to Section 8 of the Madras Agriculturists' Relief Act, 1938 applies only to payments that remain open and unappropriated on the relevant date; it prevents a creditor from unilaterally applying such payments to interest unless the debtor has made an express written statement. The provision was meant to override general-law rules allowing creditor-driven appropriation of open payments, but it does not disturb cases where the parties have already settled accounts, the debtor has appropriated the payments in that settlement, and a fresh promissory note has been executed. Accordingly, payments merged in a prior settlement cannot be reopened and treated as credits towards principal.

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Issues: Whether Explanation I to Section 8 of the Madras Agriculturists' Relief Act, 1938 permits reopening of appropriations made by the debtor as part of a prior settlement of accounts and execution of a fresh promissory note, so as to treat the earlier payments as credits towards principal.

Analysis: The statutory scheme of Section 8 applies where interest remains outstanding and payments are still open and unappropriated on the relevant date. The Explanation was enacted to prevent the creditor from unilaterally appropriating open payments towards interest unless there was an express written statement by the debtor. It was intended to nullify the effect of decisions permitting such creditor-driven appropriation under the general law, while preserving the settled line of cases holding that once parties have settled accounts and the debtor has, by that settlement, appropriated payments and executed a fresh document, the payments are no longer open to reappropriation. The Explanation does not extend to transactions in which the payments have already merged in a prior settlement.

Conclusion: The Explanation does not reopen appropriations made by the debtor as part of a settlement of accounts, and the payments in question could not be treated as open payments for reappropriation towards principal.

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