Garnishee Order

Topics: Cheque, Money, Bank Pages: 3 (623 words) Published: March 7, 2011
GARNISHEE ORDER

A Garnishee order is an order issue by court under provision of Order 21, Rule 46 of the code of Civil Procedure, 1908.

When the debtor failed to pay the debt to his creditor, the latter may approach court for the issue of garnishee order on the banker of the debtor.

2 Stages of issue:

Order Nisi – It is issued first, directing the bank to stop payment in account of the debtor.

Order Nisi requires the banker to explain as to why the funds of the depositor should not be attached towards satisfaction of the dues of the creditor. On receipt of Order Nisi, the bank is bound to stop operation in the depositors account. The bank must immediately inform the customer about the receipt of the order.

Order Absolute – On receipt of order absolute, the bank should pay the amount to the court. The production of pass book or deposit receipt is not necessary for making such payment.

Amount to be attached:

Garnishee order usually does not mention the amount. In case no amount is mentioned, the entire balance should be attached. If it is issued for specific amount, only that amount should be attached.

Accounts to be attached:

Garnishee order extends only to those accounts which are held in the same capacity in which the order is issued and not to accounts held otherwise.

1. Proprietorship Account – Where the order is in name of the individual, it would extend to any account maintained by him in the name of a firm as sole proprietor.

2. Joint Account – If the garnishee order is the name of A, but the account is in joint names of A, B and C, the account is not to be attached.

3. Partnership Account – In case the Garnishee order is in the name of A, and the account is in the name of a partnership firm where A is a partner, the firm’s account cannot be attached.

4. Trust Account – Accounts held by a person in a trust in fiduciary capacity cannot be attached by a garnishee order issued in individual name.

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