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Garnishee order

Generally when debtor owes some money to his creditor and he fails to pay the amount, the latter (creditor) may file a suit against the debtor and he may get a decree from the court for the payment of his debt. Sometimes creditor may not get any property from the debtor for execution of his decree, but there may be some person who is having debtor’s property. In such case the creditor may request the court to issue an order so as to attach the debtor’s property which is in the hands of third party. If court issues an order such an order is called “Garnishee Order”. Since Banker is also a third party who is always keeping customer’s money , court may also order to the banker to freeze the customer’s deposits in his hand . He (banker) must obey the court order. The word “Garnishee “is derived from a Latin word “garnir” which means to warn the third party. Since it is a warning to the party with regard to property of others in his hand. It is named as Garnishee order. Indian law on this point is governed by Sec 60 and Order 21 rule 46A of the Civil Procedure Code.

The court issues the garnishee order to the following people

  1. The judgment debtor is the person against whom the court issues a decree to pay the money to his creditor.
  2. Judgment creditor is another person in whose favour the decree is issued.
  3. The Banker to whom this order is directed to stop the operation of the customer’s account.

Garnishee order is of two kinds

  1. Order Nisi or preliminary order.
  2. Order absolute or final order.

Oder Nisi : It is preliminary order issued to the banker to:

  1. Stop the payment over the customer’s account.
  2. Give explanation why the judgment debtor’s credit balance in his account should not be used for the purpose of payment of the judgment creditor.
  3. It is also duty of the bank to inform the same to his customer.

Order Absolute: It is final order issued by the court to the banker to pay the amount from the judgement debtor’s account to the judgement creditor (decree holder) according to the direction given by the court.

Limitations to application of Garnishee Order

The following are the amounts not covered by this order;

  1. The Negotiable Instrument deposited with the banker for collection.
  2. When a cheque is marked for “Good for payment”.
  3. Any amount deposited after the order.
  4. The money held at abroad.
  5. The safe custody deposits.

Garnishee Order’s application

  1. Joint account : An account which is opened in the name of two or more persons is called joint account. This order cannot attach this joint account, if only one of account holders is a judgement debtor. If all holders are judgement debtors, it can be attached.
  2. Partnership firm Account : For the debts incurred by the firm the person’s individual account cannot be attached . In the same way for a partner’s individual debts firm’s account cannot be attached.
  3. Trust account : A trust account though standing by trustee in name of a person in his capacity as trustee cannot be attached for the payment of his personal liabilities.

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