GARNISHEE ORDER

Loan of 1 lac
Mr. Mr. B
Mr. A A

Refused to repay the amount

Legal action BANK

COURT Order (Garnishee Order)

Garnishee
Mr. A provided the Bank a/c no. of Mr. B in the court,
where B had sufficient money. If the court thinks the
situation is genuine, then court will issue an order in
the name of bank to freeze/ attach the amount of 1
lac in the a/c of B.

Garnishee order is an order of the court obtained by a judgement creditor

attaching the finds belonging to a judgement debtor in the hands of his debors,
including a bank, who is called Garnishee advising not to release the money
until directed by the court to do so.

BANK’s
Do’s & Don’ts under Garnishee Order
 Payment of cheques.
 Right to set off.
  Uncleared effects & subsequent credits in a/c.

 When the garnishee order does not name the customer correctly or with
sufficient accuracy, to enable the bank to identify the account in its
books, the bank is not bound to act upon it & is not responsible for
passing cheques till the order is amended.

 If a customer is having more than one a/c in the bank’s branch, one is in
debit and other is in credit balances, the net result if in credit can be
attached. The order will not attach only the credit balance a/c. But if the
debit balance is in a loan a/c, which has not been recalled by the bank
on the date of service of order, credit into another account cannot be
adjusted.

 The bank cannot appropriate the credit balance towards the contingent
liabilities of the customer, when a garnishee order is served.

 2 Orders
i. Order Nishi: Asks the banker to freeze the debtor’s A/c.
ii. Order Absolute: This order directs the banker to pay either the
whole or a part of the fund lying in the A/c.