1. Meaning and Concept of Garnishee Order
A Garnishee Order is a legal directive issued by a court instructing a bank to attach and transfer funds from a customer’s account to a creditor to satisfy a debt.
- Judgment Creditor: Person entitled to receive money
- Judgment Debtor: Person who owes money
- Garnishee (Bank): Institution holding debtor’s funds
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2. Legal Provisions Governing Garnishee Order
Garnishee Orders are governed under the Civil Procedure Code (CPC), 1908 specifically Order XXI Rule 46.
The bank is treated as a debtor of the customer, and hence the court can attach the amount deposited.
3. Stages of Garnishee Order
3.1 Order Nisi
- Temporary order issued by court
- Bank must freeze the account
- No withdrawals allowed
- Bank must confirm balance
3.2 Order Absolute
- Final order passed after hearing
- Bank must transfer funds to creditor
- Non-compliance leads to legal liability
4. Key Features of Garnishee Order
| Feature | Explanation |
|---|---|
| Legal Authority | Issued by court |
| Binding Nature | Mandatory for bank |
| Applicability | Only existing balance |
| Timing | Effective immediately |
| Priority | Overrides bank operations |
5. Scope of Garnishee Order
Accounts Covered
- Savings Account
- Current Account
- Fixed Deposit
- Recurring Deposit
Accounts Not Covered
| Account Type | Reason |
|---|---|
| Loan/OD Account | No credit balance |
| Trust Account | Funds belong to beneficiaries |
| Provident Fund | Protected by law |
| Government Account | Sovereign immunity |
6. Impact on Different Accounts
Individual Account
Fully attachable. Entire balance can be frozen.
Joint Account
Only debtor’s share can be attached. If unclear, court clarification required.
Partnership Account
- Firm debtor → Account attachable
- Partner debtor → Firm account not attachable
Trust Account
Not attachable as funds belong to beneficiaries.
7. Timing Rule (Most Important)
Garnishee Order applies only to balance available at the time of order.
Future deposits are NOT attachable.
Example
- Balance at order: ₹50,000
- Later deposit: ₹1,00,000
Attachable amount = ₹50,000 only
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8. Banker’s Duties
- Verify court order
- Identify account
- Freeze funds immediately
- Stop withdrawals
- Inform customer
- Respond to court
- Transfer funds after Order Absolute
9. Consequences of Non-Compliance
- Bank becomes liable
- Penalty by court
- Contempt proceedings possible
10. Garnishee Order vs Lien vs Set-Off
| Basis | Garnishee Order | Lien | Set-Off |
|---|---|---|---|
| Authority | Court | Bank | Bank |
| Nature | Legal Attachment | Right to retain | Adjustment |
| Control | External | Internal | Internal |
11. Case-Based Examples
Case 1
Debt: ₹2,00,000 | Balance: ₹80,000 → Bank will transfer ₹80,000
Case 2
Multiple accounts → Total balance considered
Case 3
Joint account → Only debtor’s share attachable
12. Important Exam Points
- Applies only to credit balance
- Future deposits not applicable
- Loan accounts cannot be attached
- Order Nisi before Order Absolute
- Immediate action required
13. Common Exam Traps
| Statement | Reality |
|---|---|
| Applies to future deposits | Incorrect |
| Loan accounts attachable | Incorrect |
| Bank can delay action | Incorrect |
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17. Quick Revision Table
| Topic | Key Concept |
|---|---|
| Law | CPC Order 21 Rule 46 |
| Stages | Order Nisi → Order Absolute |
| Applicability | Existing balance only |
| Not Applicable | Future deposits |
| Bank Duty | Freeze & transfer funds |
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. Covers CPC 1908 rules, Order Nisi, Order Absolute, banker duties, account treatment, and exam-focused concepts.){kind=link}