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Garnishee order
- 1. The obligation ofa banker to honour his customer’s cheque is extinguished (not accepted or clear) on receipt of an order of the Court, known as the Garnishee order, issued under Order 21, Rule 46 of the Code of Civil Procedure, 1908.
- 2. A courtorder instructing a garnishee (a bank) that funds held on behalf of a debtor (the judgement debtor) should not be released until directed by the court. The order may also instruct the bank to pay a given sum to the judgement creditor (the person to whom a debt is owed by the judgement debtor) from these funds.
- 3. If thedebtor fails to pay the debt owned by him to his creditor, the latter may apply to the court for the issue of a garnshee order on the banker of his debtor. The account of the customer with the banker, thus, becomes suspended and the banker is under an obligation not to make any payment thereof.
- 4. The creditorat whose request the order is issued is called the judgment creditor; the debtor whose money is frozen is called judgment debtor and the banker who is the debtor of the judgment debtor is called the Garnishee.
- 5. The Garnisheeorder is issued in two parts The court directs the banker to stop payment out of the account of the judgement- debtor ORDER NISHI After the bank file his explanation, if any, the court may issue the final order, called ORDER ABSOLUTE
- 6. In caseof order nisi the banker is prohibited from paying the amount due to the customer n the date of receipt of order nisi. Bank should in such a case immediately inform the customer so that dishonour of any cheque issued by him may be avoided.