JAIBB: What is Garnishi and Attachment Order ?

 


The obligation of a banker to hounour a customer cheque is extinguished upon receipt of the order of the court is known as “Garnishi Order”. The court can issue this order under the court of Civil Procedure, 1908 –Order 21 Rule 26.

If a debtor fails to pay his debt owed to his creditor, the creditor may apply to the court for issuing Garnishi Order on the banker of the debtor. This order is only applicable to the amount which is not secured by a negotiable instrument.

The Garnishee Order is issued in two parts.

Ø  First, the Court directs the banker to stop payment out of the account of the judgement- debtor. Such order, called Order Nisi, also seeks explanation from the banker as to why the funds in the said account should not be utilized for the judgement- creditor’s claim. The banker is prohibited from paying the amount due to his customer on the date of receipt of the Order Nisi. He should, therefore, immediately inform the customer so that dishonour of any cheque issued by him may be avoided.

Ø  After the banker files his explanation, if any, the Court may issue the financial order, called Order Absolute where the entire balance in the account or a specified amount is attached to be handed over to the judgement- creditor. On receipt of such an order to the banker is bound to pay the garnished funds to the judgement- creditor. Thereafter, the banker liabilities towards his customer are discharged to the extent.

The amount attached by the order. A garnishee order may attach either the amount of the judgement debtor with the banker irrespective of the amount which the judgement- debtor owes to the creditor or a specified amount only which is sufficient to meet the creditor claim from the judgement-debtor.

Post a Comment

0 Comments