Garnishee order

Garnishee order

The word ‘Garnish’ is derived from an old French word ‘garnir’ which means to warn or to prepare. It is to serve an heir with notice i.e. to warn of certain debts that must be paid before the person is entitled to receive property as an heir.

Garnishee means a judgment-debtor’s debtor. He is a person or institution that is indebted to another whose property has been subject to garnishment. He is a person who is liable to pay a debt to a judgment debtor or to deliver any movable property to him. A third person or party in whose hands money is attached by process of court; so called, because he had garnishment or warning, not to pay the money to the defendant, but to appear and answer to the plaintiff creditor’s suit .

Garnisher is a judgment-creditor (decree-holder) who initiates a garnishment action to reach the debtor’s property that is thought to be held or owed by a third party.

A garnishee order is an order passed by an executing court directing or ordering a garnishee not to pay money to judgment debtor since the latter is indebted to the Garnisher (decree-holder). It is an order of court to attach money or goods belonging to the judgment debtor in the hands of a third person. It is a remedy available to any judgment creditor; this order may be made by the court to holders of funds (3rd party) that no payments are to make until the court authorizes them. The third party is known as garnishee and the court order is known as garnishee order.

The purpose of the order is to protect the interest of the creditors. An order served upon a garnishee requiring him not to pay or deliver the money or property of the debtor (defendant) to him and / or requiring him to appear in the court and answer to the suit of the plaintiff to the extent of the liability to the defendant

Suppose A owes Rs. 1000 to B and B owes Rs. 1000 to C. by a garnishee order the court may require A not pay money owed to him to B, but instead to Pay C, since B owes the said amount to C, who has obtained the order.

Suppose A owes B Rs 2,000/. A refuses to repay the amount to B and B sues A. He obtains a decree in his favor. Here B is a judgment-creditor and A is the judgment-debtor. B comes to know that A has some money in a bank account and would like to have his decree satisfied by attaching the funds in the hands of A's bank. For this purpose he approaches a court and obtains a Garnishee order attaching funds at the bank standing to the credit of A. In this e.g., A, is the garnishee and B is the Garnisher (Person who initiates action).

Order 21 Rule 46.

They lay down the procedure in garnishee cases.

The object is to render the debt due by the debtor of the judgment debtor available in execution to the decree holder and not to drive him to a suit. The primary object of a garnishee order is to make the debt due by the debtor of the judgment debtor available to the decree holder in execution without driving him to the suit.

The court may, in the case of debt (other than a debt secured by a mortgage or charge), upon the application of the attaching creditor, issue a notice to garnishee liable to pay such debt, calling upon him either to pay into court the debt due from him to the judgment debtor or so much thereof as may be sufficient to satisfy the decree and costs of execution, or to appear and show cause why he should not do so.

The order is discretionary and the court may refuse to pass such order if it is inequitable. The discretion, however, must be exercised judicially. Where the court finds that there is bona fide dispute against the claim and the dispute is not false or frivolous, it should not take action under this rule.

If money is payable to the judgment debtor on certain contingencies, the garnishee cannot be asked to make payment unless those contingencies have taken place. Similarly, garnishee proceedings cannot be taken in respect of a debt which cannot be attached under the code. Where the garnishee disputes his liability, the court must raise an issue, and determine the liability of the garnishee.

The payment made by the garnishee into the court pursuant to the notice shall be treated as a valid discharge to him as against the judgment debtor. The court may direct that such amount may be paid to the decree holder towards the satisfaction of the decree and costs of the execution.

Orders passed in garnishee proceedings are appealable as Decrees.

Garnishee Proceedings;

Garnishment is a judicial proceeding in which a creditor asks the court to order a third party who is indebted to the debtor to turn over to the creditor any of the debtor’s property held by that third party. It is an inquisitorial proceeding, affording a harsh and extraordinary remedy.

It is proceeding by which a diligent creditor may legally obtain preference over other creditors; and it is in the nature of the creditor’s bill, or a sequestration of the effects of a debtor in the hands of his debtor.

It is a proceeding in which plaintiff in action seeks to reach the rights & effects of defendant by calling into court some third party, who has such effects in his possession or who is indebted to defendant.

Garnishee proceedings are the proceedings are in rem as well as in personam. It operates on the person of the garnishee as on the debt. Therefore, it is classified as a proceeding quasi in rem

Execution of money decree

The executing court has been given power to recover any of the amounts of the judgment debtor, which is in the hands of other. However, the court has no power to issue an order or direction to anybody, may it be usual financier of the judgment-debtor to pay to satisfy the debt or decretal amount for the judgment debtor, may it under assumption that the guarantee is able and can recover the amount from judgment debtor or the judgment debtor will pay to garnishee.