Bank Promotion Exams

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A court order instructing a garnishee (a bank) that funds held on behalf of a debtor (the judgement debtor) should not be released until directed bythe 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. 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 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.

For Example,

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.

Order Nisi

A Garnishee Order is issued in two stages, first as an Order Nisi and then an Order Absolute.

1. On receipt of Order Nisi, Bank is bound to stop operation of the account.
2. We must immediately inform the customer about the receipt of the order.

Order Absolute

After receipt of the explanation of Bank ,Court may issue Order Absolute.
On receipt of an “Order absolute”,Bank has to pay the amount to the court.

Amount of Garnishee Order

A Garnishee Order usually does not mention the amount. In case no amount is mentioned, the entire balance should be attached.

Accounts to be attached

Garnishee Order extends only to those accounts which are held in the same capacity in which the order is issued and not to accounts held otherwise.

If the Garnishee Order is in the name of A, but the account in joint names of A, B and C, the account is not attached.
However, if the Garnishee Order is in the joint names of say A, B and C, it will not only attach the joint accounts of A,B,& C, but also accounts in their individual names.

In case of Garnishee Order is in the name of A, and the account is in the name of A, partnership firm where A be attached.
However a Garnishee Order issued in the name of a partnership firm, extends to the balance in the firm’ in the accounts in the individual names of the partners.

Where the Garnishee Order is in the name of individual, it would extend to any account maintained by him in the name of a firm as sole proprietor.

Accounts held by a person in trust are not attached by a Garnishee Order issued in the individual name.

A Garnishee Order in the name of an Advocate will attached his office account

Accounts not to be attached

Funds belonging to deceased constituents are not attachable by a Garnishee Order.

Funds in the name of an undischarged insolvent are not attachable by a Garnishee Order.

All deposits due and accruing due are attached.

This means SB a/c, CD a/c, Cr. Bal. in C/C, O/D

Garnishee Order can attach Term deposits only on its maturity.

Uncleared balances in SB/CD account cannot be attached.

A Garnishee order cannot attach salary.

The Undrawn portion of a cash credit account cannot be attached as it is not a debt due.

IT attachment order

Issued under Sec.226(3) of Income Tax Act, 1961, by an Income Tax Officer.
Amount is mentioned in Income Tax Attachment Order.
Even though the order is received in a single name, it attaches balance (pro-rata) in any joint account maintained by such person.
Accounts of deceased/insolvent are attachable.
SB/CD/Call Deposits & Term Deposits held at the time of receipt of order, but future credits are not attached.


Where a Bank fails to attach the amount it would be deemed to be an assesse in default.

Right of Set-Off

The Bank is entitled to first exercise the right of set-off before acting on the order.