INTRODUCTION

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 orde r 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 inter est 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 lia bility to the defendant.

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Chapter I - Orders & Proceedings

Order 21 Rule 46 A to 46 I have been newly inserted in the Code of Civil Procedure
by the Amendment Act, 1976. They lay down the procedure in garnishee cases.
Prior to amendment, opinion expressed by various Courts was that the Court had no
power to compel a garnishee to pay debt in Court and in case a garnishee on
appearance denied the debt, it was duty of the Court to enquire that if debt was due
and when garnishee was held liable to pay, exc ept on certain contingencies, it was
not permissible to call upon him to pay the amount into Court . The object of newly
inserted Rule 46A 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 se cured by a mortgage
or charge) which has been attached under Rule 46, 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 debto r 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 contemplated by Rule 46 A 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 deb tor 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 disp utes his liability, the court
must raise an issue, and determine the liability of the garnishee.

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Some property is exempt from garnishment. Exemptions are created by statutes to
avoid leaving a debtor with no means of support. For example, only a certain
amount of work income may be garnished. Under 15 U.S.C.A. § 1673, a
garnishment sought in federal court may not exceed 25 percent of the debtor's
disposable earnings each week, or the amount by which the debtor's disposable
earnings for the week exceed thi rty times the federal minimum hourly wage in
effect at the time the earnings are payable. In Alaska, exemptions include a burial
plot; health aids necessary for work or health; benefits paid or payable for medical,
surgical, or hospital care; awards to victims of violent crime; and assets received
from a retirement plan (Alaska Stat. § 09.38.015, .017). Because garnishment
involves the taking of property, the procedure is subject to DUE PROCESS
requirements. In Sniadatch v. Family Finance Corp. of Bay View, the U.S. Supreme
Court struck down a Wisconsin statute that allowed pretrial garnishment of wages
without an opportunity to be heard or to submit a defense. According to the Court,
garnishment without prior notice and a prior hearing violated fundamental
principles of due process.

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 t he satisfaction of
the decree and costs of the execution.

Where neither the garnishee makes the payment into the court, as ordered, nor
appears and shows any cause in answer to the notice, the court may order the
garnishee to comply with such notice as if such order were a decree against him.
The costs of the garnishee proceedings are at the discretion of the court. Orders
passed in garnishee proceedings are appealable as Decrees.

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Garnishee Proceedings

Garnishment is a judicial proceeding in which a cred itor 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 an anomaly, a statutory invention
sui generic, with no affinity to any action known to common law. It is a method of
seizure but it is not a levy in the usual acceptation of that term. It is proceeding by
which a diligent creditor may legally obtain preference over oth er 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. While a
garnishment proceeding accomplishes the same purposes as an attachment or
execution, it is in no sense a levy on property, but it is a judicial proceeding by
which a new judgment is to be obtained.

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.

In Kuchimanchi Nagamani vs. Mantri Prasada Agnihotrudu and others, the

petitioner filed suit for recovery. During the pendency of suit the Order of
garnishee attachment of amount lying with Government department was passed but
no objections were raised by the government authori ties at that time and therefore,
the Order became final. Later, when the petitioner applied for withdrawal of
amount, the Government Authorities objected. The Hon’ble Court while setting
aside the objections held that the authorities did not raise the obje ctions at relevant
time and therefore, the objections are not to be entertained.

In Fargo Freight Ltd v. Commodities Exchange Corporation, the enforcement

petition was for enforcing the English award. The Hon’ble Court held that it was
under S 46 to 49 of the Arbitration and Conciliation Act, 1996. In these

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proceedings, the enforcement has necessarily to be between the parties to the award.
In these proceedings, serious disputes regarding the liability of third party to pay
could not be decided. Here the dispute arose as to whether or not the documents
were discrepant. The Hon’ble Supreme Court held that the division court should
have directed the appellants to have that dispute decided by the competent court in
an appropriate proceeding. Provisions containe d in Part II of the arbitration and
conciliation Act, 1996 do not permit courts to decide such disputes with the third
party in such proceedings. To that extent, here, the division Court is right. Such a
dispute could not have been decided in the proceedin gs. In Hon’ble Supreme
Court’s view, however, the division court was wrong in remitting the matter back
for the following procedure under Order 21 Rule 46 CPC. The Hon’ble Supreme
Court held that Order 21 Rule 46 deals with the garnishee proceedings. These apply
when monies of judgment debtor are in the hands of the third parties. In cases of
Letter of Credit the liability of the issuing bank is an entirely independent liability.
It cannot be said that the monies payable by the issuing bank are monies belon ging
to the judgment-debtor. Thus, the claim, if any, can only be decided in independent
proceedings which should have been adopted by the Appellants.

Prohibitory order on garnishee

A Notice was issued to call upon the defendant to show cause against the prayer of
the plaintiff in his application. However, notice was not issued in form No 5. The
Kerala High Court, in Greater Cochin development Authority, Kadavanthara v,
harrisons Malayam Ltd., held that since the purpose of form 5 was achieved in
substance, the order will not be liable to be set aside on that ground. A comparison
of form No 5 was made with the prohibitory order which actually served on the
garnishee. It revealed certai n differences such as in the prescribed form the
direction was “to the above named garnishee and to affix at the court house” the
mention of the direction to the defendant to furnish security was not available in the
impugned order and direction in the imp ugned order was to the garnishee
prohibiting or restraining him from making the payment of specified debt or any
part thereof to any person whomsoever or otherwise than the court and form no 5

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envisages direction to the Amin to call upon the defendant to f urnish security.
However, in the absence of any particular form prescribed by the law, whereby the
amin, to whom the warrant in form No 5 is addressed, should call upon the
defendant to furnish security, the court resorted to issuance of separate notice
calling upon the defendant to show cause against the prayer in the application which
mentions of security as well, there was no illegality. By issuance of separate notice
the court achieved the purpose of the former portion of the form No 5 in substance.

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. In the just out cas e,
the executing court has not held that any of the amounts of the judgment debtor who
is not holding any money of the judgment debtor is lying with the petitioner bank.
The executing court did not held that the petitioner under any provisions of law can
be directed to create liability upon himself to pay the amount to decree holder even
under the assumption that petitioner may recover the amount either from the
judgment debtor or from state.

The order of the executing court, which is virtually a direction to create a liability
for the bank, rather than to pay any debt amount or deposit amount of the judgment
debtor to decree holder is therefore, in violation of the Rule 46 B of order 21 of
CPC and is liable to be set aside.

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Chapter - II Legal Provisions

Order 21 Rule 46 A to Rule 46 I of Code of Civil Procedure, 1908 deals with

Garnishee orders. It was inserted in the code by the Amendment Act, 1976.

Rule 46-A: Notice to garnishee, “ (1) The Court may in the case of a debt (other
than a debt secured by a mortgage or a charge) which has been attached under rule
46, upon the application of the attaching creditor, issue notice to the 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.

(2) An application under sub-rule (1) shall be made on affidavit verifying the facts
alleged and stating that in the belief of the deponent, the garnishee is indebted to
the judgment-debtor.

(3) Where the garnishee pays in the Court the amount due from him to the
judgment-debtor or so much thereof as is sufficient to satisfy the decree and the
costs of the execution, the Court may direct that the amount may be paid to the
decree-holder towards satisfaction of the decree and costs of the execution. ”

Rule 46-B: Order against garnishee, “Where the garnishee does not forthwith pay
into Court the amount due from him to the judgm ent-debtor or so much thereof as is
sufficient to satisfy the decree and the costs of execution, and does not appear and
show cause in answer to the notice, the Court may order the garnishee to comply
with the terms of such notice, and on such order, execu tion may issue as though
such order were a decree against him.”

Rule 46-C: Trial of disputed questions, “Where the garnishee disputes liability, the
Court may order that any issue or question necessary for the determination of
liability shall be tried as i f it were an issue in a suit and upon the determination of
such issue shall make such order or orders as it deems fit.

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Provided that if the debt in respect of which the application under rule 46A is made
is in respect of a sum of money beyond the pecuniar y jurisdiction of the Court, the
Court shall send the execution case to the Court of the District Judge to which the
said Court is subordinate, and thereupon the Court of the District Judge or any other
competent Court to which it may be transferred by the District Judge shall deal with
it in the same manner as if the case had been originally instituted in that Court.”

Rule 46-D: Procedure where debt belongs to third person, “Where it is suggested or
appears to be probable that the debt belongs to some thir d person, or that any third
person has a lien or charge on, or other interest in such debt, the Court may order
such third person to appear and state the nature and particulars of his claim, if any,
to such debt and prove the same”.

Rule 46-E: Order as regards third person, “After hearing such third person and any
person or persons who any subsequently be ordered to appear, or where such third
or other person or persons do not appear when so ordered, the Court may make such
order as is hereinbefore provided, or such other order or orders upon such terms, if
any, with respect to the lien, charge or interest, as the case may be, of such third or
other person or persons as it may deem fit and proper.”

Rule 46-F: Payment by garnishee to be valid discharge, “Paym ent made by the
garnishee on notice under rule 46A or under any such order as aforesaid shall be a
valid discharge to him as against the judgment -debtor and any other person ordered
to appear as aforesaid for the amount paid or levied, although the decree in
execution of which the application under rule 46A was made, or the order passed in
the proceedings on such application may be set aside or reversed.”

Rule 46-G: Costs, “The costs of any application made under rule 46 A and any of
the proceeding arising therefrom or incidental thereto shall be in the discretion of
the court.”

Rule 46-H: Appeals, “An Order made under rule 46 B, 46 C or 56 E shall be

appealable as a decree.”

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Rule 46-I: Application to negotiable Instruments, “The provisions of Rules 46 A to
46 H shall, so far as may be, apply in relation to negotiable instruments attached
under rule 51 as they apply in relation to debts.”

Judicial Trend

In Kazim Jawaz Jung v. Mir Mohamad Ali Jaferi and Anr, the Appellant is the
debtor of judgment debtor. He was directed to deposit in Court amount payable to
judgment debtor as required by decree holder. The appellant disputed his liability
with regard to amount due to judgment debtor. He contended that the final decree
with regard to liability amount has not been passed yet and therefore the impugned
amount becomes payable only when judgment debtor allots land to appellant. Thus,
the appellant is not liable to pay any amount before allotment of land by judgment
debtor. The Hon’ble Andhra Pradesh High Court hel d that where the judgment
debtor himself is not entitled to recover amount from appellant then decree holder
has no right to recover amount from appellant.

In Mackinnon Mackenzie and Company Pvt. Ltd. v. Anil Kumar Sen and Anr, the
question which came up for consideration is that if the garnishee denies that any
sum of money is due to the judgment-debtor whether it is open to the court to hold
the garnishee liable for the claim made by the judgment -debtor without raising and
trying an issue on the question of such liability. The Hon’ble Calcutta High Court
held that the Judge has a discretion under the Rule to, make an order summarily or
to settle an issue and try the same on evidence. No doubt the order contemplated by
the Rule is a discretionary one, but s uch discretion must be judicially exercised.
Where a Judge finds that a claim is bona fide disputed and the dispute is not
frivolous, he should not rush to a conclusion on the affidavit evidence having
regard to the requirement of the Rule. A garnishee ord er which enables a judgment -
creditor to obtain satisfaction of his claim in a summary proceeding is a matter of
procedure, similar in scope as in the case of a judgment on admission under Order
12 Rule 6 of the Civil Procedure Code or the summary procedure in suits to recover

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debts or liquidated demands as prescribed in Chapter XIII -A of the Original Side
Rules. This procedure can be availed of by a decree -holder where either the debt is
not disputed or the dispute appears to the Court to be frivolous and w ithout any
substance. It is of no avail in a case where there is a substantial bona fide dispute
with regard to the debts sought to be attached.

In Executive Engineer, KSE Board v. J H Sharma, the garnishee appeared in court

in response to the letter and filed a counter-affidavit, raising certain objections. It
was held that since he had raised his contentions in counter -affidavit, the same
could be treated as objections contemplated under O 21 R 46 C even in the absence
of formal notice under O 21 R 46 C t o order that the disputed question be tried as
an issue and to decide the issue. In the impugned orders, the court below did not
consider the merits of the dispute raised by the appellant.

In Food Corporation of India v. Sukh Deo Prasad, the Hon’ble Supreme Court held
that the Garnishee proceedings are governed by Rules 46 and 46A to 46F of order
21 of the Code. Sub-para (1) of Rule 46 A provides that in the case of a debt (other
than a debt secured by a mortgage or a charge) which has been attached u nder Rule
46, upon the application of the attaching creditor, the court may issue notice to the
garnishee liable to pay such debt, calling upon him either to pay into court the debt
due from debtor or to appear and show cause why he should not do so.

Rule 46B provides that where the garnishee does not forthwith pay into court the
amount due from him to the debtor and does not appear and show cause in answer to
the notice, the court may order garnishee to comply with the terms of such notice,
and on such order, execution may issue as though such order were a decree against
him. Rule 46C provides that where the garnishee disputes liability, the court may
order that any issue or question necessary for the determination of liability shall be
tried as if it were an issue in a suit and upon the determination of such issue shall
make such order or orders as it deems fit. It would thus be seen that the amount due
by a garnishee, if disputed has to be determined as if it was an issue in the suit and
the court can appropriate order determine the extent of liability of the garnishee. In
this case, there was no adjudication of the amount payable by FCI. Whatever

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amount that was due in pursuance of the order dated 27.5.1996 in regard to one go
down taken on lease in June 1 994, was deposited by FCI and the plaintiff bank at
whose instance the order was made has no complaint or grievance.

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