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National Law Institute University

Bhopal
(Session 2015-16)

Energy Law

Project On

International Atomic Energy Agency

Submitted to: Submitted by:

Mr. Siddhartha Jain Ashutosh Raghuwanshi

Gagan S. Parmar

Gaurav K. Sen

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Table of Contents

Introduction 01
Garnishee Order: Meaning 01
Garnishee Proceedings 05
Prohibitory order on garnishee 06
Execution of money decree 07
Scope and Nature 08
Conclusion 19
Bibliography 21

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Introduction
Garnishment is the entire process of petitioning for and getting a court order directing a
person or entity (garnishee) to hold funds they owe to someone who allegedly is in debt
to another person, often after a judgment has been rendered. Usually the actual
amounts owed have not been figured out or are to be paid by installments directly or
through the sheriff.

Garnishee Order: Meaning

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-debtors 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 creditors suit .
Garnisher is a judgment-creditor (decree-holder) who initiates a garnishment action to
reach the debtors 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

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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 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, except 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 secured 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 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 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.

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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.
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 thirty
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 the 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 creditor asks the court to order a third
party who is indebted to the debtor to turn over to the creditor any of the debtors
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 other creditors; and it is in the nature of the creditors 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 authorities at that time and therefore, the Order became final. Later,
when the petitioner applied for withdrawal of amount, the Government Authorities
objected. The Honble Court while setting aside the objections held that the authorities
did not raise the objections 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 Honble Court held that it was under S 46 to
49 of the Arbitration and Conciliation Act, 1996. In these 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

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dispute arose as to whether or not the documents were discrepant. The Honble
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
contained 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 proceedings.
In Honble Supreme Courts view, however, the division court was wrong in remitting the
matter back for the following procedure under Order 21 Rule 46 CPC. The Honble
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 belonging 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. & Anr , 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 certain
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
impugned 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 envisages direction to the Amin to call upon the defendant
to furnish 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

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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 case, 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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Scope & Nature

Scope of Order 21 Rule 46 A

Rule 46-A requires a notice to be issued to a garnishee before a garnishee order is


passed against him. If such notice is not issued and opportunity of hearing is not
afforded before passing an order, the order would be null and void. In the eyes of the
law, there is no existence of such an order and any step taken pursuant to or an in
enforcement of such an order would also be void.
The object of this rule is to render debt due by the debtor of the judgment debtor
available in execution to the decree holder and not to drive him to a suit. It applies to a
debt, other than a debt secured by a mortgage or a charge, which has been attached
under R 46. Unlike the Calcutta rule, this rule applies to a debt under a negotiable
instrument by virtue of the new R 46-A. The word may in the rule means that the rule is
discretionary and the court may refuse to act under this rule if it inequitable. If a debt
attachable under R 46 has not in fact been attached under this rule or the debt is one
which cannot be attached under this rule garnishee proceedings cannot be taken in
respect thereof. Thus, the garnishee proceedings cannot be taken in respect of a debt
due to a firm in execution decree against the partners in their individual capacity.
The foundation of garnishee proceedings is an attachment under R 46. Further a decree
holder can proceed against a garnishee only where the judgment debtor has a present
right to recover the debt from his Judgment debtor (the garnishee). If money is payable
to the judgment debtor only on a certain contingencies, the decree holder would be
subject to the same disability as his judgment debtor & decree holder would be subject
to the same disability as his judgment debtor and has to wait till the happening of that
contingency. This so because the debt that is attachable is one which the judgment
debtor can enforce payment of, if he desires to do so. There is, however, a distinction
between the case where there is existing debt, payment whereof is deferred and the
case where the debt and its payment rests in future. In the former case, the debt is
attachable and in the latter it is not . The fact that the amount of the debt due or
accruing is not ascertained does not prevent a garnishee order nisi being made

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In Syndicate Bank v. Vijay Kumar, while furnishing bank guarantee in favor of high
Court customer furnished two fixed deposit receipts duly discharged to the bank and
authorized the bank the custody of the receipts and renewals thereof. The Honble
Supreme Court held that it becomes a general lien. Bank can set off liability of the party
against the receipts. If the fixed deposits are attached to bank garnishee has to go to
the court. The balance after adjustments of banks claim shall be available to satisfy the
decree.
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 to 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.

Form of Notice

The notice submitted shall call upon the garnishee to show cause. In a particular case,
a money decree was obtained on the basis of Compromise. At the instance of the
decree holder, an attachment before judgment was effected, of a certain sum of money,
said to belonging to the judgment debtor which was in the hands of the appellant
garnishee, by way of prohibitory order. The executing court, at no stage, issued any
notice under O 21 R 46 to the garnishee. Only, a letter was directed by the court to be
written, requesting the garnishee to remit to be stated in the summons or notice. It
would not attract O 58 R 5 .
Bank Account

In the case of a bank account which is in the joint names of two persons their shares
are taken as equal in the absence of evidence to the contrary . Banker has the right to
set off one account against another account of the same person

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Cheque

A cheque cannot be attached under O 21 R 46. It is attached under O21 R 51 relating to


negotiable instrument.

Contingent Debt

A contingent debt cannot be attached . For Example, where, under a building contract,
the building contractor is supposed to be paid only on the architects certificate then,
unless and until the certificate is issued the money at the owners hand cannot be
attached for a debt due from contactor.

Scope of Order 21 Rule 46 B:

It empowers the court, in case the garnishee does not appear and show cause against
the notice under R 46 A, to order him to comply with the terms of the notice and on such
an order, execution may be issued. Such an order is to be deemed to be a decree
against the garnishee and in favor of the judgment creditor. The further proceedings are
in execution of that decree and against the garnishee . The power to make the order is
discretionary and may be refused on sufficient grounds such as where the judgment
debtors interest in the debt is not personal but is in the capacity as a trustee
Scope of Order 21 Rule 46 C:

The legislature intended to treat some of the orders passed by the execution court to be
decree for the purpose of appeals or otherwise. It was further intended to treat certain
orders passes to be in the exercise of the original jurisdiction of the court so as to have
a final adjudication of those matters and accordingly jurisdiction had been specifically
conferred under O 21 R 46 C & R 101 of CPC. Thus, orders passed under r 46 C & R
101 stand on different footing.

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If the garnishee disputes indebt ness to the judgment debtor or alleges that the debt is
not attachable debt the court must order an issue to be raised and tried. Even if there is
reasonable doubt, the matter must be tried .

1. Adjudication of the dispute

Where the letter of credit opened by the bank and the court issued interim order in view
thereof but the bank disputed its liability under the said letter of credit held, without
adjudicating liability of the bank, decree passed in terms of arbitral award was not
proper. For all intents and purposes the appellant is a third party to the decree. The first
question for consideration which arise is that whether decree could be enforced in the
same execution proceedings against a third party, not being party to the decree. Before
that question is taken up for consideration, it is to see the nature of credit. Letter of
credit as commonly understood confers authority on the person to whom it is addressed
to advance money or furnish good on the credit of the writer. It is in the nature of
negotiable instrument, and is a letter whereby a person requests another to advance
money or given credit to the third party and promised to repay person making
advancement. A letter of credit has been defined as an offer by a bank or any other
financial institutions to be bound to person to whom it is directed, when accepted and
acted on him by according to its stipulation and is in substance an authority to him to
draw on the bank in accordance with the terms stated and a promise by the bank to
accept and pay bills or drafts so drawn.

2. Trial of disputed Question

Where the ban disputed its liabilities under the letter of credit, it was observed that letter
of credit commonly understood confers authority upon the person to whom it is
addressed to advance money or furnish goods on credit of the writer. It is in the nature
of negotiable instrument, and is a letter whereby a person requests another to advance
money or give credit to third person and promised to repay person making
advancement. A letter of credit has been defined as an offer by a bank or other financial

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institutions to be found to person to whom it is directed, when accepted and acted on by
him according to its stipulations and is an substance an authority to him to draw on the
bank in accordance with the terms stated and a promise by the bank to accept and pay
bills or draft so drawn.
Moreover, Rule 46 A of order 21 applies not only to a debit other than a debit secured
by a mortgage or a charge, which has been attached under Rule 46 of Order 2 1of CPC
but also to a debt under a negotiable instrument. Rule 46 lays down the procedure
when the garnishee dispute indebt ness to the judgment debtor or alleges that the debt
is not an attachable debt. The court must order an issue to be raised and tried. Even if
there is a reasonable doubt the matter should be tried. The garnishee is required to
make out a garnishee is required to make out a prima facie case before an issue as to
liability may be ordered to be raised. In the words he would disclose facts from which a
reasonable inference may be drawn that there is a valid dispute as to his alleged
liability. On the same analogy, as contained in rule 46 C of order 21, there must be
adjudication by the court, once the bank had disputed its liability to pay.

3. Attachment before judgment

In the instant case, the order passed by the court being interim in nature, there was no
urgent need for physical confiscation of the money from the garnishee, especially
because the opportunity for furnishing security was still there and it was in those
circumstances that a prohibitory order was issued as seen quoted above from pg 27 of
the paper book. By service of the order in the particular form the garnishee or the
defendant is not prejudiced in any manner because no direction is contained therein,
which is not authorized by the provisions of law. The fact that the court has restrained
payment is clearly communicated in the order served on the garnishee and the
ambiguity, if any; available in the form prescribed is cleared in the specific order actually
served on the garnishee. It may also be mentioned here that this being attachment of
debt, it is o 21r 46 that applies regarding the manner of effectuating the attachment
order and that o 21 r 46(2) provides for service of the prohibitory order on the garnishee
besides affixture in the courts notice board. Both these requirements have been fulfilled

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here. There is no mandate in O 21 R 46(2) that copy of the prohibitory order should be
served on the defendants also.
Attachment before judgment was effected under O 38 R 5, CPC since the attachment
was of a sum of money allegedly belonging to the judgment debtor and lying in the
hands of the appellant, it would have been affected byway of prohibitory order. R 11 A
O 38 states that the provisions of the code are applicable to an attachment made in
execution of the decree shall, so far as may be, apply to an attachment made before
judgment which continues after the judgment by virtue of provisions of R 11. According
to R 11, where property is under attachment by virtue of the provisions of O 38 and a
decree is subsequently passed in favor of the plaintiff, it shall not be necessary upon an
application for execution of such decree to apply for attachment of the property.

4. Liability of Bank

Where the bank disputed its liability under the letter of credit and the court did not
adjudicate upon the liability of the bank rather decree passed in terms of Arbitration
award making the bank liable. But since bank was not party to arbitration, the orders
liable to satisfied. Letter of credit as commonly understood confers authority upon the
person to whom it is addressed to advance money or furnished goods on the credit of
the writer. It is in the nature of negotiable instrument, and is a letter whereby a person
requests another to advance money or given credit to a third person and promised to
repay person making advancement. A letter of credit has been defined as an offer by a
bank, or other financial institutions to be bound to person to whom it is directed, when
accepted and acted on by him according to its stipulations and is in substance an
authority to him to draw on bank in accordance with the terms stated and a promise by
the bank to accept and pay bills or drafts so drawn.
The court must order an issue to be raised and tried. Even if there is a reasonable doubt
the matter should be tried. The garnishee is required to make out a prima facie case
before an issue as to his liability may be ordered to be raised. In other words, he would
disclose facts from which a reasonable inference may be drawn that there is a valid
dispute as to his alleged liability. On the same analogy, as contained in R 46 C, there

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must be adjudication by the court, once the bank had disputed its liability to pay.

5. Admission of Appeal

Order passed under R 46 C & R 101 stand on different footing that the orders passed
under the provisions of O 21, even though the provisions were made to treat all such
orders as decrees. As original jurisdiction has not conferred to the executing court in
deciding claims under R 58 CPC an appeal shall not lie to the division bench from an
order passed under R 46 C & R 101 are orders passed in exercise of the original
jurisdiction of subordinate court and those orders shall come within the purview of
Clause (ii) of S 5 of Kerala HC Act.

6. Undertaking to pay compensation

Where garnishee obtained possession from the lessee giving undertaking to pay agreed
compensation, in the suit filed by the creditor, direction was given to the garnishee to
deposit the amount in the court. In the instant case, TIDCO has acquired the lands
belonging to the salt department of government of India and has agreed to pay
compensation due to the salt department and its lessees. Transfer of entire land has
also been made by the salt department to TIDCO in pursuance of the order dated 6-1-
1999 by the government of India. Conditions under which transfer has been affected in
favor of TIDCO by the government of India are to the effect that TIDCO shall pay
compensation agreed by it to the lessees who have been made to prematurely
surrender their leasehold rights. Further it was a condition that the salt commissioner
shall not be dragged to any proceedings in court in respect of the amount payable to the
lessees and it is responsibility of the TIDCO to meet all Claims.

Order 21 Rule 46 D

The words where it is suggested or appears to be probable would mean that either the

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garnishee points it out or that it appears to the court from the record before it. On a rule
similar to this rule, it has been held in England that the garnishee must inform the court
of any claim to or lien upon the debt and that if having knowledge thereof, he still pays
to the garnisher then he would have to pay the person entitled to such claim or lien .
Under this rule, the court has to make an order directing such a third person to appear
and state his claim to such a debt and prove the same.

Order 21 Rule 46 E

In R Viswanatha Pandaram & Co v. Surajmal Ganeshmal Bansali, P Filed a suit for


recovery of Rs 13,300/- against B on the same day, applied for an attachment before
judgment, of a sum of Rs 10,000/- in the hands of C Bank. The garnishee, C Bank, filed
a counter affidavit stating that the money did not belong to the debtor but to L, Bank of
Bombay. A notice was thereupon issued to L Bank under the provisions of R 46 D made
by the high Court of Madras belonged to it. The High Court held that it was incumbent
on the court to have investigated as to whom the money belonged or if it found that the
matter was complicated, it would have referred the parties to a suit after ordering the
amount to be deposited in court .

Order 21 Rule 46 F

The object of this rule is to discharge the garnishee from his liability to his own creditor,
judgment debtor and any other person ordered to appear under R 4 D for the amount
paid or levied. The words under rule 46 A or under any such order as aforesaid mean
that the garnishee gets discharge of his liability only if payment by him is made under R
46 A or under an order made under R 46 B, 46 C, 46 E. Accordingly if the garnishee
makes payment, not under the garnishee proceedings, but by way of private
arrangement, he would not get a valid discharge under this rule. The garnishee gets a
valid discharge although the decree in execution of which the application is made under
R 46 A or the order passed in the proceedings under such an application, is set aside or

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reversed. This is so also where the judgment creditor may have to return the money to
the receiver in insolvency, where the judgment debtor has been adjudicated insolvent.

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 judgment-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, execution 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 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.

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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 pecuniary 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 third 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, Payment 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.
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.

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III. 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 Honble
Andhra Pradesh High Court held 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 Bombay Stock Exchange v. Jaya I. Shah and Anr, the Honble Court held that the
assets belonging to the defaulted member cannot be attached in Garnishee
proceedings since it is not a debt due by the Exchange to the defaulted member.
In Uttar Gujarat S.R.V. Sangh Ltd. V. Mehsana District Central Co-op. Bank Ltd. and
Ors , Ex-parte garnishee orders were issued against the appellant by the Ahmedabad
Board of Nominees. Pursuant to the order of restraint passed by the Board of
Nominees, Ahmedabad Division, the present appellant was restrained from giving or
making payment to defendant No. 1. Though appellant was a party in the Special Civil
Application, the matter was disposed of without hearing the appellant. In the Review
Application the learned Single Judge of the High Court proceeded on entirely erroneous
premises. The ultimate result is that the appellant, without getting an opportunity of
being heard and/or presenting its case has been saddled with the liability. Therefore,
the Honble Supreme Court set aside the impugned order and remits the matter to the
High Court for fresh disposal in accordance with law.

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Conclusion

The Code of Civil Procedure empowers the court to issue the garnishee order. Prior to
the amendment in 1976, there was no provision relating to garnishee order in the code
of civil procedure, 1908. After the insertion of Amendment by the way of Code of civil
procedure Amendment Act, 1976, a direct provision was added to the Code of Civil
Procedure, 1908. It empowers the court to issue such an order on the application duly
filed. But it is not mandatory on the courts to issue the order every time as and when the
application for its issuance is filed. It is the discretionary power of the court to issue a
garnishee order and not the mandatory provision. The word may in the rule means that
the rule is discretionary and the court may refuse to act under this rule if it inequitable or
if it is likely to cause prejudice to garnishee.
The garnishee is required to make out a prima facie case before an issue as to his
liability may be ordered to be raised. Even if the garnishee disputes the indebtedness to
the judgment debtor, the court shall carry on the proceedings. If there is even little doubt
about the indebtedness of the judgment-debtor, the court shall continue with the
proceedings. The Court must order an issue to be raised and tried. Even if there is a
reasonable doubt the matter should be tried.
The court has no power to issue order or direction to anybody, may it be usual financier
of the judgment-debtor, who is not holding any money of the judgment-debtor to pay to
satisfy the debt or decretal amount for the judgment-debtor, may it under assumption
the garnishee is able and can recover the amount from the judgment-debtor or the
judgment-debtor will pay to the garnishee
The court may reject the application or refuse to issue such order if suitable grounds are
not found i.e. if the affidavit filed by the decree holder is vague, insufficient and
ambiguous; the proceedings would not sustain and would come at stake. The court
may, in exercise of sound discretion, control the use of writs of garnishment to the
extent of preventing it from being abused or becoming oppressive. If the assets are
belonging to the defaulted member it cannot be attached in Garnishee proceedings
since it is not a debt due to the defaulted member.

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Thus, it is concluded that it is very good piece of legislation by our parliamentarians. But
it has to be used with caution. While issuing such order, it is the duty of the court to
check whether the case is prima facie. It is also the duty of the court that while
exercising the discretionary power, the power is not misused and the innocent is not
harassed.

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Bibliography

Statute

The Code Of Civil Procedure, 1908

Books

Bakshi, P. M, Mulla Code of Civil Procedure, Vol-I, 15th Ed.(1999), Butterworths,


Mumbai.
Takwani, C. K., Civil Procedure, 6th Ed. (2009 Rep.), Eastern Book Company,
Lucknow.

Majumdar, P. K. and Katariya, R.P., Commentary on The Code of Civil


Procedure, 1908, 3rd Ed. (1998), Orient Publishing Company, Allahabad.

Websites

www.manupatra.com/search/cpcamendment

www.legalpundits.com/amendments

www.ebc-india.com/cpc/amendingbills

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