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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 Top
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.
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 Top
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.

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 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 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 authorities 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 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 Hon'ble 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 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 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 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 Top
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
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., 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 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.

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 Top
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.

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 Hon'ble
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 bank's 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.
Top
Bank Account
I th f b k t hi h i i th j i t ft th i h
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.

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 architect's certificate then,
unless and until the certificate is issued the money at the owner's 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 debtor's 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.

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 Top
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 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 court's notice board. Both these requirements
have been fulfilled 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 Top

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 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 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.
Top

O d 21 R l 46 E
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 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.”
Top

Rule 46-C: Trial of disputed questions, “Where the garnishee disputes liability, the
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.

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.”

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 Hon'ble 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.
Top
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
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 such 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 order 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 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 without 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 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.

In Surinder Nath v Union of India, The garnishee order was for a fictitious sum of Rs.
8, 56,377.55 which was not mentioned in the show cause notice issued under Section
226(3) of the Income Tax Act, 1961. The Hon'ble Supreme Court held that there can be
no doubt that when an order is made for the payment of a fictitious sum without
giving any opportunity to a person, against whom the order is made, to show cause
against the passing of such an order for the said sum, the order is a nullity. The
garnishee order that was passed was a nullity and any sale held pursuant to such an
order is also a nullity irrespective of its confirmation. In view of the conduct of the firm
and/or its said partner, they should share along with the Revenue a part of the
compensation that may be allowed to the auction-purchaser. The Revenue shall see
that the said amount is refunded back to the auction-purchaser. Further, the auction-
purchaser will be entitled to get interest on the said amount at rate of fifteen per cent
for a period of two years and a half, during which the amount remained blocked, by
way of compensation.

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 Hon'ble
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 bank's claim shall be available to
satisfy the decree.

In K Jayaraman & etc. v. TS Ravi & Ors, 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. Top
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
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.

In Global trust bank Ltd. v. Fargo Frieght ltd. & ors, the Hon'ble court held that it
applies not only to a debt other than a debt secured by a mortgage or a charge, which
has been attached under Rule 46 of Order 21 but also to a debt under a negotiable
instrument. The foundation of a garnishee proceeding is an attachment under rule
46(1) of Order 21 of the Code. At the most it can be said that orders, which were
passed, are akin to attachment proceedings under which by operation of various
interim orders the appellant had been directed to keep the letter of credit alive. But
the question in this instant case is that whether mere attachment would entitle and
enable the Court to otherwise make a direction for the payment of the amount,
without adjudicating upon the case set up by appellant that for various reasons it is
not liable to pay the amount. It has also been noticed above that the appellant is
seriously disputing its liability under the letter of credit to pay. Rule 46B of Order 21 of
the Code says that when the garnishee does not forthwith pay into Court the amount
due form him and fails to appear and show cause in answer to the notice, the Court
may order the garnishee to comply with the terms of such notice. Rule 46C of Order 21
lays down the procedure when the garnishee disputes indebtedness 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 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.

In Greater Cochin development Authority, Kadavanthara v, harrisons Malayam

Ltd. & Anr, 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 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 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.

In Bombay Stock Exchange v. Jaya I. Shah and Anr, the Hon'ble 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. Top

In State of Bikaner and Jaipur v Additional Dist & Sessions Judge Jodhpur the
In State of Bikaner and Jaipur v. Additional Dist. & Sessions Judge, Jodhpur, the
Hon'ble Court held that it is clear from Sub-rule (1) of Rule 46 of Order 21 itself that an
attachment can be issued against the debt, share and other movable property not in
the possession of the judgment-debtor. The court may pass appropriate order
restraining the person holding the debt or share in the capital of any corporation to
not to pay or disburse the amount. The Rule 46B also provides that what type of order
can be passed against the garnishee. It only says that the executing court can pass the
order against the garnishee to pay into Court, "the amount due from him to the
judgment-debtor". The Rule 46D provides the what procedure should be adopted
when it is claimed that the debts belongs to some third person, or that any third
person had 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. All the provisions referred above clearly reveals that
the executing court has been given power to recover any of the amounts of the
judgment-debtor, which is in the hands of other. 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 further held that the executing court appears to have not
looked into the relevant provision of law to find out for what type of order can be
issued against the garnishee. The court held that the order of the executing court
violates the Rule 46B of Order 21 CPC, which authorizes the executing court to direct
the garnishee to pay the "amount due from him (garnishee) to the judgment-debtor".

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 Hon'ble Supreme Court set aside the impugned order and
remits the matter to the High Court for fresh disposal in accordance with law.

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 under 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 Top
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 amount that
case, there was no adjudication of the amount payable by FCI. Whatever amount that
was due in pursuance of the order dated 27.5.1996 in regard to one go down taken on
lease in June 1994, was deposited by FCI and the plaintiff bank at whose instance the
order was made has no complaint or grievance.

IV. 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.

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.

Bibliography
Books:
1. Thakker C K (2009). Code of Civil Procedure, Lucknow: Eastern Book Company.
2. Takwani C K (2003). Civil Procedure, Lucknow: Eastern Book Company.
3. Basu's (2007). The code of civil procedure, New Delhi: Ashoka Law House.
4. Prasad, B.M (2007). Mulla, The Code of Civil Procedure, Lexis Nexis Butterworths
5. Bryan Garner (2004). Black's Law Dictionary, USA: Thomson Business.
6. P Ramanatha Aiyer (2005). Advanced Law Lexicon, Nagpur: Wadhwa & Co.
7. Vedula Venkata Ramana Vedula Srinivas (2008). V.J. Rao's The Code of Civil
Procedure, 1908, Hyderabad: ALT Publications.
8. A K Banerjee (2007). Banerjee's Commentary on The Code of Civil Procedure, 1908, Top
Allahabad: Dwivedi & Company.
 Case laws:
1. KHE Supply Co Ltd. v. Lakshmi Narayan Sukhani AIR 1941 Cal 364
2. Central bank v. Rao AIR 1949 Cal 144
3. Imperial Bank of India v. Bibi Sayeedun IR 1960 Pat 132
4. Shanti Prasad Jain v. Director, AIR 1962 SC 1764
5. R Viswanatha Pandaram & Co v. Surajmal Ganeshmal Bansali, AIR 1964 Mad 49
6. Lukka Vergese v. D Varkey AIR 1965 Ker 47
7. Jung v. Mohd. Ali, AIR 1972 AP 70
8. Mackenzie & Co. v. Anil kumar, AIR 1975 Cal 150
9. Balaraman v. Varadammal AIR 1987 Mad 99
10. Surinder Nath v Union of India, AIR 1988 SC 1777
11. Executive Engineer, KSE Board v. JH Sharma AIR 1988 Ker 288
12. United Bank of India v. Venugopalan AIR 1990 Ker 223
13. Syndicate Bank v. Vijay Kumar, (1992) 2 SCC 330
14. C.G. Manoj v. infant Jesus Church & Ors,. AIR 2000 NOC 43 (Ker)
15. K Jayaraman & etc. v. TS Ravi & Ors., AIR 2001 Mad 422
16. Kuchimanchi Nagamani Vs. Mantri Prasada Agnihotrudu and others, 2001 (1) ALT
385
17. Global trust bank Ltd. v. Fargo Frieght ltd. & ors. AIR 2002 Del. 13
18. Greater Cochin development Authority, Kadavanthara v, Harrisons Malayam Ltd. &
Anr., AIR 2002 Ker. 119
19. Fargo Freight Ltd v. Commodities Exchange Corporation, AIR 2004 SC 4109
20. Bombay Stock Exchange v. Jaya I. Shah and Anr, AIR 2004 SC 55
21. State of Bikaner and Jaipur v. Additional Dist. & Sessions Judge, Jodhpur, AIR 2005
Raj 246
22. Uttar Gujarat S.R.V. Sangh Ltd. V. Mehsana Dist. Cent. Co-op. Bank Ltd. and Ors,
(2008) 11 SCC 492
23. Food Corporation of India v. Sukh Deo Prasad, AIR 2009 SC 2330
24. O'Driscoll v. Manchester Insurance Committee, 1915 3 KB 499, CA
25. De Pass v. Capital & industries Corp, 1891 1 QB 216
26. Roberts v. Death (1882) 8 QBD 819
27. Turner v. Jones (1858) 26 LT Exclusive 62
28. Dunlop & Ranken Ltd v. Handall Steel Ltd (1957) 1 ALL ER 347
29. Sniadatch v. Family Finance Corp. of Bay View, 395 U.S. 337, 89 S. Ct. 1820, 23 L. Ed.
2d 349 (1969)
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