01. Rule/Order Nishi.
(a) Asks the banker to freeze the debtor's account.
(b) Asks the banker to explain why the funds in the account, so freezed should not be used for payment of judgement creditor.
On receipt of such an order the bank should immediately inform the customer so that he may make the necessary arrangements for payments of the debts due by him.
02. Absolute:
This order directs the banker to pay either the whole or a part of the funds lying in the account against which "Order Nishi" has been issued to the judgement creditor.
(i) The amount attached: The Garnishee Order may provide for the attachment of the whole or a part of the funds of the judgement debtor's account with the bank. The bank should not make payment out of the account so freezed in contravention of the court's order otherwise it will be liable for defying the order of the court.
Illustration: A fails to pay his creditor B a sum of $6000 usd, B brings a Garnishee Order against the bank where A has an account having a balance of $ 10000 usd prohibiting any payment out of this account. Inspite of this the banker subsequently honours A's cheque for $5000 usd. The banker is liable for defying court's order and will have to compensate B for any loss that he may suffer on account of non-recovery of the full amount due to him.
In case only a part of the sum standing to the credit of the judgement debtor's account has been attached on account of Garnishee Order, the banker may transfer that much of amount to a suspense account and the customer's account may be permitted to be operated with the balance.
In case certain cheques drawn by the judgment debtor were certified as "good for payment" by banker before the receipt of Garnishee Order by the bank, they can be paid in spite of subsequent Garnishee Order.
(ii) Order applicable only against the debt due or accruing due: The banker is restrained by the Garnishee Order only to make payment of such debts which have already become to the customer or which are not at which at present payable but for the payment of which an obligation exists. An amount which is not a debt due by the banker cannot be attached by such an order. For example, a banker has agreed to allow an overdraft of $5000 usd to a customer, he has overdrawn only $3000 usd so far, remaining $2000 usd cannot be attached by the Garnishee Order.
(iii) Banker's claim to Set Off: In case a banker has a definite claim against the debtor, it can claim the set off of such claim against the customer's balance with it in spite of the Garnishee Order.
(iv) Amounts not covered by the Garnishee Order: The Garnishee Order attaches only that balance which is lying in the judgement debtor's account at the time when the order is served on the banker. It, therefore, does not apply to :
(a) cheques, bill of exchange etc. deposited with the banker for collection but not yet collected.
(b) sale proceeds of securities etc. of the customer not yet collected.
(c) deposits made subsequent to the serving of the Garnishee Order.
(d) payments made by the banker before serving of the Garnishee Order.
(e) money held abroad by the judgement debtor.
(f) securities lying in safe custody with the banker.
(v) Serving of Garnishee Order: Garnishee Order may be served on the Head Office of the Bank and it will serve as a notice to all branches where the judgement debtor may have his accounts. However, the Head Office will have to be given a reasonable time so as to enable it to inform the branches. Any payment made by the branches before receipt of information regarding Garnishee Order, will be taken as a valid payment.
(a) Asks the banker to freeze the debtor's account.
(b) Asks the banker to explain why the funds in the account, so freezed should not be used for payment of judgement creditor.
On receipt of such an order the bank should immediately inform the customer so that he may make the necessary arrangements for payments of the debts due by him.
02. Absolute:
This order directs the banker to pay either the whole or a part of the funds lying in the account against which "Order Nishi" has been issued to the judgement creditor.
(i) The amount attached: The Garnishee Order may provide for the attachment of the whole or a part of the funds of the judgement debtor's account with the bank. The bank should not make payment out of the account so freezed in contravention of the court's order otherwise it will be liable for defying the order of the court.
Illustration: A fails to pay his creditor B a sum of $6000 usd, B brings a Garnishee Order against the bank where A has an account having a balance of $ 10000 usd prohibiting any payment out of this account. Inspite of this the banker subsequently honours A's cheque for $5000 usd. The banker is liable for defying court's order and will have to compensate B for any loss that he may suffer on account of non-recovery of the full amount due to him.
In case only a part of the sum standing to the credit of the judgement debtor's account has been attached on account of Garnishee Order, the banker may transfer that much of amount to a suspense account and the customer's account may be permitted to be operated with the balance.
In case certain cheques drawn by the judgment debtor were certified as "good for payment" by banker before the receipt of Garnishee Order by the bank, they can be paid in spite of subsequent Garnishee Order.
(ii) Order applicable only against the debt due or accruing due: The banker is restrained by the Garnishee Order only to make payment of such debts which have already become to the customer or which are not at which at present payable but for the payment of which an obligation exists. An amount which is not a debt due by the banker cannot be attached by such an order. For example, a banker has agreed to allow an overdraft of $5000 usd to a customer, he has overdrawn only $3000 usd so far, remaining $2000 usd cannot be attached by the Garnishee Order.
(iii) Banker's claim to Set Off: In case a banker has a definite claim against the debtor, it can claim the set off of such claim against the customer's balance with it in spite of the Garnishee Order.
(iv) Amounts not covered by the Garnishee Order: The Garnishee Order attaches only that balance which is lying in the judgement debtor's account at the time when the order is served on the banker. It, therefore, does not apply to :
(a) cheques, bill of exchange etc. deposited with the banker for collection but not yet collected.
(b) sale proceeds of securities etc. of the customer not yet collected.
(c) deposits made subsequent to the serving of the Garnishee Order.
(d) payments made by the banker before serving of the Garnishee Order.
(e) money held abroad by the judgement debtor.
(f) securities lying in safe custody with the banker.
(v) Serving of Garnishee Order: Garnishee Order may be served on the Head Office of the Bank and it will serve as a notice to all branches where the judgement debtor may have his accounts. However, the Head Office will have to be given a reasonable time so as to enable it to inform the branches. Any payment made by the branches before receipt of information regarding Garnishee Order, will be taken as a valid payment.
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