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Scope and 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.

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.
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.

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 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 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 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.

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.

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.

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.

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 Mackinnon Mackenzie and Company Pvt. Ltd. v. Anil Kumar Sen and Anr, the
question which came up for consideration is that if the garnishee denies that any sum of
money is due to the judgment-debtor whether it is open to the court to hold the garnishee
liable for the claim made by the judgment-debtor without raising and trying an issue on the
question of such liability. The Honble 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 Honble 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 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 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. 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.

In Global trust bank Ltd. v. Fargo Frieght ltd. & ors, the Honble 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 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 State of Bikaner and Jaipur v. Additional Dist. & Sessions Judge, Jodhpur, the
Honble 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 Honble 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 Honble 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 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 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.

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.