RIGHT UNDER GARNISHEE RIGHT UNDER GARNISHEE

ORDERORDER The term ‘garnishee’ is derived form the Latin Word The term ‘garnishee’ is derived form the Latin Word

“garnire’’ which means ‘to warn’. “garnire’’ which means ‘to warn’.

in case a debtor fails to pay the money due to is in case a debtor fails to pay the money due to is creditor, the latter may apply to the court to issue a creditor, the latter may apply to the court to issue a

garnishee order, on the debtors banker. As a result of garnishee order, on the debtors banker. As a result of this order the debtors account with the bank is frozen this order the debtors account with the bank is frozen

and bank cannot make any payments out of the and bank cannot make any payments out of the account. The creditor, on whose request such an account. The creditor, on whose request such an order is issued is called judgement creditor; the order is issued is called judgement creditor; the

debtor, whose account is frozen is called the debtor, whose account is frozen is called the judgement debtor and the banker who has the judgement debtor and the banker who has the

customer account is called the Garnishee.customer account is called the Garnishee.

The term ‘garnishee’ is derived form the Latin Word The term ‘garnishee’ is derived form the Latin Word “garnire’’ which means ‘to warn’. “garnire’’ which means ‘to warn’.

in case a debtor fails to pay the money due to is in case a debtor fails to pay the money due to is creditor, the latter may apply to the court to issue a creditor, the latter may apply to the court to issue a

garnishee order, on the debtors banker. As a result of garnishee order, on the debtors banker. As a result of this order the debtors account with the bank is frozen this order the debtors account with the bank is frozen

and bank cannot make any payments out of the and bank cannot make any payments out of the account. The creditor, on whose request such an account. The creditor, on whose request such an order is issued is called judgement creditor; the order is issued is called judgement creditor; the

debtor, whose account is frozen is called the debtor, whose account is frozen is called the judgement debtor and the banker who has the judgement debtor and the banker who has the

customer account is called the Garnishee.customer account is called the Garnishee.

Garnishee order typesGarnishee order types

1.order nisi: by this order the court

asks the banker to freeze the debtors account.

asks the banker to explain why the funds in the account, so frezeed should not be used for the payment creditor.

Order absoluteOrder absolute

This order directs the banker to pay either the whole or a part of the funds lying in the account against which “order nisi’ has been issued to the judgement creditor.

The role of bankerThe role of banker

• Banker occupies two positions1. As ‘garnishee’ holding the funds of

judgement debtor. He must issue notice to his customer

regarding the garnishee order received against his accout

Banker should also inform whether entire amount is attached or only a part of it is subjected to garnishee order.

He should advice the customer to He should advice the customer to open a new account for future open a new account for future operation.operation. banker can ask the customer to banker can ask the customer to riase any objection against the riase any objection against the garnishee order in the court garnishee order in the court

As judgement creditor, filing his own case in As judgement creditor, filing his own case in the court.the court.

• if the judgement debtor has funds with any government or private agency, such funds can be attached by the banker to satisfy his calim through G.O

Funds of customer to which G.O Funds of customer to which G.O cannot be attached cannot be attached

• The funds held by the customer as a ‘trustee’• Joint accounts of customers.• Deposit held as security for advances • Deposit in any form received under the

garnishee order.• The account of a partnership cannot be attached

under garnishee order for the debts due by a partner in his individual capacity.

OBLIGATIONS OF A BANKEROBLIGATIONS OF A BANKER

1.OBLIGATION TO HONOUR CHEQUES

HE HAS SUFFICIENT FUNDS OF THE CUSTOMERS. THE FUNDS ARE PROPERLY APPLICABLE TO THE PAYMENT

OF SUCH CHEQUE, BANKER HAS BEEN DULY REQUIRED TO PAY. THE CHEQUE HAS BEEN PRESENTED WITHIN A

REASONABLE TIME AFTER THE APPARENT DATE OF ISSUE. NO GARNISHEE OR ATTACHMENT ORDER.

1.OBLIGATION TO HONOUR CHEQUES

HE HAS SUFFICIENT FUNDS OF THE CUSTOMERS. THE FUNDS ARE PROPERLY APPLICABLE TO THE PAYMENT

OF SUCH CHEQUE, BANKER HAS BEEN DULY REQUIRED TO PAY. THE CHEQUE HAS BEEN PRESENTED WITHIN A

REASONABLE TIME AFTER THE APPARENT DATE OF ISSUE. NO GARNISHEE OR ATTACHMENT ORDER.

2.OBLIGATION TO MAINTAIN SECRECY 2.OBLIGATION TO MAINTAIN SECRECY OF CUSTOMERS ACCOUNTOF CUSTOMERS ACCOUNT

• It is obligatory for the banker not to disclose the state of the customers account with it since such disclosure may adversely affect the customers credit and business.

In the following circumstances the In the following circumstances the banker may dispense with the rule.banker may dispense with the rule.

• Where such disclosure is a legal necessity.

• Where such disclosure is permissible on account of banking practices

• Where such disclosure is in public interest.

3. Receive cheques and other instruments for collections.

4. Honour the cheques of customers across the counter.

5. Give reasonable notice before closing the customers account.

Rights of customer under consumer Rights of customer under consumer protection act,1986protection act,1986

a customer has a right to approach with his complaints to the consumer dispute redressal forum known as “district forum”

Complaint may relate to the followingAny fault, imperfection in quality and

nature of performance.Any unfair practices adopted by the

banker.

District forum may instruct the bankDistrict forum may instruct the bank

• To return to the customer the charge paid by the customer.

• To pay such amount as may e awarded by its compensation to the customer for any loss suffered by the customer.

• To remove the defects in the service• To discontinue the unfair trade practice or not to

repeat it,• To provide for adequate costs to the parties to

the dispoutes.

Module -2Module -2PAYING BANKERPAYING BANKER

Nature of banking business according to section 5(b) banks have to do 1. collect deposit form the public 2. lend or invest the deposit collected from the

public. 3.demand deposit can be withdrawn any time by

the depositor by cheque or withdrawal slip. 4. bank lends in the form of overdrafts. Loans

purchase of bills. 5. bank make both secured and unsecured

advances.

NEGOTIABLE INSTRUMENTSNEGOTIABLE INSTRUMENTS

It means a written document which creates a right in favour of some person and which is freely transferable.

according to sec 13 of the negotiable instrument act, a negotiable instruments means ‘a promissory note, bill of exchange or cheque, payable either to order or to bearer whether the words ‘order’ or ‘bearer’ appears on the instruments or not.

• PROPER FORM• PHYSICAL CONDITION.• CROSSSING• OFFICE OF DRAWING.• DATE OF THE CHEQUE• TIME OF PRESENTATION• AMOUNT• MATERIAL ALTERATION• SIGNATURE OF THE DRAWER.• LEGAL RESTRICTIONS• 1.COUNTERMANDING• 2. death• 3. insolvency• 4. Lunancy• 5. Garnishee order• SUFFICIENT BALANCE

MANDATORY FUNCTIONS OFMANDATORY FUNCTIONS OF PAYING BANKERPAYING BANKER