Describe briefly whether garnishee order can attach undrawn or unutilized balance in an overdraft and/or cash credit account.

Third party (e.g., bank, customer, employer etc.) who, while not involved in the court case between a debtor or creditor is required by a Court Order (Garnishee Order) to retain the money (account balance, amount due, wages etc.,) belonging to debtors. The issue whether garnishee order applies to undrawn balance is discussed below. If the account is overdrawn, the banker owes no money to the customer and hence the Court Order (Garnishee Order) ceases to be effective. A bank is not a garnishee with respect to the unutilized portion of the overdraft or cash credit facility sanctioned to its customer and such utilized portion of cash credit or overdraft facility cannot be said to be an amount due from the bank to its customer. The above decision was given by the Karnataka High Court in Canara Bank Vs. Regional Provident Fund Commissioner. In this case the Regional Provident Fund Commissioner wanted to recover the arrears of provident fund contribution from the defaulters' bankers out of the unutilized portion of the cash credit facility. Rejecting this claim, the High Court held that the bank cannot be termed as a Garnishee of such unutilized portion of cash credit, as the banker's position is that of creditor. The banker, of course, has the right to set off any debt owed by the customer before the amount to which the Garnishee Order applies is determined. But it is essential that debt due from the customer is actual and not merely contingent. Hence it can be said that garnishee order is not applicable to undrawn/unutilized balance in an overdraft/loan account and the order ceases to be effective.