Mandates

  Mandates

A Mandate is an authority given by the account holder in favour of a third person to do certain acts on his behalf. This is issued by the account holder to his bank. Salient Features

It is unstamped letter signed by the customer

The signature of the person so authorized should be appended in the letter of mandate.

It is for short and temporary period.

In case of joint account holders – all the partner must signed the mandate.

Power of Attorney  is a stamped Document.

There are two types of Power of Attorney

·         Special Power of Attorney – It is for a single transaction

·         General Power of Attorney – empowers an agent to act in more than one transaction.

·         Power of attorney is a stamped document and generally executed in the presence of Notary Public/ Magistrate of a Court of government officials

·         The bank should obtain the original power of attorney for perusal and copy of the same is retained for record purposes.

·         The power of attorney holder must sign as Per Pro-

Attachment Orders

Those issued by the court, called Garnishee orders and

Those issued by Revenue Authorities.

Garnishee Orders

They are issued by a court in favor of judgment of creditors. A garnishee order is issued by two stages

Order Nisi – Freeze or stop all the txns in the debtor account.

Order absolute -

What is Attachable And What is Not?

Amount Specified and Unspecified

Debts due and accruing

Payment of Cheques and Garnishee Order

Right of Set-off and Garnishee Order

Unclear effects, Subsequent Credits and Undrawn overdrafts – Credit into account subsequent to the receipt of the Garnishee Order are not attachable, because the order can attach only debts due or accruing at the time of the

receipt of the order by the banker.

Joint Accounts - If the order is issued for the attachment of A’s deposits, the deposits held jointly by A and B cannot be attached, if the account is operated

.

by either or survivor.But if    it is former or survivor (and A is the former) and

money belongs to clearly to the former alone, then it can be attached even if the attachment order mentions only the ‘A’ s name only..

Liquidator if the company is in liquidation, the accounts of the liquidator cannot be attached by a fresh garnishee order because money held by the bank was not debts due to the company, but to the liquidator.

Procedure to be followed by the Bank on Receipt of the GARNISHEE ORDER

Banker must freeze the account and advise the court the full details.

All submission to the court should be done through the bank’s counsel.

If the order is specific, the amount, in excess can be permitted to be withdrawn.

For handling subsequent credits, it may be preferable to open a new account.