Garnishee orders become infructuous when the underlying ESI order is kept in abeyance.

The petitioners challenged garnishee orders dated 21 and 26 February 2025, issued by the ESI Recovery Officer to SBI and the Reserve Bank of India in connection with dues attributed to respondent no. 3, an SBI customer.

SBI maintained that it had placed a hold on the customer’s account and had informed the Recovery Officer of the account position.

In related proceedings, the Division Bench directed that the order under Section 45A of the ESI Act remain in abeyance, restrained coercive measures until 15 April 2025, and directed a fresh appeal and hearing before the appellate authority.

The Division Bench had also earlier permitted operation of the account while keeping Rs. 5 lakh frozen.

During the writ proceedings, RBI informed the Court that the amount debited from SBI under the impugned garnishee orders had been credited back to SBI.

Whether the garnishee orders issued against SBI and RBI could remain in force after the Division Bench placed the underlying Section 45A order in abeyance and directed a fresh hearing.

Whether the challenged orders should be set aside in light of the subsequent proceedings before the Division Bench and the return of the debited amount to SBI.

The Court considered Sections 45A, 45G and 45H of the Employees’ State Insurance Act.

Section 45A formed the basis of the underlying determination of dues; Section 45G was invoked for recovery by garnishee proceedings; and Section 45H applies the specified Income Tax Act and Income Tax (Certificate) Rules provisions to ESI recovery proceedings.

The Court’s decision rested on the procedural effect of the Division Bench’s order placing the Section 45A order in abeyance and directing a fresh appeal and hearing: the garnishee orders implementing that underlying determination could no longer remain operative.

The Court found that the impugned garnishee orders had been issued to implement the Section 45A order.

The Division Bench had subsequently kept that order in abeyance and directed a fresh appellate process, while restraining coercive action during the specified period.

In those circumstances, the garnishee orders had become infructuous.

The Court also recorded that RBI had credited the debited amount back to SBI.

Although SBI had argued that Sections 45G and 45H were wrongly invoked and that it could not pay from the customer’s allegedly inoperative account, the Court did not separately determine those submissions on their merits.

It quashed and set aside those orders and allowed WPA 6511 of 2025; connected applications were disposed of, and any interim order was vacated.