https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/6650

In re Nirav Prabhulal Shah (Debtor) (Insolvency Cause E035 of 2025) [2026] KEHC 6650 (KLR) (Commercial and Tax) (14 May 2026) (Ruling) Neutral citation: [2026] KEHC 6650 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Insolvency Cause E035 of 2025 PM Mulwa, J May 14, 2026 IN THE MATTER OF THE INSOLVENCY ACT, 2015 IN THE MATTER OF AN APPLICATION FOR BANKRUPTCY ORDER BY THE DEBTOR IN THE MATTER OF: NIRAV PRABHULAL SHAH……………………..DEBTOR/APPLICANT Ruling 1.This is the Notice of motion dated 22nd September 2025 brought under Section 32, Section 15(1) (b) and Section 34 of the Insolvency Act and Order 51 Rule 1 of the Civil Procedure Rules and Sections 1A,1B and 3A of the Civil Procedure Act. The applicant seeks stay of execution proceedings in HCCOMM/E096/2021 (Milimani): Moriental Bank Limited v East Africa Logistics Limited, Nirav Prabhulal Shah, And Rajen Dinesh Chandra Shah, pending the hearing of the bankruptcy petition. 2.The application is premised on the grounds set out on its face and is supported by the affidavit sworn by the Applicant, Nirav Prabhulal Shah, on 22nd September 2025. The Applicant depones that he is unable to pay his debts, which as at 22nd September 2025 stood at approximately Kshs. 200 Million owed to the Respondent bank. He avers that the Respondent obtained an ex parte judgment against him in HCCOMM/E096/2021 and has since commenced execution proceedings, including obtaining warrants of arrest and committal to civil jail against him. The Applicant further states that he is critically ill, having been diagnosed with cancer, and is currently undergoing treatment, circumstances which he contends render the threatened arrest and execution prejudicial and oppressive. 3.The application is opposed through the Replying Affidavit sworn on 24th November 2025 by Wilfred Machini, the Chief Manager Credit of the Respondent bank. The Respondent contends that the application is incompetent, frivolous, amounts to forum shopping and constitutes an abuse of the court process. According to the Respondent, the application is merely intended to defeat execution of the decree issued in HCCOMM/E096/2021 - M Oriental Bank Limited v East Africa Logistics Ltd & 2 Others. 4.The Respondent avers that judgment in the primary suit was entered after the Applicant failed to enter an appearance or file a defence despite proper service. Following the commencement of execution proceedings, the Applicant moved the trial court seeking a stay of execution and setting aside of the judgment. According to the Respondent, the trial court granted conditional stay orders on 14th May 2025, requiring the Applicant to deposit 40% of the decretal sum, which the Applicant failed to satisfy. 5.The Respondent further contends that the present insolvency proceedings were instituted in bad faith and merely as a shield against lawful execution after the Applicant failed to obtain favourable orders before the trial court. It is argued that the Insolvency Act does not provide for the kind of stay sought and that the Applicant is improperly inviting the insolvency court to interfere with execution proceedings that properly fall within the jurisdiction of the execution court or appellate court. 6.The Respondent also accuses the Applicant of material non-disclosure and concealment of facts, particularly failure to disclose previous applications for stay, dismissal of the application to set aside judgment, and the existence of pending proceedings and appeals in HCCOMM/E096/2021. The Respondent maintains that the Applicant’s remedies lie before the trial court or on appeal and not through a collateral bankruptcy application. 7.The Respondent further asserts that the statement of affairs filed by the Applicant is incomplete and unsupported, lacking proper disclosure of assets, liabilities, income streams and shareholding. It is therefore contended that the Applicant has not demonstrated genuine insolvency or that the bankruptcy process has been commenced for the benefit of all creditors but rather to frustrate realization of the Respondent’s decretal sum, said to exceed Kshs. 224 Million. 8.The Respondent further avers that the Applicant has failed to establish sufficient cause for the grant of stay orders, has not demonstrated substantial loss and has approached the Court with unclean hands after failing to comply with previous court orders. It is contended that the Applicant’s medical condition does not constitute a legal bar to execution and that any issues relating to execution ought properly to be addressed before the execution court. 9.The application was heard by way of written submissions. The applicant filed submissions dated 17th January 2026, while the Respondent filed submissions dated 17th March 2026. 10.I have considered the application, the affidavits on record, and the rival submissions filed by the parties. The sole issue for determination is whether the applicant is deserving of the orders for stay in HCCOMM/E096/2021 in light of the impending bankruptcy petition. 11.The objectives of the Insolvency Act are set out under Section 3 thereof. One of the key objectives is to provide for an efficient and equitable administration of the estates of insolvent natural persons while balancing between the interests of those persons and those of their creditors. 12.Further, under section 32 of the Insolvency Act, a debtor is entitled to seek the protection of bankruptcy where they are unable to pay their debts. 13.It is not in dispute that the Respondent obtained judgment against the Applicant in HCCOMM/E096/2021 and that execution proceedings have since commenced. It is equally not disputed that the Applicant had previously moved the trial court seeking a stay of execution and setting aside of the judgment, and that conditional stay orders were granted requiring the deposit of 40% of the decretal amount, which condition was not complied with. 14.The material placed before this Court further demonstrates that the Applicant has pending proceedings touching on the same decree before the court seized of HCCOMM/E096/2021. In my considered view, questions relating to the propriety of execution and any attendant relief properly fall for determination before the execution court or the appellate court and not through collateral insolvency. 15.Again, an applicant seeking a stay of execution is obliged to satisfy the conditions set out in Order 42 Rule 6(2) of the Civil Procedure Rules, namely:a.that a substantial loss may result to the applicant unless the order is madeb.that the application has been made without unreasonable delay; andc.that such security as the court orders for the due performance of such decree or order as may ultimately be binding on the applicant has been given. 16.Although the Applicant invokes the insolvency jurisdiction of this Court, the circumstances surrounding the commencement of the present proceedings raise legitimate concerns as to whether the bankruptcy process has been invoked genuinely for the benefit of all creditors or merely as a shield against execution by the Respondent. The Applicant approached this Court only after execution measures, including warrants of arrest, had already commenced and after previous attempts at obtaining stay orders before the trial court had failed 17.The Court is alive to the principle that insolvency proceedings should not be used oppressively or as an instrument to defeat lawful decrees. It must be remembered that the test for stay of proceedings is high and stringent since it is a grave judicial action which seriously interferes with the right of a litigant to conduct his litigation, as it impinges on the right of access to justice, right to be heard without delay and overall, right to a fair trial. 18.I am not satisfied that the Applicant has demonstrated genuine insolvency. The statement of affairs annexed to the petition appears scanty and incomplete. It is my considered view that the Applicant has therefore failed to place before the Court sufficient material upon which the Court can conclude that the bankruptcy process has been commenced for orderly administration of his estate for the benefit of all creditors. 19.The Applicant has also relied on his medical condition, contending that he is critically ill and undergoing cancer treatment. While the Court sympathizes with the Applicant’s condition, illness alone cannot operate as an automatic bar to execution of a lawful decree. An applicant must demonstrate sufficient cause and approach the Court in good faith. In the present matter, the conduct of the Applicant, including failure to comply with previous conditional stay orders and commencement of parallel proceedings while similar issues remain pending before the trial court, militates against the exercise of this Court’s discretion in his favour. 20.In the premises, I find no merit in the Notice of Motion dated 22nd September 2025. The same is hereby dismissed with costs to the Respondent.It is so ordered. RULING DELIVERED VIRTUALLY, DATED AND SIGNED AT NAIROBI THIS 14TH DAY OF MAY 2026.P.M. MULWAJUDGEIn the presence of:Ms. Karima h/b for Mr. Madevia for ApplicantMs. Kendi for Creditor (Oriental Bank)Court Assistant: Lispa