https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/2187

 **REPUBLIC OF KENYA** **IN THE EMPLOYMENT *&* LABOUR RELATIONS** **COURT OF KENYA AT KISUMU** **CAUSE NO. E008 OF 2025** KENNETH OMONDI ALUOCH...……..………….…………**PETITIONER** **VERSUS** KENYA COMMERCIAL BANK (K) LIMITED……..……. **RESPONDENT** **RULING** Background 1. The Claimant herein, Mr. Kenneth Omondi Aluoch (the Claimant), instituted this suit vide an Amended Memorandum of Claim dated 21st March 2025 against KCB Bank (the Respondent), alleging that his employment had been unfairly terminated. He avers that, during the course of his employment, he had obtained mortgage facilities from the Respondent secured by parcels of land known as Suna East/Wasweta I/20229, 24376, 24355, 13872 and 20230. According to the Claimant, he was actively servicing the facilities at the time of his dismissal. 2. The Claimant further avers that, following his dismissal, the Respondent commenced recovery proceedings by exercising its statutory power of sale over the charged properties. Consequently, he filed an application dated 4th April 2026 seeking orders to restrain the Respondent from selling the parcels of land pending the hearing and determination of the suit. He contends that the properties form part of the facts in issue in the amended claim and that their sale will prejudice the determination of the dispute. 3. The Respondent opposed the application by filing a Replying Affidavit and a Notice of Preliminary Objection, both dated 14th April 2026. The Preliminary Objection, which is the subject of this ruling, challenges the jurisdiction of this Court to entertain the application. The Respondent contends that, by virtue of section 12 of the Employment and Labour Relations Court Act, the Court lacks jurisdiction to stop the sale, rendering the application fatally defective and liable to be struck out with costs. 4. The Preliminary Objection was canvassed by way of written submissions. Respondent's Submissions 1. The Respondent identifies the following issues for determination: * + 1. Whether the Court is clothed with Jurisdiction to entertain and determine the Application dated 4th April 2026; 2. Whether the Applicant has met the prerequisites to warrant the issuance of an interim injunction pending the hearing and determination of the main claim; and 3. Who bears costs of the Application. 2. On jurisdiction, the Respondent submits that this Court lacks jurisdiction under section 12 of the Employment and Labour Relations Court Act because the dispute concerning the intended exercise of the statutory power of sale arises from a commercial loan and charge instrument rather than an employment relationship. It contends that although the loans were obtained by virtue of the Claimant's employment, the mortgage facility constitutes a separate contractual arrangement governed by land and commercial law. In support, the Respondent relies on **Lumumba *v* Kenya Commercial Bank Ltd [2026] KEELRC 497 (KLR)**, where the Court held that disputes concerning mortgage facilities and the exercise of a chargee's statutory power of sale fall outside the jurisdiction of the Employment and Labour Relations Court, and maintained that courts should not rewrite contracts freely entered into by parties. The Respondent further relies on **Ouma *v* Faulu Microfinance Bank Ltd [2023] KEELRC 940 (KLR)**, where the Court held that staff loan agreements are commercial contracts falling outside the jurisdiction of the ELRC and, guided by **Owners of the Motor Vessel "Lillian S" *v* Caltex Oil (Kenya) Ltd [1989] KLR 1**, reiterated that a court without jurisdiction must immediately down its tools. It also cites **Zamzam *v* Gulf African Bank Limited [2022] KEELRC 1618 (KLR)**, where the Court distinguished employment contracts from charge instruments and held that disputes relating to the exercise of a chargee's statutory power of sale fall within the jurisdiction of the Environment and Land Court. The Respondent therefore urges the Court to dismiss the application for want of jurisdiction. 3. Without prejudice to the foregoing, the Respondent submits that the Applicant has failed to satisfy the principles governing the grant of an interlocutory injunction. It asserts that although the amended claim may disclose arguable employment issues, the application seeks to restrain the exercise of contractual rights arising from the loan agreements. The Respondent relies on **Giella *v* Cassman Brown & Co. Ltd [1973] EA 358**, as reaffirmed in **EA Industries Ltd *v* Trufoods [1972] EA 420**, and as applied in **Lumumba *v* Kenya Commercial Bank Ltd** (*supra*), for the principles that an applicant must establish a *prima facie* case, demonstrate irreparable harm and, where doubt exists, show that the balance of convenience favours the grant of the injunction. The Respondent submits that the Applicant has not demonstrated irreparable injury. It contends that the Applicant admits being indebted but failed to present any repayment proposal or seek restructuring of the loan despite being invited to do so following the termination of his employment. Moreover, the Respondent asserts that the Claimant voluntarily offered the charged properties as security with full knowledge of the consequences of default and cannot now invoke the Court's equitable jurisdiction while remaining in breach of his contractual obligations. It further maintains that the Claimant retains ownership of the charged properties and can avert the intended sale by settling the outstanding debt. In support, it relies on **Lumumba *v* Kenya Commercial Bank Ltd** (*supra*), where the Court held that failure to propose repayment or demonstrate irreparable harm disentitles an applicant to injunctive relief. 4. Finally, the Respondent submits that the balance of convenience does not favour the Claimant. It argues that the he delayed for approximately one year and five months after the conversion of the staff loans to commercial rates before filing the application and had previously filed a similar application which was dismissed for want of prosecution. Relying once again on **Lumumba *v* Kenya Commercial Bank Ltd** *(supra),* the Respondent submits that the Claimant's conduct, delay and failure to engage the lender estop him from challenging the loan terms and disentitle him from equitable relief. Accordingly, the Respondent urges the Court to uphold its preliminary objection. In the alternative, it submits that the Claimant has failed to satisfy the conditions for the grant of an interlocutory injunction and prays that the application be dismissed with costs. Claimant's Submissions 1. On his part the Claimant identifies the issues for determination as: * + 1. Whether the Respondent's Notice of Preliminary Objection dated 14th April 2026 constitutes a proper Preliminary Objection in law and as per the **Mukisa Biscuit Manufacturing Co. Ltd *v* West End Distributors Ltd [1969] EA 696** case; 2. Whether this Honourable Court has jurisdiction to hear and determine the Notice of Motion dated 4th April 2026; 3. Whether the Claimant/Applicant has satisfied the conditions for the grant of an interlocutory injunction; and 4. Who should bear the costs of the Application 2. On the first issue the Claimant submits that the threshold in **Mukisa Biscuit Manufacturing Co. Ltd *v* West End Distributors Ltd [1969] EA 696** has not been met. He asserts that although the objection is framed as a jurisdictional challenge, it requires the Court to determine contested issues of fact, including the nature of the loan facilities, the circumstances under which they were advanced, and whether the conversion of the staff loan to commercial terms following the termination of employment forms part of the employment dispute before the Court. The Claimant further submits that the legality of the loan conversion is specifically pleaded in the Amended Statement of Claim and therefore constitutes a substantive issue for trial rather than a pure point of law capable of determination through a preliminary objection. 3. As for jurisdiction the Claimant submits that this Court has jurisdiction under Article 162(2)(a) of the Constitution and section 12 of the Employment and Labour Relations Court Act because the dispute arises directly from the employer-employee relationship. He asserts that it is the substance of the proceedings that determines jurisdiction, not a party's characterization of the dispute. The Claimant maintains that since the loans were advanced on preferential staff terms and the Respondent has acknowledged conversion into commercial terms after his termination, the challenged conversion is intrinsically linked to the employment relationship. Consequently, he asserts that the application merely seeks preservatory orders to maintain the *status quo* pending the determination of the substantive employment dispute, so as to prevent the proceedings from being rendered nugatory. 4. As concerns the application, the Claimant asserts that he has met the threshold for grant of interlocutory injunction as set out in **Giella *v* Cassman Brown *&* Co. Ltd [1973] EA 358**, and reaffirmed in **Nguruman Limited *v* Jan Bonde Nielsen *&* 2 others [2014] eKLR**. He contends that he has established a *prima facie* case because it is undisputed that the loans were granted on staff terms during his employment and were subsequently converted to commercial facilities after his dismissal. He submits that the legality of that conversion is one of the substantive issues awaiting determination and that the Respondent's intended realization of the charged securities stems directly from the impugned conversion. The Claimant further submits that unless the *status quo* is preserved through an interlocutory injunction, the Respondent may realize the securities before the main claim is heard, thereby defeating the subject matter of the suit. He asserts that granting the orders sought would merely preserve the suit properties pending the determination of the dispute, while leaving the Respondent's rights under the charge instruments intact should it ultimately succeed at trial. 5. On costs, the Claimant submits that although costs remain in the discretion of the Court, the general rule is that costs follow the event. He therefore urges the Court to find that the Preliminary Objection is devoid of merit, allow the application dated 4th April 2026, dismiss the Respondent's Preliminary Objection with costs, and award him the costs of both the application and the objection. Disposition 1. The Claimant sued the Respondent and subsequently sought relief in respect of the properties charged to his former employer. The Respondent now asserts there is no jurisdiction reposed in this Court to hear and determine the dispute as the colour is a commercial suit. The Claimant is naturally opposed and asserts the Respondent has not raised a pure point of law as espoused in the case of **Mukisa Biscuits**.The Respondent urges the striking out of the claim whereas the Claimant seeks dismissal of the preliminary objection and grant of interlocutory relief. 2. The Claimant was an employee of the Respondent. As such employee, he obtained mortgage facilities from the Respondent. Whereas there is an assertion the corpus of the dispute is covered by commercial and contract law, the Court disagrees. The loans advanced to the Claimant on rebated terms known as ''staff rates'' connotes the same were part and parcel of his terms of service. Any Tom, Dick and Harry cannot go KCB and ask for a mortgage at the rates the Claimant enjoyed. He exclusively enjoyed these favourable terms like many other employees of the Respondent who qualify. As such, the favourable contractual terms on loans taken by the Claimant indicate the terms and conditions of service included rebated loan and other facilities. The Court declines to hold that these were purely commercial in nature. The provisions of section 12(1) of the Employment Act are as follows: *12. Jurisdiction of the Court* *(1) The Court shall have exclusive original and appellate jurisdiction to hear and determine all disputes referred to it in accordance with Article 162(2) of the Constitution and the provisions of this Act or any other written law which extends jurisdiction to the Court relating to employment and labour relations including —* *(a) disputes relating to or arising out of employment between an employer and an employee;* *(b) disputes between an employer and a trade union;* *(c) disputes between an employers' organisation and a trade unions organisation;* *(d) disputes between trade unions;* *(e) disputes between employer organizations;* *(f) disputes between an employers' organisation and a trade union;* *(g) disputes between a trade union and a member thereof;* *(h) disputes between an employer's organisation or a federation and a member thereof;* *(i) disputes concerning the registration and election of trade union officials; and* *(j) disputes relating to the registration and enforcement of collective agreements.* 1. The Claimant has a **dispute relating to or arising out of employment between an employer and an employee** as provided for under section 12(1)(a). There is no better forum to handle this dispute than this Court as Article 162(2)(a) of the Constitution provides that Parliament shall establish courts with the status of the High Court to hear and determine disputes relating to—(a) employment and labour relations. This is that Court established under Article 162(2)(a) and I see a dispute that falls within these confines of the law. The Claimant is in the correct court. The objection fails on that score. 2. On matters interlocutory injunction, the true north is the principles that an applicant must establish. An applicant must establish a *prima facie* case, demonstrate irreparable harm and, where doubt exists, show that the balance of convenience favours the grant of the injunction. In this case, the Claimant has demonstrated he has a *prima facie* case. A *prima facie* case is not necessarily one that must succeed but that there is an arguable case. This case is arguable even as parties have shown in this interlocutory application. On irreparable harm, the realisation of the security pending determination of this case is one which clearly falls within the irreparable harm aspect. It is impossible to restore a person to the place he was when his house, his chattel and consortium was sold to another. How would he recover his house, his home? This is the perfect example of irreparable harm. The second limb is satisfied. We do not need to even consider the balance of convenience but if we had to, the balance favours the grant as maintaining the *status quo* is better than altering the circumstances of the Claimant as he faces the case in Court. The Respondent can absorb the delay in realising the security should the Claimant fail in his case. Given the relative differences in the equality of arms, the order that would commend itself is to grant the injunction which shall last for the entire duration of this case. The preliminary objection is dismissed however without any order on costs. The costs on the application will abide the outcome in this case. It is so ordered. **Dated and delivered at Kisii this 28th day of July 2026** **Nzioki wa Makau, MCIArb.** **JUDGE**