https://new.kenyalaw.org/akn/ke/judgment/keelc/2026/3750

Ardhilink Limited v Equity Bank Limited & another (Environment and Land Case E023 of 2025) [2026] KEELC 3750 (KLR) (15 June 2026) (Ruling) Neutral citation: [2026] KEELC 3750 (KLR) Republic of Kenya In the Environment and Land Court at Thika Environment and Land Case E023 of 2025 JA Mogeni, J June 15, 2026 Between Ardhilink Limited Plaintiff and Equity Bank Limited 1st Defendant Nguru Auctioneers 2nd Defendant Ruling 1.The Application before me brought under Sections 1A, 1B, 3A and 63 of the Civil Procedure Act; Order 40 Rules 1, 2, 3 and 4, Order 51 Rule 1 of the Civil Procedure Rules and all other enabling laws of Kenya seeking the orders herebelow:i.Spent.ii.That this Honourable Court be pleased to issue a temporary injunctive order restraining the Defendants/Respondents, whether by themselves, servants, and/or agents, from selling by public auction Land Parcels No. Ruiru/Ruiru East Block 1/1858, Ruiru East/Juja East Block 2/41219, and Ruiru East/Juja East Block 2/41220 on 21st February 2025 at Zion Place Off Kasarani-Mwiki Road, pending the hearing and determination of this application.iii.That this Honourable Court be pleased to issue a temporary injunctive order restraining the Defendants/Respondents from selling, disposing, leasing, occupying, or in any way dealing with or alienating the property rights in the Applicant's charged properties (as described in Prayer 2) pending the hearing and determination of this application.iv.That this Honourable Court be pleased to issue a temporary injunctive order restraining the Defendants/Respondents from selling, disposing, leasing, occupying, or in any way dealing with or alienating the property rights in the Applicant's charged properties (as described in Prayer 2) pending the hearing and determination of the main suit.v.That the costs of this application be provided for. 2.The Application is supported by grounds on the face of the application and the Supporting Affidavit sworn on 17/02/2025 by Patrick Ngigi Mbugua the Director of the Plaintiff. 3.Among the grounds advanced are that the Applicant is the registered owner of the three parcels. That while there was a consolidated loan of Kshs.18,000,000 the Applicant has been diligently servicing it, with the balance reduced to approximately Kshs. 15,857,000. 4.That the Defendants failed to serve mandatory legal notices required under the Land Act and Auctioneers Rules, specifically: The 90-day statutory notice of default. The 40-day notice of intention to sell. The 45-day redemption notice. 5.The Applicant avers that the Respondents failed to conduct a forced sale valuation as required by Section 97(2) of the Land Act. The Applicant’s private valuation places the property value at Kshs. 33,120,000, suggesting the intended auction risks selling the property at a gross undervalue. 6.The property houses Mjengo Top Hardware, a running business. Selling the land would destroy the business, displace employees, and cause financial loss that cannot be adequately compensated by money through payments of damages. 7.The Applicant contends the Respondents are acting with undue haste and malice, ignoring the Applicant's efforts to engage in repayment talks while the loan is being actively serviced. 8.The Applicant relies on established case law East Africa Ventor Co. Ltd V Agricultural Finance Co-op Ltd & Another [2017] eKLR and Moses KibJego Yator V Eco Bank Kenya Limited NKU E& L No. 426 of 2013[20141 eKLR which dictates that statutory notices are mandatory and the burden of proof regarding service lies with the bank. 9.Through the Supporting Affidavit of Patrick Ngigi Mbugua, the Director of the Plaintiff/Applicant as evidenced by the CR12 marked as "PNM-1", deposes that the Applicant is the registered proprietor of Land Parcels No. Ruiru/Ruiru East Block 1/1858, Ruiru East/Juja East Block 2/41219 and Ruiru East/Juja East Block 2/41220. The Deponent states that these properties were charged to the 1st Defendant to secure a consolidated loan facility of Kshs. 18,000,000, which the Applicant has diligently serviced to a current balance of Kshs. 15,857,000. Despite this consistent repayment, the Applicant discovered through a newspaper advertisement in the Daily Nation dated 6/02/2025, marked as “PNM-3”, that the 1st Defendant, through the 2nd Defendant, has scheduled a public auction of the suit properties for 2/02/2025. The Deponent further clarifies that the primary property houses Mjengo Top Hardware, a vital business venture that sustains employees and suppliers, and which currently services a separate loan facility as demonstrated by the bank statement marked “PNM-4”. 10.The Deponent further avers, that the intended sale is unlawful and procedurally fatal for want of statutory compliance. Specifically, the Defendants failed to serve the mandatory 90-day statutory notice under Section 90(2)(b) of the Land Act, the 40-day notice under Section 96(2), and the 45-day redemption notice required by the Auctioneers Rules. 11.Furthermore, the Defendants have neglected to conduct a forced sale valuation as required by Section 97(2) of the Land Act, effectively threatening to dispose of assets valued at Kshs. 33,120,000 as supported by the valuation reports and title documents marked “PNM-2 A and B” without establishing a proper reserve price. The Deponent maintains that the Applicant’s attempts to engage the Respondents have been futile and that the high-handed actions of the Defendants will cause the Applicant irreparable loss and damage that cannot be remedied by an award of costs, thereby necessitating the urgent intervention of this Honourable Court. 12.The Application is opposed. The 1st Defendant filed a Notice of Preliminary Objection dated 28/03/2025 in response to the Application. Through the Preliminary Objection the 1st Defendant raises a preliminary point of law to be determined in limine, that the Notice of Motion Application dated 18/02/2025 and Plaint of even date be struck out with costs to the 1st Defendant/Respondent on the grounds that:1.That this Honourable Court lacks jurisdiction to be seized of, entertain, or determine the issues raised in the Application as the same offends Article 162(2)(b) of the Constitution of Kenya 2010 and Section 13 of the Environment and Land Court Act.2.That the Application as filed and prayers sought therein are unmeritorious, an abuse of the Court process and should be dismissed with costs to the 1st Defendant/Respondent.3.That the Application is incompetent, fatally defective, and the same ought to be struck out or dismissed with costs. 13.Additionally, the 1st and 2nd Respondents filed a joint Replying Affidavit sworn on 30/04/2026. The Replying Affidavit was sworn by Samuel Wamaitha, the Assistant Legal Manager of the 1st Defendant, where he deposes that the 1st Defendant is a stranger to the Applicant’s corporate structure but admits that the Applicant is the registered owner of the three suit properties as evidenced by the Title Deeds marked “SW-1(a), (b), and (c)”. The Deponent states that the Applicant voluntarily offered these properties as security for two separate loan facilities of Kshs. 8,000,000 and Kshs. 10,000,000 respectively, culminating in the execution of a Charge and a Further Charge both dated 31/05/2022, which are annexed as “SW-2(a) and (b)”. 14.That following a request by the Applicant, these facilities were consolidated into a single loan of Kshs. 15,857,000 under a Letter of Offer dated 16/11/ 2023, marked “SW-3”, and further secured by personal guarantees from the Applicant’s Directors. The Deponent avers that the Applicant breached its contractual obligations by failing to maintain the monthly installments of Kshs. 406,990.00 as demonstrated by the Loan Statement marked “SW-4”, thereby triggering the 1st Defendant's Statutory Power of Sale. 15.The Deponent further maintains that the 1st Defendant strictly complied with all mandatory legal requirements by issuing a 90-day Statutory Notice on 28/05/2024 via Registered Post, followed by a 40-day Statutory Notice on 12/10/2024, both of which are annexed with their respective Certificates of Postage as “SW-5(a) & (b)” and “SW-6(a) & (b)”. 16.To ensure the properties were not sold at an undervalue, the 1st Defendant commissioned Topmark Valuers Limited, whose valuation reports dated 30/12/2024, marked “SW-7(a) & (b)”, established the forced sale values. Consequently, the 1st Defendant instructed Nguru Auctioneers, who served the 45-day Redemption Notice and Notification of Sale through physical service, Registered Post, and electronic means, as confirmed by the Certificate of Service and postage receipts marked “SW-8(a), (b), (c), and (d)”. The Deponent dismisses the Applicant's concerns regarding the hardware business and other loan facilities as legally irrelevant to the realization of the security, asserting that the Applicant has failed to establish a prima facie case and is merely seeking to obstruct the 1st Defendant’s accrued right to recover the outstanding debt, which stood at Kshs. 18,011,937.08 as at 21/12/2024. 17.The Application was canvassed by way of written submissions. Despite the Applicant being given 14 days to file their submissions from 19/03/2026 by the time of writing this Ruling only the 1st and 2nd Defendants had filed their submissions. The 1st and 2nd Defendants/ Respondents filed written submissions dated 30/04/2026 in opposition to the Application. Additionally, the 1st Respondent filed written submission in support of the Preliminary Objection dated 30/05/2025. 18.In summary the 1st and 2nd Respondents, in their joint written submissions, contend that the Applicant has failed to satisfy the tripartite judicial test for the grant of a temporary injunction as established in Giella -vs- Cassman Brown & Co. Ltd [1973] EA 358 and Kibutiri -vs- Kenya Shell (1981) KLR. The Respondents submit that the Applicant has not established a prima facie case with a probability of success, as defined in Mrao Ltd -vs- First American Bank of Kenya Ltd & 2 Others [2003] eKLR, because the 1st Respondent has demonstrated full statutory compliance. Relying on Peter Kiama Maina -vs- Industrial Commercial Development Corporation & another [2021] eKLR, they argue that the Court must look at the procedures set out in the Land Act, and since the Respondents exhibited a valuation report by Topmark Valuers Limited and evidence of service of Statutory Notices, the Applicant’s bare denials cannot stand. 19.Furthermore, citing Palmy Company Ltd -vs- Consolidated Bank of Kenya Ltd [2014] eKLR, they maintain that the onus of proving undervaluation lies with the Applicant, who has failed to provide a counter-valuation or challenge the methodology of the Respondents’ valuer as required in Zum Zum Investment Limited -vs- Habib Bank Limited [2014] KEHC 6207 (KLR). 20.On the second limb of irreparable harm, the Respondents aver that the Applicant’s apprehension is speculative and that any potential loss is calculable and compensable by way of damages, thus failing the definition of irreparable injury in Halsbury’s Laws of England. Citing Francis Ngarama Kiratu -vs- Equity Bank [2019] KEHC 2058 (KLR) and Downhill Ltd -vs- Harith Ali EL-Busaidy [2000] eKLR, they submit that alleged undervaluation at an auction is a ground for damages, not for stopping a sale. 21.Regarding the disruption of Mjengo Top Hardware, the Respondents rely on Nyanza Fish Processors Limited -vs- Barclays Bank of Kenya Limited (C.A Civil Appeal No. 114 of 2009) to argue that by charging the property, the Applicant converted it into a Commercial asset, the loss of which is compensable. This position is fortified by Nancy Wacici -vs- Kenya Women Micro Finance Bank Ltd [2017] eKLR and Solomon Hodo Rugaria t/a Sunshine Spring Academy -vs- Kenya Commercial Bank Limited [2019] eKLR, which reiterate that once a value is assigned to a property, damages become an adequate remedy. 22.Lastly, the Respondents submit that the balance of convenience, as defined in Pius Kipchirchir Kogo -vs- Frank Kimeli Tenai [2018] eKLR, tilts overwhelmingly in favor of the financial institution. They argue that the Applicant is a chronic defaulter seeking to shield itself from a lawfully accrued Statutory Power of Sale, which the Court of Appeal in the Mrao case cautioned against to prevent Courts from becoming a haven for defaulters. The Respondents invoke Section 27 of the Civil Procedure Act, which mandates that costs follow the event, and urge the Court to find that the Applicant has failed to surmount the sequential hurdles set out in Nguruman Limited -vs- Jane Bonde Nielsen and 2 Others [2014] eKLR. Consequently, they pray for the dismissal of the application with costs, asserting that an injunction would unjustly fetter the Respondents' right to recover the outstanding debt of Kshs. 18,011,937.08. 23.In support of the Preliminary Objection the 1st Defendant’s submissions primarily challenge the jurisdiction of the Environment and Land Court (ELC) to determine a dispute centered on the exercise of a chargee’s Statutory Power of Sale. Relying on the locus classicus Mukisa Biscuit Manufacturing Co. Ltd -vs- West End Distributors Ltd [1969] EA 696, the Respondent deposes that the objection raises a pure point of law which, if upheld, must result in the Court downing its tools in accordance with the celebrated principle in Owners of the Motor Vessel "Lillian S" -vs- Caltex Oil (Kenya) Ltd [1989] eKLR. The Respondent contends that while the suit involves land, the substratum of the claim is a banking contract and the recovery of debt, which does not fall within the specialized jurisdiction of the ELC as contemplated under Article 162(2)(b) of the Constitution of Kenya and Section 13 of the Environment and Land Court Act. 24.To fortify this position, the Respondent cites the binding Court of Appeal decision in Co-operative Bank of Kenya Limited -vs- Patrick Kangethe Njuguna & 5 Others [2017] KECA 79 (KLR), which clarified that where the validity of a charge instrument is not in dispute but the central issue is the tabulation of sums owing and the issuance of Statutory Notices, jurisdiction vests in the High Court rather than the ELC. This stance is further supported by Thomas Mutuku Kasue -vs- Housing Finance Company Ltd (HFC) & Another [2021] eKLR, where the Court held that the High Court has the requisite jurisdiction to deal with disputes where the predominant issue is the exercise of the Statutory Power of Sale by a chargee. The Respondent argues that because the Applicant admits the existence of the charge and only contests the service of notices and the loan balance, the suit is essentially a Commercial dispute over debt realization. 25.In conclusion, the Respondent urges the Court to follow the precedent set in Mturi & Another -vs- Diamond Trust Bank Kenya Limited [2024] KEELC 6167 (KLR) and Murungi -vs- Kanyi & Another [2024] KEELC 1823 (KLR), where the ELC struck out similar suits for lack of jurisdiction once a red flag was raised at the earliest opportunity. The Respondent submits that jurisdiction is everything and, absent it, any further proceedings or orders including the sought injunction would be a nullity. Consequently, the 1st Defendant prays for the dismissal of the application and the striking out of the entire suit with costs following the event pursuant to Section 27 of the Civil Procedure Act, on the grounds that the Applicant moved the wrong forum. Analysis and Determination 26.The core issues for determination in this matter are twofold:i.Whether this Court is clothed with the requisite jurisdiction to entertain a dispute centered on the exercise of a chargee’s Statutory Power of Sale; andii.Secondly, if jurisdiction exists, whether the Applicant has satisfied the sequential judicial hurdles for the grant of an interlocutory injunction. 27.The 1st Respondent’s Preliminary Objection challenges the very competence of the Environment and Land Court (ELC) to determine this claim, positing that the substratum of the suit is a Commercial banking contract rather than a dispute over the use and occupation of, and title to, land as contemplated under Article 162(2)(b) of the Constitution. Jurisdiction is a threshold issue of pure law, and as held by the Supreme Court of Kenya in Samuel Kamau Macharia & Another v Kenya Commercial Bank Limited & 2 Others [2012] eKLR:“A Court’s jurisdiction flows from either the Constitution or legislation or both. Thus, a Court can only exercise jurisdiction as has been conferred upon it by the Constitution or a statute. It cannot arrogate to itself jurisdiction through the craft of interpretation." 28.In assessing the jurisdictional divide between the High Court and the ELC in debt realization matters, I am guided by the authoritative pronouncement in Co-operative Bank of Kenya Limited v Patrick Kangethe Njuguna & 5 Others [2017] eKLR, where the Court of Appeal observed:“The ELC has no jurisdiction to hear and determine a dispute where the cause of action is the recovery of a debt or the tabulation of sums owing under a charge ... The mere fact that land is a security for the debt does not automatically confer jurisdiction on the ELC." 29.In the present case, the Applicant does not challenge the validity of the charge instruments but seeks to stop an auction based on the alleged non-service of notices and an ongoing loan repayment plan. This characterizes the suit as a Commercial grievance. Furthermore, the ELC's specialized mandate under Section 13 of the ELC Act is distinct; as noted by my brother Justice Angote in Thomas Mutuku Kasue v Housing Finance Company Ltd (HFC) & Another [2021] eKLR:“Where the predominant issue in a suit relates to the exercise of the Statutory Power of Sale by a chargee to recover a debt, the High Court is the proper forum for the determination of such a dispute." 30.Turning to the merits of the injunction, even if this Court were to arrogate jurisdiction, the Applicant fails to surmount the test in Giella v Cassman Brown & Co. Ltd [1973] EA 358. Specifically, the Applicant has not demonstrated a prima facie case with a probability of success, as the Respondents have provided cogent evidence of statutory compliance through certificates of postage and valuation reports. On the limb of irreparable injury, the law is settled that land offered as security for a Commercial loan is a commodity for sale and its loss can be adequately compensated by damages. Justice Ringera in Mrao Ltd v First American Bank of Kenya Ltd & 2 Others [2003] eKLR famously cautioned that:“A prima facie case ... is one which on the material presented to the Court, a tribunal properly directing itself will conclude that there exists a right... probability of success means the Court is only to gauge the strength of the Plaintiff's case and not to adjudge the main suit." 31.Given the robust rebuttal by the Respondents, the Applicant’s case remains a collection of bare denials. On the issue of Jurisdiction, I do find that the Preliminary Objection is merited. The predominant issue herein is the recovery of a debt and the procedural regularity of a Statutory Sale, which falls within the Commercial jurisdiction of the High Court, not the specialized ELC. 32.Even if jurisdiction were present, the Applicant has failed to establish that damages would not be an adequate remedy, particularly since the property was voluntarily charged as a Commercial asset. 33.Given the foregoing I do find against the Applicant and order that:i.The Preliminary Objection dated 28/03/2025 is hereby upheld.ii.This Court downs its tools for lack of jurisdiction.iii.The Plaint dated 18/02/2025 is hereby struck out.iv.The Application dated 18/02/2025 is hereby dismissed.v.Costs of the suit and the application are awarded to the Defendants/Respondents.Orders Accordingly.It is so ordered. DATED SIGNED AND DELIVERED VIRTUALLY AT THIKA VIA VIDEOLINK THIS 15TH DAY OF JUNE, 2026.………………………MOGENI JJUDGEIn the presence of:Mr. Okeyo for the PlaintiffMs. Omalla for the 1st and 2nd DefendantsMs. Lillian - Court Assistant