https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1126

Cool Xtreme Ltd v Mandalia (Civil Appeal (Application) E809 of 2025) [2026] KECA 1126 (KLR) (12 June 2026) (Ruling) Neutral citation: [2026] KECA 1126 (KLR) Republic of Kenya In the Court of Appeal at Nairobi Civil Appeal (Application) E809 of 2025 W Karanja, K M'Inoti & WK Korir, JJA June 12, 2026 Between Cool Xtreme Ltd Applicant and Peush Mandalia Respondent (Application for stay of execution pending the hearing and determination of an appeal from the judgment and decree of the Employment & Labour Relations Court at Nairobi (Onyango, J.) dated 25th January 2024 in ELRCC No. 11482 of 2016 Cause 1481 of 2016 ) Ruling 1.The applicant, Cool Xtreme Ltd, has moved the Court vide a motion on notice dated 3rd November 2025 seeking an order of stay of execution of the judgment and decree of the Employment and Labour Relations Court (ELRC) dated 25th January 2024. By that judgment, the ELRC (Onyango, J.) awarded the respondent, Peush Mandalia, terminal benefits of Kshs. 2,945,725 from which the court allowed the applicant to set off Kshs. 85,000.00 owed to it by the respondent. 2.By a statement of claim dated 14th July 2016, the respondent pleaded that upon resigning from the applicant’s employment, the applicant wrongfully failed to pay his terminal dues. He prayed for judgment against the applicant for:i.4 years gratuity - 1,500,000.00ii.Leave pay - 878,125.00iii.Overtime - 567,600.00Total - 2,945,725.00 3.In addition, the respondent prayed for interest, costs and certificate of service. 4.By a statement of response dated 6th September 2016, the applicant denied the claim and pleaded that the respondent was not entitled to the terminal dues claimed. The appellant further pleaded that after resignation, the respondent failed to surrender the applicant’s properties and to pay for services rendered to him amounting to Kshs. 419,382.14, which the applicant claimed. 5.As stated, the ELRC found in favour of the respondent and the applicant lodged a notice of appeal on 31st July 2025 after obtaining extension of time to do so from the ELRC. The applicant filed the record of appeal on 26th September 2025 followed by the present application for stay of execution pending the hearing and determination of the appeal. 6.In support of the application, the applicant relied on a supporting affidavit sworn by its director, Anwar Hajee on 3rd November 2025 and written submissions dated 20th January 2026. The applicant contends that its pending appeal is arguable because the ELRC erred by awarding the respondent gratuity while the applicant was paying and remitting the respondent’s National Social Security Fund payments; by treating gratuity and service pay as one and the same thing; by awarding the respondent gratuity while the contract of payment did not provide for payment of gratuity; and by awarding the respondent overtime pay of Kshs. 576,000 without any basis or evidence. 7.It is further contended that the above issues are not frivolous and that this Court will grant an order of stay of execution even on account of only one bona fide arguable issue. 8.On whether the appeal risked being rendered nugatory, the applicant averred that the respondent had already commenced execution proceedings and that the appeal would be rendered nugatory because the applicant had no means of recovering the decretal sum from the respondent. It was contended that the respondent had no known assets from which the applicant could recover the decretal amount in the event of success of the appeal. On the other hand, the applicant described itself as a reputable company which is able to pay the decretal amount should the appeal fail. 9.The applicant cited the decisions in Halai & another v Thornton Turpin (1963) Ltd [1990] KECA 65 (KLR); Dickson Sinker Mapi v. Mutunkei [2021] KECA 235 (KLR); Stanley Kang’ethe Kinyanjui v. Tony Keter & 5 Others [2013] eKLR; and Gulf Timber & Hardware Supplies Ltd v. Ngaruiya & 5 Others [2022] KECA 87 (KLR), on the principles that guide the Court in an application for stay of execution pending appeal. 10.The respondent opposed the application vide his replying affidavit sworn on 27th January 2026. He deposed that the applicant applied for stay of execution in the ELRC and its application was dismissed vide a ruling dated 31st July 2025. He contended that the applicant ought to have appealed against that ruling instead of applying for stay of execution in this Court and that having failed to disclose that fact, the applicant had come to the Court with unclean hands and was, therefore, not entitled to exercise of the Court’s discretion in his favour. 11.It was the respondent’s further contention that the application for stay of execution was res judicata, the applicant having made a similar application in the ELRC. 12.As regards the merits of the application, the respondent urged that the applicant had not established an arguable appeal which risked being rendered nugatory if an order of stay of execution was not granted. It was contended that the decree that the applicant seeks to stay is a money decree for Kshs. 2,945,125.00 and that execution of such a decree cannot render an appeal nugatory. The respondent added that he was in gainful employment earning a monthly salary of Kshs 747,006.29 and was, therefore, capable of refunding the decretal sum should the appeal succeed. 13.At the hearing of the application learned counsel, Ms. Munyao appeared for the applicant while Mr. Ogara appeared for the respondent. Ms. Munyao reiterated her submissions, as set out above. Mr. Ogara did not file any submissions but elected to rely on the applicant’s replying affidavit, whose substance we have summarised above. 14.We have carefully considered this application and the arguments by the respective parties. Before considering the merits of the application, we must dispose of the respondent’s objection that the application is res judicata, and does not lie, the applicant having unsuccessfully made a similar application before the ELRC. 15.We think that the respondent’s objection is not well founded.The fact that the trial court has heard and denied an application for injunction, stay of execution, stay of proceedings pending appeal, does not deny or affect the jurisdiction of this Court to grant a similar relief under rule 5(2)(b) of this Court’s Rules. An application under rule 5(2)(b) is not an appeal from a decision of the trial court. That is why the jurisdiction of the Court under rule 5(2) (b) has been described as “original”. 16.In Githunguri v. Jimba Credit Corporation Ltd (No. 2) [1988] KLR 838, this Court held as follows on a similar argument as that advanced by the respondent:“We cannot accept that this is the correct approach. We think this Court’s jurisdiction under rule 5(2) to grant either a stay of execution, an injunction or stay of any further proceedings, arises if a notice of appeal has been lodged against the decision or ruling appealed from in accordance with rule 74. And we are then clothed with jurisdiction to grant any of the such orders “on such terms as the Court may think just.” That rule confers an independent original discretion on us and we have to apply our own minds de novo on the suitability or otherwise of the relief sought. It is not an appeal from the learned judge’s discretion to ours.” (Emphasis added). 17.The same point was made by Githinji, JA in Equity Bank Ltd v. West Link MBO Ltd [2013] KECA 320 (KLR) as follows:“It is trite law that in dealing with 5 (2) (b) applications the Court exercises discretion as a court of first instance and even where a similar application has been made in the High Court or other similar court under Rule 6(1) of order 42 C. P. Rules and refused, the Court in dealing with a fresh application still exercises an original independent discretion as opposed to appellate jurisdiction.” 18.We agree with the above rendition on the Court’s jurisdiction under rule 5(2) (b) and, accordingly, reject the applicant’s objection. 19.Turning to the merits of the application, an applicant is obliged to satisfy the Court that the appeal or the intended appeal is arguable and that it will be rendered nugatory if it succeeds without the order sought. Both those considerations must be satisfied and, establishing only one will not entitle the applicant to relief. (See Republic v. Kenya Anti-Corruption Commission & 2 Others [2009] KLR 31). 20.This Court has consistently held that an arguable appeal is one that raises even a single bona fide issue that deserves full consideration by the Court. It is an appeal that is not frivolous. It is not necessary for an applicant to raise a multiplicity of issues. A single genuine issue will suffice. Further, an arguable appeal is not necessarily one that must succeed when the appeal is heard. In determining whether or not the applicant has established an arguable appeal, the Court is not required to definitely determine contested issues. It is required to undertake the exercise with great circumspection to avoid pre-empting the issues. Accordingly, an applicant needs only to demonstrate that prima facie, the appeal is not frivolous. 21.On the second consideration of whether the intended appeal will be rendered nugatory, the primary concern of the Court is to ensure that a successful appeal is not reduced to a mere pyrrhic victory or paper judgment (see Hashmuklal Virchand Shah & 2 Others v. Investment & Mortgage Bank Ltd [2014] eKLR). Whether or not an appeal will be rendered nugatory is determined on a case-by-case basis depending on the peculiar circumstances of the case. (See Reliance Bank Ltd v. Norlake Investments Ltd (2002) 1 EA 227). But ordinarily, the Court will grant relief under rule 5(2) (b) if what is apprehended cannot be undone once it happens or cannot be undone without undue hardship or expense, or cannot be adequately compensated by award of damages. The Court also takes into account the respective hardship that grant or refusal of relief is likely to wrought on the parties. (See Nation Media Group & 2 Others v. John Joseph Kamotho & 3 Others, Civil Application No. 108 of 2006). These principles are comprehensively articulated and elaborated in the decision of this Court in Stanley Kangethe Kinyanjui v. Tony Ketter & Others (supra). 22.We think that the issues identified by the applicant for appeal are not frivolous. It is quite an arguable issue whether a party is entitled to gratuity if it is not provided for in the contract of employment. We think it is also an arguable point whether in this case the ELRC conflated gratuity and service pay. Granted that an arguable appeal need not succeed when the appeal is heard and need not raise a multiplicity of issues, we find that the applicant has satisfied the first limb under rule 5(2) (b). 23.Whether an appeal will be rendered nugatory depends on the circumstances on each case. The fact that the decree in issue is a money decree does not in all and sundry cases mean that the Court cannot issue an order of stay of execution. In this case the applicant questions the ability of the applicant to refund the decretal amount and in response the respondent states that he is in gainful employment. Considering the total sum of the decretal amount which is far beyond the applicant’s stated monthly salary, we think this is a deserving case for an order of stay of execution pending appeal. We also bear in mind that the appeal is already filed and is only pending directions on hearing. 24.In the circumstances, we find merit in the motion dated 3rd November 2025 and grant an order of stay of execution of the judgment and decree of the ELRC dated 25th January 2024 pending the hearing and determination of the applicant’s appeal. Costs of the application shall abide the outcome of the appeal. It is so ordered. DATED AND DELIVERED AT NAIROBI THIS 12TH DAY OF JUNE 2026.W. KARANJA...................................JUDGE OF APPEALK. M’INOTI................................JUDGE OF APPEALW. KORIR...................................JUDGE OF APPEALI certify that this is a true copy of the original.SignedDEPUTY REGISTRAR.