Eurocollections Limited v Mahesh Kumari

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT NAIROBI** **MILIMANI LAW COURTS** **CIVIL APPELLATE DIVISION** ***(Coram: A. C. Mrima, J.)*** **CIVIL SMALL CLAIMS APPEAL NO. E270 OF 2024** ***-between-*** **EUROCOLLECTIONS LIMITED………………………………...APPLICANT** ***-versus-*** **MAHESH KUMARI………………………………………………RESPONDENT** **RULING** **Background:** 1. *Eurocollections Limited*, the Applicant herein, lodged *Nairobi [Milimani] Small Claims Civil Claim No. E5220 of 2024*, [hereinafter referred to as ‘***the suit’***] against *Mahesh Kumar*, the Respondent herein, seeking compensation for damage occasioned to its motor vehicle. In its judgment of 5th September 2025, the trial Court dismissed the Applicant’s claim with costs. Subsequently, it issued a decree on 5th September 2025, certifying the Respondent’s costs at Kshs. 43,800/=. 2. On 8th October 2025, the Respondent’s Advocates served the Applicant with a demand letter seeking settlement of the said costs which yielded the application, subject of this ruling. **The Application:** 1. Through the application by way of a Notice of Motion dated 9th October 2025, the Applicant sought the following orders: * 1. *Spent.* 2. *This Honourable Court be pleased to stay execution of the judgment delivered on 5th September 2025 and decree issued thereunder pending hearing and determination of this application.* 3. *The Honourable Court be pleased to issue such further orders as it may deem fit, appropriate and expedient to grant in the circumstances of this matter for purposes of compliance and/or other just consideration.* 4. *Costs of this Application be granted to the Applicant.* 2. The application was grounded on the premise that the Applicant was dissatisfied with the trial Court’s judgment, had lodged an appeal with high chances of success, and faced imminent execution following the service of the decree and the demand letter on 8th October 2025. The Applicant averred that the application was brought in good faith, without undue delay, and that failure to grant the stay would render the appeal nugatory without causing prejudice to the Respondent. 3. In the Supporting Affidavit sworn on 9th October 2025, *Mr. Erick Sigu Okonji* deposed that he was authorized to swear the affidavit on behalf of the Applicant’s insurer. It was his case that following the dismissal of the claim and the subsequent demand for the decretal sum, the Applicant grew anxious that the Respondent would acquire warrants of attachment. He further deposed that the Applicant stood to suffer substantial and irreparable loss if execution proceeded, as the Respondent might be unable to refund the awarded sums should the appeal succeed, thereby effectively rendering the appeal nugatory. *The Submissions* 1. In its submissions dated 3rd February 2026, the Applicant argued that the Court possessed the requisite jurisdiction to grant the stay under Order 42 Rule 6 of the Civil Procedure Rules and Sections 1A and 3A of the Civil Procedure Act. In reference to the decision in *Jepchirchir -vs- Chemwor (*Civil Appeal E090 of 2024) [2024] KEHC 14288 (KLR), it was argued that the Applicant had fulfilled all mandatory conditions for a stay of execution. 2. On the issue of substantial loss, the Applicant submitted that their right to appeal would be severely prejudiced if compelled to satisfy the decree. Drawing from the principles set in *Tropical Commodities Suppliers Ltd & Others -vs- International Credit Bank Ltd* (in liquidation) [2004] 2 EA 331 and *James Wangalwa & Another -vs- Agnes Naliaka Cheseto [*2012] eKLR, it was argued that the execution would create a state of affairs negating the essential core of the appeal, rendering it nugatory. 3. Regarding unreasonable delay, it was submitted that the application was filed promptly on 9th October 2025, merely a day after the demand letter was received, a position that aligned with the holding in *Gichuhi & another -vs- Gichuhi & 2 others* (Civil Appeal E632 of 2021) [2022] KECA 818 (KLR) where it was observed that delay must not bar a party from justice where the interests of justice demand otherwise. 4. Finally, relying on the precedent in *Focin Motorcycle Co. Limited -vs- Ann Wambui Wangui & another*, the Applicant submitted that an expressed willingness to furnish security was sufficient to satisfy the security condition under the law. The Applicant further cited *African Merchant Assurance Company limited -vs- Nyamai Kea* (Miscellaneous Civil Application No. 540 of 2019) to emphasize the overriding objectives of proportionality and equality of arms. **The Respondent’s case:** 1. The Respondent opposed the application through a Replying Affidavit sworn by *Mahesh Kumar* on 27th October 2025. It was is case that the Applicant’s claim was dismissed because it failed to meet the required standard of proof, and execution was subsequently instructed since no stay orders had been issued. 2. He deposed further that the Applicant failed to meet the conditions for a stay of execution under Order 42 Rule 6(2) of the Civil Procedure Rules. He stated that the Applicant exhibited a lack of good faith by failing to demonstrate a willingness to deposit security for the due performance of the decree. 3. The Respondent also deposed that neither the Notice of Appeal nor the Memorandum of Appeal had been served upon him in compliance with the rules. Additionally, he deposed that the allegations regarding his inability to refund the decretal sum were untrue, and that he stood to suffer prejudice if the application was allowed. *The Submissions* 1. Through written submissions dated 8th April 2026, the Respondent asserted that the Applicant had failed to satisfy the mandatory and conjunctive requirements of Order 42 Rule 6(2) of the Civil Procedure Rules. Relying on the case of *Antoine Ndiaye -vs- African Virtual University [2015] eKLR*, the Respondent argued that the conditions must be met simultaneously before the Court could exercise its discretion. 2. On the issue of substantial loss, the Respondent called to its aid the authority in *James Wangalwa & Another -vs- Agnes Naliaka Cheseto* [2012] eKLR, to submit that execution is a lawful process and does not inherently amount to substantial loss. It was further argued that the Applicant made mere bare allegations without providing evidence that the Respondent was a person of straw incapable of refunding the decretal sum. 3. Addressing the absence of sufficient cause, the Respondent relied on *Butt -vs- Rent Restriction Tribunal* [1982] KLR 417 to argue that the discretion to grant a stay must not be exercised to unjustly deprive a successful litigant of the fruits of their judgment. Lastly, it was submitted that the failure to offer or provide security was fatal, demonstrating bad faith and disentitling the Applicant from equitable relief. 4. The Respondent prayed that the application be disallowed with costs. **Analysis and Determination:** 1. Arising from the pleadings and the submissions of the parties, the only issue that presents itself for determination is whether the Applicant satisfies the conditions for the grant of a stay of execution pending appeal. 2. The jurisdiction to grant a stay of execution pending appeal is anchored in Order 42 Rule 6(2) of the Civil Procedure Rules. The provision prescribes three conjunctive conditions: the demonstration of substantial loss, the absence of unreasonable delay, and the provision of security for the due performance of the decree. 3. In Civil Application Nai 6 of 1979,***Butt -vs- Rent Restriction Tribunal***[1979] eKLR,the Court of Appeal discussed Order 42 rule 6 as hereunder; * 1. *The power of the Court to grant or refuse an application for a stay of execution is discretionary; and the discretion should be exercised in such a way as not to prevent an appeal.* 2. *Secondly, the general principle in granting or refusing a stay is, if there is no other overwhelming hindrance, a stay must be granted so that an appeal may not be rendered nugatory should the appeal court reverse the judge’s discretion.* 3. *Thirdly, a judge should not refuse a stay if there are good grounds for granting it merely because, in his opinion, a better remedy may become available to the applicant at the end of the proceedings.* 4. *Finally, the Court in exercising its discretion whether to grant or refuse an application for stay will consider the special circumstances and its unique requirements. The court in exercising its powers under Order XLI Rule 4(2) (b) of the Civil Procedure Rules, can order security upon application by either party or on its own motion. Failure to put security of costs as ordered will cause the order for stay of execution to lapse.* 4. This Court will now consider the requirements in turn. * + - 1. *Delay:* 5. The record indicates that the trial Court’s judgment was delivered on 5th September 2025, and the Respondent’s demand for the decretal sum was served on 8th October 2025. The Applicant filed the instant Notice of Motion on 9th October 2025. Undoubtedly, the Applicant acted with commendable promptitude. The application was, therefore brought without unreasonable delay. * + - 1. *Substantial loss:* 6. The Applicant averred that the Respondent might be unable to refund the awarded sums, which would render the appeal nugatory. Conversely, the Respondent submitted that the Applicant offered mere bare allegations without proving that he was a person of straw. 7. In resolving this impasse, this Court will draw guidance from the Court of Appeal decision in ***National Industrial Credit Bank Ltd -vs- Aquinas Francis Wasike & another*** [2006] KECA 333 (KLR)where it was observed thus; *…. This Court has said before and it would bear repeating that while the legal duty is on an applicant to prove the allegation that an appeal would be rendered nugatory because a respondent would be unable to pay back the decretal sum, it is unreasonable to expect such an applicant to know in detail the resources owned by a respondent or the lack of them. Once an applicant expresses a reasonable fear that a respondent would be unable to pay back the decretal sum, the evidential burden must then shift to the respondent to show what resources he has since that is a matter which is peculiarly within his knowledge…* 1. Drawing from the above, the Respondent merely issued a blanket denial of his inability to refund the sum without tendering any evidence of his financial liquidity. Consequently, he failed to discharge the evidential burden on him. The inevitable conclusion is that the Applicant would suffer substantial loss if execution proceeded. * + - 1. *Security* 2. Security becomes an indispensable condition for grant of stay in some cases. In ***Gianfranco Manenthi & another -vs- Africa Merchant Assurance Company Ltd*** [2019] eKLR the Court observed as follows: - *… the applicant must show and meet the condition of payment of security for due performance of the decree. Under this condition a party who seeks the right of appeal from money decree of the lower court for an order of stay must satisfy this condition on security. In this regard, the security for due performance of the decree under order 42 rule 6(1) of the Civil Procedure Rules, it is trite that the winner of litigation should not be denied the opportunity to execute the degree in order to enjoy the fruits of his judgment in case the appeal fails.* 1. The Respondent contended that the application was fatally defective as the Applicant failed to provide security. However, the Applicant made an express readiness to provide security. It constitutes a mark of good faith, and it ultimately remains the Court’s discretionary prerogative to determine the nature and quantum of the security. 2. In the face of the Applicant’s expressed willingness, this limb of the requirements is sufficiently met. **Disposition** 1. In conclusion, this Court finds that the application meets the conjunctive thresholds set out under Order 42 Rule 6(2) of the Civil Procedure Rules. Accordingly, the following final orders hereby issue; **[a] The Notice of Motion dated 9th October 2025 is hereby allowed.** **[b] There shall be a stay of execution of the judgment delivered on 5th September 2025 and the decree issued thereunder, pending the hearing and determination of the appeal.** **[c] The grant of stay is conditional upon the Applicant depositing the decretal sum of Kshs. 43,800/= in a COURT within thirty (30) days from the date of this ruling. In default of compliance, the orders of stay shall be automatically vacated and the Notice of Motion dated 9th October 2025 will stand dismissed with costs.** **[d] In the meantime. the costs of the application shall abide the outcome of the appeal.** Orders accordingly. **DELIVERED**, **DATED** and **SIGNED** at **NAIROBI** this **9th** day of **September, 2026.** **A. C. MRIMA** **JUDGE** **Ruling virtually delivered in the presence of:** **Ms Gakure** holding brief for Mr. Wairotofor the Applicant. **Ms Wambui,** Learned Counsel for the Respondent. **Michael/Amina** –Court Assistants.