https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/8728

Flamco Ltd & 5 others v Bank of Baroda (K) Limited (Civil Case E019 of 2021) [2026] KEHC 8728 (KLR) (23 June 2026) (Ruling) Neutral citation: [2026] KEHC 8728 (KLR) Republic of Kenya In the High Court at Nakuru Civil Case E019 of 2021 JK Sergon, J June 23, 2026 Between Flamco Limited 1st Applicant Hasmukh Raichand Shah 2nd Applicant Sanjay Raichand Shah 3rd Applicant Kavit Hasmukh Shah 4th Applicant Shah Chanrika Hasmukh Raichand 5th Applicant Diviya Sanjay Shah 6th Applicant and Bank of Baroda (K) Limited Respondent Ruling 1.Before this Court for determination is the Plaintiffs/Applicants' Notice of Motion Application dated 5th November 2025. The Application is brought under Sections 3 of the Insolvency Act, 2015, Sections 1A and 3A of the Civil Procedure Act, Order 51 of the Civil Procedure Rules, and all other enabling provisions of the law. 2.The Application seeks a stay of execution of the Notice to Show Cause dated 17th June 2025 directing the 2nd to 6th Plaintiffs/Applicants to appear in Court to show cause why they should not be committed to civil jail. The stay is sought pending the hearing and determination of Bankruptcy Petitions No. E011 to E015 of 2025 filed at the Milimani High Court. 3.The Application is supported by the Affidavit of SANJAY SHAH (the 3rd Plaintiff/Applicant) sworn on 5th November 2025, and written submissions dated 11th February 2026. 4.The Application is opposed by the Defendant/Respondent vide the Replying Affidavit of JUSTUS PAUL MUGA (the Branch Credit Manager of the Defendant/Respondent) sworn on 17th November 2025. 5.The parties herein were involved in litigation in this Court in this suit which was initiated by the Plaintiffs and subsequently withdrawn by them. 6.Upon withdrawal of the suit, the Defendant/Respondent was awarded costs, which were subsequently taxed by the Deputy Registrar of this Court. 7.In execution of the Decree for costs, the Defendant/Respondent took out a Notice to Show Cause dated 17th June 2025 requiring the 2nd to 6th Plaintiffs/Applicants, who are the Directors of the 1st Plaintiff/Applicant Company, to appear in Court and show cause why they should not be committed to civil jail for non-payment of the decretal sum. 8.The 2nd to 6th Plaintiffs/Applicants filed separate Bankruptcy Petitions at the Milimani High Court, namely; Bankruptcy Petition No. E011 of 2025 In the Matter of Hasmukh Shah Bankruptcy Petition No. E012 of 2025 In the Matter of Diviya Sanjay Shah Bankruptcy Petition No. E013 of 2025 In the Matter of Sanjay Shah Bankruptcy Petition No. E014 of 2025 In the Matter of Kavit Hasmukh Shah Bankruptcy Petition No. E015 of 2025 In the Matter of Shah Chanrika Hasmukh Raichand 9.The Applicants now seek a stay of the execution proceedings pending the hearing and determination of the said Bankruptcy Petitions. 10.The Applicants contend that the 2nd to 6th Plaintiffs/Applicants have no source of income, are wholly dependent on support from their relatives, and are unable to pay the pending costs sought in the said decree. 11.The Applicants further contend that the company (Flamco Limited) was adversely affected by COVID-19 in 2020 and closed its business, resulting in default on the loan facility with the Defendant/Respondent in the sum of Kenya Shillings Eight Hundred and Sixty-Two Million, One Hundred and Thirty-Seven Thousand One Hundred and Seventy and Eighty-Two Cents (Kshs. 862,137,170.82). 12.The following issues arise for determination;(i)Whether the Applicants have satisfied the legal threshold for the grant of a stay of execution pending the hearing and determination of the Bankruptcy Petitions.(ii)Who should bear the costs of this Application. 13.The applicants rely on Section 23(2) of the Insolvency Act, 2015, which provides;“(2)If it is proved to the issuing court that an application for a bankruptcy order in respect of the debtor has been made to the High Court, that court may either—(a)stay the execution process on such terms as it considers appropriate; or(b)permit the execution process to continue on such terms as it considers appropriate." 14.It is important to note that a stay under Section 23(2) is discretionary, not automatic. The court must consider the circumstances of each case and exercise its discretion judiciously. 15.Before determining whether the Applicants have met the threshold for a stay, it is necessary to briefly address the Respondent's jurisdictional objection. The Respondent contends in its Replying Affidavit that this Court is divested of jurisdiction because the Applicants have filed Bankruptcy Petitions at the Milimani High Court. I find this objection to be without merit. The Notice to Show Cause subject of this Application arises from a Decree of this Court. Under Section 34(1) of the Civil Procedure Act, all questions relating to execution, discharge, or satisfaction of a decree shall be determined by the court executing the decree. The filing of Bankruptcy Petitions elsewhere does not divest this Court of its jurisdiction over execution matters arising from its own decrees. I therefore find that this Court has jurisdiction to hear and determine the Application. 16.The Applicants have invited this Court to apply the principles for the grant of an interlocutory injunction as set out in the case of Giella v Cassman Brown & Co. Ltd [1973] E.A. 358, where the Court held that;“First, an applicant must show a prima facie case with a probability of success. Secondly, an interlocutory injunction will not be granted unless the applicant might otherwise suffer irreparable injury, which would not be adequately compensated by an award of damages. Thirdly, if the court is in doubt, it will decide an application on the balance of convenience." 17.I shall now consider each of these limbs. 18.The Applicants submit that they have established a prima facie case by demonstrating that they have filed valid Bankruptcy Petitions and that the purpose of such proceedings is to allow for the orderly determination of all creditors' claims, preventing a single creditor from obtaining an unfair advantage. 19.The Respondent counters that the Applicants have approached this Court with "unclean hands" and that the Bankruptcy Petitions are merely a "gimmick" and "diversionary tactic" to evade payment of the taxed costs. 20.The Respondent further argues that no bankruptcy order has been made in respect of any of the Applicants. 21.I have carefully considered these submissions. The mere filing of a Bankruptcy Petition does not, by itself, establish a prima facie case for the grant of a stay. The Applicants must demonstrate that the Petitions are bona fide and have a realistic prospect of success. 22.In the case of Re Matter of the Insolvency of George Mbuthia Maina [2021] eKLR, the Court emphasized that a stay of proceedings under the Insolvency Act is not automatic upon the filing of a bankruptcy petition. An applicant must establish a prima facie case that the stay is necessary for the effective administration of the bankruptcy process. 23.In the present case, I am not satisfied that the Applicants have established a strong prima facie case. The Bankruptcy Petitions appear to have been filed as a reaction to the execution proceedings, and no bankruptcy orders have been issued to date. The Applicants have not demonstrated that their Petitions have a realistic prospect of success. 24.The Applicants themselves withdrew the main suit herein, and the costs were subsequently taxed. The Applicants have not demonstrated any irregularity in the taxation of costs or the issuance of the Decree. As the Respondent correctly submitted, had the Applicants wanted to file suit without risking the obvious incidence of costs, they should have sought leave of court to file suit as paupers so that the issue of not paying costs would have been heard and determined first. 25.In the circumstances, I find that the Applicants have failed to establish a prima facie case with a probability of success. 26.The Applicants submit that the injury they face, that is, committal to civil jail is irreparable and cannot be adequately compensated by damages. 27.The Respondent argues that the Applicants voluntarily initiated the suit, withdrew it, and are now trying to evade the consequences of their actions. 28.I acknowledge that the threat of committal to civil jail is a serious matter that implicates the liberty of the Applicants. The loss of liberty, even temporarily, can constitute irreparable harm. However, I also note that the Applicants are not without recourse. The Bankruptcy Court itself has jurisdiction to issue a stay under Section 23(2) of the Insolvency Act. The Applicants have not demonstrated why they did not seek a stay from the Bankruptcy Court, which is in a better position to oversee and protect the integrity of the insolvency process. 29.Furthermore, the Applicants have not provided any evidence of their financial status beyond general assertions of hardship. No financial statements, bank statements, or other verifiable evidence has been placed before this Court to demonstrate that they are indeed insolvent. 30.In the case of Gladys Nduku Nthuki v Letshego Kenya Ltd [2022] eKLR, the Court emphasized that the threshold for establishing irreparable injury is not met by mere assertions; it requires concrete evidence demonstrating that the injury cannot be adequately compensated by an award of damages. In the present case, the Applicants have not demonstrated that the injury they face cannot be adequately compensated by damages, nor have they shown that they have taken steps to seek relief from the Bankruptcy Court. In the circumstances, I find that the Applicants have failed to establish that they will suffer irreparable injury if the stay is not granted. 31.The Applicants submit that the balance of convenience favours them, as the Respondent is already a notified creditor in the Bankruptcy proceedings and its rights are fully preserved. 32.The Respondent submits that the Application is a "diversionary tactic" and that the balance of convenience favours allowing the execution to proceed, as the costs have been lawfully taxed and remain unpaid. The Respondent has a valid decree for costs that remains unsatisfied. The Applicants have not offered to deposit the decretal sum as security, nor have they proposed any other terms that would protect the Respondent's interests pending the hearing of the Bankruptcy Petitions. The Respondent has even offered a compromise position: if the stay is granted, the Applicants should be ordered to deposit the entire taxed costs as security. The Applicants have not responded to this proposal. In the circumstances, I find that the balance of convenience favours the Respondent. 33.The Applicants have prayed that the costs of this Application be provided for. 34.The Respondent, having successfully opposed the Application, is entitled to costs. It is a well-established principle of law that costs follow the event. This principle is codified in Section 27 of the Civil Procedure Act, which provides that;“Subject to such conditions and limitations as may be prescribed, and to the provisions of any law for the time being in force, the costs of and incidental to all suits shall be in the discretion of the court or judge, and the court or judge shall have full power to determine by whom and out of what property and to what extent such costs are to be paid, and to give all necessary directions for the purposes aforesaid; and the fact that the court or judge has no jurisdiction to try the suit shall be no bar to the exercise of those powers:Provided that the costs of any action, cause or other matter or issue shall follow the event unless the court or judge shall for good reason otherwise order." 35.In Jasbir Singh Rai & 3 Others v Tarlochan Singh Rai & 4 Others [2014] eKLR, the Court held that;“It emerges that the award of costs would normally be guided by the principle that 'costs follow the event'; the effect being that the party who calls forth the event by instituting suit, will bear the costs if the suit fails; but if this party shows legitimate occasion, by successful suit, then the defendant or respondent will bear the costs." 36.In the present case, I find no exceptional circumstances that would justify denying the Respondent its costs. 37.Accordingly, the Plaintiffs/Applicants' Notice of Motion Application dated 5th November 2025 is hereby dismissed with costs. 38.Orders accordingly. DATED, SIGNED AND DELIVERED AT NAKURU THIS 23RD DAY OF JUNE, 2026.........................J.K.SERGONJUDGEIn presence of:Jamleck/Rutoh – C/AMuthui holding brief for Kisilah for DefendantMiss Wangui holding brief for Wathuta for Applicant