https://new.kenyalaw.org/akn/ke/judgment/keelc/2026/3414

Kaoko v Saitoti & 3 others (Environment and Land Case E027 of 2024) [2026] KEELC 3414 (KLR) (28 May 2026) (Ruling) Neutral citation: [2026] KEELC 3414 (KLR) Republic of Kenya In the Environment and Land Court at Kajiado Environment and Land Case E027 of 2024 J Omange, J May 28, 2026 Between Francis Keponyi Kaoko Plaintiff and Jackson Saitoti 1st Defendant Bryan Mbugua Kariuki 2nd Defendant Sadiki Growers Limited 3rd Defendant Cooperative Bank of Kenya Limited 4th Defendant Ruling 1.Before this Court are two applications for determination. One dated 16th September 2025 by the 2nd and 3rd Defendants and another dated 30th October 2025 by the Plaintiff. 2.The 2nd and 3rd Defendants in the application dated 16th September 2025 seek orders that this suit be stayed indefinitely pursuant to Section 428(1) of the Insolvency Act and that the Plaintiff and the 4th Defendant be directed to pursue their claims before the Official Receiver through proof of debt procedures. 3.This Application is supported by the 2nd Defendants Affidavit of even date is premised on the grounds that the 2nd and 3rd Defendants were adjudged bankrupt on 13th December 2024 and 20th December 2022 by the High Court through HCCOMMIC E016 of 2024 and HCCOMMIP E8 of 2022 respectively. That, by operation of Section 428(1) of the Insolvency Act, no proceedings may be commenced or continued against them without leave of Court. That no leave of court has been obtained. As such, continuation of the suit is unlawful and an abuse of the court process. That no prejudice will be occasioned to the Plaintiff or the 4th Defendant as they have an opportunity to pursue their claim before the Official Receiver. 4.The Plaintiff in the Grounds of Opposition dated 21st October 2025 and an Affidavit dated 23rd October 2025 argues that his suit is not founded on recovery of a debt but on recovery of his title deed over parcel number Kajiado/Kitengela/101603 which he alleges was fraudulently used as collateral. He states that the 2nd and 3rd Defendants initiated bankruptcy proceedings after learning that the Plaintiff was pursuing recovery of his title deed. The application was therefore an afterthought, filed in bad faith, and intended to delay the hearing and determination of the suit. 5.The 4th Defendant through the legal officer Jackson Oire, states that they have confirmed authenticity of the liquidation bankruptcy order against the Defendants and do not oppose the application acknowledging that proceedings against them are subject to the Insolvency Act and may only continue with leave of the Court as required by Sections 432 and 48 of the Insolvency Act. They also indicate that they intend to seek leave from the High Court to continue the suit against the 2nd and 3rd Defendants to safeguard their proprietary rights over the charged property. 6.The Plaintiffs Application dated 30th October 2025 seeks injunctive reliefs preventing interference with parcel Kajiado/Kitengela/101603 pending the determination of this suit. The Plaintiff states that he is and has always been the registered owner of Kajiado/Kitengela/101603. His case is that sometime in 2019 the 1st Defendant gained possession of the original title deed for photocopying purposes. The Plaintiff avers that the title was never returned. 7.On the year 2022 he conducted an official search and discovered that a charge had been registered against the property in favour of the 4th Defendant on 8th October 2020 to secure loan facilities amounting to Kshs. 19,500,000, without his knowledge or consent. He states as a result of the fraudulent charge the bank as at 18th February 2025, was demanding over Kshs. 66 million. The bank had issued a statutory notice dated 1st December 2023 expressing intention to exercise its remedies under Section 90 of the Land Act. 8.The 4th Defendant opposes the Application on grounds that that the Plaintiff is a shareholder of the 3rd Defendant, which had been advanced loan facilities secured by a legal charge over parcel Kajiado/Kitengela/101603. The Bank states that the Plaintiff voluntarily offered the property as security and that the charge was duly registered on 8th October 2020 with the requisite Land Control Board consent. It affirmed that the loan facilities are in arrears and statutory notices had been duly issued and as such it was lawfully entitled to exercise its statutory power of sale. It was the 4th Defendants contention that the Plaintiff is abusing the court process to delay realization of the security and the suit should be dismissed. 9.The applications were canvassed by way of written submissions which have been duly considered by the court. 10.The court distills the following issues for determination ; whether the proceedings should be stayed pending leave of Court; whether the Plaintiff is entitled to the injunctive reliefs sought. 11.The 2nd and 3rd Defendants moved court seeking that the proceedings herein be stayed indefinitely as no leave had been sought to commence a suit against them having been adjudged bankrupt and insolvent respectively. 12.The 4th Defendant did not oppose the application. The Plaintiff opposed the application on grounds that his claim was for recovery of title deed for parcel Kajiado/Kitengela/101603 which was illegally and fraudulently used by the 2nd Defendant to obtain a loan facility from the 4th Defendant and not a claim for debt recovery. 13.Section 432(2) of the Insolvency Act provides that: When a liquidation order has been made or a provisional liquidator has been appointed, legal proceedings against the company may be begun or continued only with the approval of the Court and subject to such conditions as the Court considers appropriate. 14.The Plaintiff attempts to distinguish his claim by arguing that he primarily challenges validity of transfer and charge and further argues that insolvency does not automatically extinguish proprietary disputes or suspend judicial inquiry into whether property properly forms part of an estate. 15.While this could be true, Section 560(1) provides ; While a company is under administration—(d)a person may begin or continue legal proceedings (including execution and distress) against the company or the company's property only with the consent of the administrator or with the approval of the Court. 16.The rationale for this was stated in the case of Hoggers Limited (in administration) Vs John Lee Halamandres and 11 others (2021) eKLR, where the court quoted with approval Cook v Mortgage Debenture Ltd [2016] EWCA thus;“In the case of liquidation and bankruptcy, the purpose of these provisions is essentially two-fold. First, given that the property of the company or individual stands under the statute to be realised and distributed, subject to any existing interests, among the creditors on a pari passu basis, the moratorium prevents any creditor from obtaining priority and thereby undermining the pari passu basis of distribution. Second, given that both a liquidation and bankruptcy contain provisions for the adjudication of claims by persons claiming to be creditors, the moratorium protects those procedures and prevents unnecessary and potentially expensive litigation. In circumstances where the potential liability of the company or bankrupt is best determined in ordinary legal proceedings, as for example is often the case with a personal injury claim, the court will give permission for proceedings to be commenced or continued, but usually on terms that no judgment against the company or individual can be enforced against the assets of the estate.” 17.Leave is thus a prerequisite for commencing or continuing court proceedings against a person adjudged bankrupt or a company under liquidation such as in the case of the 2nd and 3rd Defendant. It is imperative that the necessary leave be sought before this matter proceeds as against the 2nd and 3rd Defendants. 18.On the injunctive reliefs sought by the Plaintiff against the 4th Defendant, the law on grant of interlocutory injunctions is set out under Order 40 Rule 1 (a) and (b) of the Civil Procedure Rules as follows:“Where in any suit it is proved by affidavit or otherwise –a.That any property in dispute in a suit is in danger of being wasted, damaged, or alienated by any party to the suit, or wrongfully sold in execution of a decree; orb.That the defendant threatens or intends to remove or dispose of his property in circumstances affording reasonable probability that the Plaintiff will or may be obstructed or delayed in execution of any decree that may be passed against the defendant in the suit;the court may by order grant a temporary injunction to restrain such act, or make such other order for the purpose of staying and preventing the wasting, damaging, alienation, sale removal, or disposition of the property as the court thinks fit until the disposal of the suit or until further orders.” 19.The principles for grant of injunction are well settled by the locus classicus of Giella Vs Cassman Brown & Company Limited [1973] E.A. 358., where the court stated thus:“First, an applicant must show a prima facie case with a probability of success. Secondly, an interlocutory injunction will not normally be granted unless the applicant might otherwise suffer irreparable injury, which would not adequately be compensated by an award of damages. Thirdly, if the court is in doubt, it will decide an application on the balance of convenience.” 20.The Plaintiff alleges fraud, unlawful deprivation of title, unauthorized transfer and creation of a charge. It is his case that he did not authorize use of his title or transfer ownership. He disputes participation in the affairs of the 3rd Defendant. On the material presently before Court, these are triable issues which the court can only resolve during the hearing. 21.While it is argued that the bank would be in a position to repay the value of the land, given the emotive issues around land in this country and considering that fraud is alleged, the court is satisfied that the balance of convenience tilts in favour of preserving the substratum of the suit. 22.Accordingly, the Court makes the following orders:a.An interlocutory injunction is hereby issued restraining the 4th Defendant, its servants, agents, employees, or any persons acting under its authority, from exercising any power of sale or otherwise dealing with, disposing of, or interfering with land parcel Kajiado/Kitengela/101603, pending the hearing and determination of the main suit.b.The matter shall be stayed for 6 months to enable the Plaintiff/ 4th Defendant to seek leave to continue with the suit against the 2nd and 3rd Defendant.c.Costs shall abide the outcome of the main suit. DATED, SIGNED AND DELIVERED VIRTUALLY AT KAJIADO THIS 28TH DAY OF MAY 2026.JUDY OMANGEJUDGEIn The Presence Of:Mr Marobe for Plaintiff.Mr Kimani for 4th Defendant.Peter - Court Assistant.