https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1556

Gilgil Treatment Industries Limited v Bank of India & another (Civil Application E052 of 2026) [2026] KECA 1556 (KLR) (31 July 2026) (Ruling) Neutral citation: [2026] KECA 1556 (KLR) Republic of Kenya In the Court of Appeal at Eldoret Civil Application E052 of 2026 PM Gachoka, WK Korir & L Ndolo, JJA July 31, 2026 Between Gilgil Treatment Industries Limited Applicant and Bank of India 1st Respondent Kennedy Shikuku t/a Eshikhoni Auctioneers 2nd Respondent (Being an application for stay of execution and/or injunction against the ruling of the High Court of Kenya at Eldoret (Ominde, J) dated 19th March, 2026 in HCCC No. E001 of 2025) Ruling 1.Before us is a Notice of Motion dated 7th April 2026 brought under rule 5(2)(b) of the Court of Appeal Rules, 2022. The Applicant, Gilgil Treatment Industries Limited, seeks orders restraining Bank of India (“the 1st respondent”) and Kennedy Shikuku T/A Eshikhoni Auctioneers (“the 2nd respondent”) from selling, advertising for sale, alienating, or otherwise dealing with the suit properties, namely L.R. Nos. Eldoret Municipality Blocks 9/2501, 9/2502 and 9/2522, pending the hearing and determination of an intended appeal against the ruling delivered on 19th March 2026 by E. Ominde, J. of the High Court. 2.The application is supported by an affidavit sworn on 7th April 2026 and a supplementary affidavit sworn on 5th June 2026 by Divyesh Indubhai Patel, the applicant's Managing Director. The motion is premised on the grounds that the intended appeal is arguable and meritorious, raising serious issues of law, including whether the statutory notices issued under sections 90(2) and 96(2) of the Land Act, 2012 complied with mandatory statutory requirements and whether the learned Judge correctly applied the principles for granting interlocutory injunctions. It is further averred that the respondents have already taken active steps towards realization of the securities and are poised to proceed with the sale, thereby creating an imminent danger of disposal of the suit properties. 3.The applicant deposes that if the sale proceeds, its equity of redemption will be permanently extinguished, the substratum of the intended appeal will be irreversibly destroyed, and it will suffer substantial and irreparable loss, which cannot be adequately compensated by an award of damages. The applicant maintains that the balance of convenience tilts in favour of preserving the suit properties pending the hearing and determination of the appeal, as the respondents will not suffer prejudice that cannot be compensated by costs or interest. The applicant states that it is ready and willing to offer security as this Court may direct and that it is in the interest of justice, fairness, and equity that the orders sought be granted to preserve the subject matter of the dispute. 4.The application is opposed by the respondents through a replying affidavit sworn on 3rd June 2026 by Sanjay Kumar, the Chief Manager of the Eldoret Branch of the 1st respondent. It is averred that the learned Judge dismissed the applicant’s application for injunction having found that the statutory notices issued under sections 90 and 96 of the Land Act were valid and compliant with the law. According to the respondents, the notices served clearly ventilated the nature and extent of the default consisting of non-payment of money owed by the chargor under various financial instruments. Further, that the applicant has not disputed its indebtedness to the 1st respondent and the outstanding amount continues to earn interest. 5.Asserting that the application is without merit, the respondents deposed that the applicant has not demonstrated an arguable appeal since the trial Judge had found that both the statutory demand notice and statutory notice of sale were valid and duly served contrary to the applicant’s allegation. According to the respondents, the redemption notice and notification of sale were subsequently issued by the 2nd respondent as required by the law. It is therefore their firm position that in the circumstances the applicant’s intended appeal will not be rendered nugatory. 6.In closing, the respondents accused the applicant of directly, and through proxy, filing multiplicity of applications and suits in respect of the same matter. In support of this averment, reference is made to an application filed in the High Court by the applicant on 9th April 2026, which was yet to be prosecuted, and a suit allegedly filed on 13th May 2026 before the Environment and Land Court by a third party allegedly acting in concert with the applicant. It is the respondents’ contention that the applicant is abusing the court process and we have been beseeched to dismiss the application with costs. 7.We heard the application virtually on 8th June 2026. Learned counsel Mr. Odegi appeared for the applicant while his counterpart Ms. Kinyanjui was present for the respondents. Counsel sought to rely on the already filed written submissions. 8.Learned counsel for the applicant, Mr. Odegi, submitted that the applicant has satisfied the twin test under rule 5(2)(b) of the Court of Appeal Rules, 2022 that the intended appeal is arguable and will be rendered nugatory should the application be declined. According to counsel, the respondents' principal argument that the learned Judge correctly determined the issue of statutory notices misconceives the role of this Court at the interlocutory stage. Counsel relied on Stanley Kangethe Kinyanjui vs. Tony Ketter & 5 Others [2013] KECA 378 (KLR) and Cabinet Secretary, Ministry of Health vs. Aura & 13 Others [2024] KECA 1195 (KLR) on the contours of an arguable appeal and submitted that its intended appeal is arguable as it raises numerous arguable questions. 9.Regarding the nugatory aspect, Mr. Odegi submitted that the subject properties are the very securities whose intended realization forms the core dispute before the Court, and once sold, the applicant's equity of redemption shall be extinguished, and the substratum of the intended appeal shall cease to exist. According to counsel, if the orders of stay are not granted, the appeal will be reduced to an academic exercise. Counsel contended that the respondents' allegation of abuse of process is unfounded as they have failed to demonstrate that the parties, causes of action, and issues in the other proceedings are identical, and in any event, the exercise of a lawful right of appeal cannot, without more, constitute an abuse of the court process. Counsel appealed to us to allow the application with costs. 10.In opposition to the motion, Ms. Kinyanjui, learned counsel for the respondents adverted to rule 5(2)(b) of the Court of Appeal Rules, 2022, and the principles laid down in Stanley Kangethe Kinyanjui vs. Tony Ketter & 5 others (supra), and argued that the applicant has failed to satisfy the twin principles for the grant of an order staying execution pending appeal. 11.Turning specifically to the first limb, counsel for the respondents submitted that the intended appeal is not arguable because it is founded upon allegations regarding the validity of statutory notices, a matter which was comprehensively considered and determined by the learned Judge. 12.On the nugatory aspect, Ms. Kinyanjui cited the Supreme Court decision in Haki Na Sheria Initiative vs. Inspector General of Police & 2 Others [2021] KESC 22 (KLR) and submitted that the applicant has failed to demonstrate that the intended appeal would be rendered nugatory, as the properties were voluntarily offered as security and are subject to sale in the event of default. Additionally, counsel asserted that the applicant remains in default and has not taken any meaningful steps towards redemption, and in the event the intended appeal succeeds, the applicant's loss, if any, is quantifiable and capable of compensation by way of damages. The Court was therefore urged to dismiss the application with costs to the respondents. 13.The principles governing the discretionary exercise of the jurisdiction granted to this Court under rule 5(2)(b) of the Rules of the Court are settled. For an applicant to successfully move the Court for an order of stay of execution, an injunction or stay of proceedings, an arguable appeal must be disclosed, and in addition, the applicant must demonstrate that without an order of stay, the appeal will be rendered nugatory. These principles have been regurgitated in multiple decisions of this Court, and we only need to refer to Montague Charles Ruben & 9 Others vs. Peter Charles Nderito & Another [1989] KECA 70 (KLR) to highlight the principles thus:“In dealing with rule 5(2)(b) applicants, this Court exercises original jurisdiction and this has been so stated in a long line of cases decided by this Court. Once an applicant has properly come before the Court, the Court has jurisdiction to grant an injunction or make an order for a stay on such terms as the Court may think just. We have to apply our minds denovo (anew) on the propriety or otherwise of granting the relief sought. And as we have always made clear, this exercise does not constitute an appeal from the trial judge’s discretion to ours. In such an application, the applicant must show that the intended appeal is not frivolous, or put the other way round, he must satisfy the court that he has an arguable appeal.Secondly, it must be shown that the appeal, if successful, would be rendered nugatory: See Stanley Munga Githunguri vs. Jimba Credit Corporation Ltd Civil Application NAI 161 of 1988.” 14.On the first limb, this Court in Cabinet Secretary, Ministry of Health vs. Aura & 13 Others (Civil Appeal (Application) E565 of 2024) [2024] KECA 1195 (KLR) held that an arguable appeal is not one that must necessarily succeed, but one that raises a matter that is not frivolous, thus deserving further consideration by the Court in the main appeal. The applicant’s memorandum of appeal raises several grounds challenging the validity of the statutory notices, the propriety of service, alleged failure to comply with sections 90 and 96 of the Land Act, and whether the learned Judge correctly applied the principles for granting interlocutory injunctions. On their part, the respondents maintain that the learned Judge has already correctly determined these issues. 15.It has been held that an arguable appeal is not one that must eventually succeed. What an applicant is required to demonstrate is that the intended appeal or appeal is not frivolous and deserves the consideration of the Court. And, as was held in Stanley Kangethe Kinyanjui vs. Tony Ketter & 5 Others (supra), it is sufficient if a single bona fide arguable ground of appeal is raised. A perusal of the applicant’s pleadings filed in Court discloses that among the issues it desires to take up on appeal are whether the statutory notices served upon the applicant complied with the mandatory provisions of sections 90 and 96 of the Land Act and whether the learned Judge properly applied the principles governing the grant of interlocutory injunctions. It is not for us to assess these grounds against the ruling of the learned Judge, for that duty lies with the bench of the Court that will eventually be tasked with hearing the intended appeal. Ours is only to consider whether the issues raised are not frivolous and deserve substantive consideration by the Court. Looking at the issues proposed by the applicant, and considering the low threshold this Court adopts in determining whether or not an appeal is arguable, we are satisfied that the applicant has established that its intended appeal is arguable. 16.We now turn to the second limb which requires us to consider whether, were the intended appeal to eventually succeed, it would be rendered nugatory if the orders sought are not granted. In Haki Na Sheria Initiative vs. Inspector General of Police & 2 Others (supra), the Supreme Court explained what it means for an appeal to be rendered nugatory as follows:“On the nugatory aspect, the concern is whether what is sought to be stayed if allowed to happen is reversible; or if it is not reversible, whether damages will reasonably compensate the party aggrieved. See the decision of the Court of Appeal in Stanley Kangethe Kinyanjui vs Tony Ketter & 5 others Civil Application No 31 of 2012, [2013] eKLR.” 17.In determining whether there is likelihood that the intended appeal would be rendered nugatory should the applicant’s motion be declined, we commence by observing that the properties that are the subject of this application are charged securities. The principles guiding the issuance of stay orders or injunctions in such circumstances are now well established. Faced with an application similar to the one before us, this Court in Shah & Another vs. Diamond Trust Bank of Kenya Ltd & Another [2026] KECA 704 (KLR) held that:“Regarding the second limb, it is true that what is in dispute is the recovery, by way of the exercise of the respondent’s statutory power of sale, of the facility secured by the suit property. The value of the charged property is determinable. The mere allegation that a property tendered as security is matrimonial property does not automatically entitle an applicant to an injunction pending an appeal. If the applicants’ intended appeal succeeds, the remedies of restitution and damages are available to the applicants, and it is not contended that the respondent, a bank, will be unable to pay such damages.” 18.Again, in Muga Developers Limited vs. Equity Bank of Kenya Ltd & 4 Others [2022] KECA 453 (KLR), this Court held that:“As regards the nugatory aspect, while it is true that the 1st respondent may exercise its statutory power of sale, the applicant’s appeal cannot be said to be rendered nugatory. First, the applicant having offered the suit property as security, it has become a commercial entity that can be compensated in monetary value. Secondly, if the applicant is successful in the appeal, he would be entitled to damages and it is common knowledge that the 1st respondent is a reputable banking institution and would have no difficulties in paying damages.” 19.In the matter before us, the respondents averred and argued that: the properties were voluntarily offered as security and are subject to sale in the event of default; the applicant remains in default and has not taken any meaningful steps towards redemption; and, should the intended appeal succeed, the applicant can be compensated by way of damages. The applicant has not rebutted these arguments. Indeed, when the Court questioned counsel for the applicant during the hearing, he conceded that although the outstanding amount was contested, the applicant actually owed the 1st respondent money. In the circumstances, we agree with the respondents that should the intended appeal eventually succeed it will not be rendered nugatory.The respondent is a licensed financial institution, and it has not been demonstrated that it is not capable of compensating the applicant, if successful. 20.Having determined that the application does not meet the threshold for the grant of the orders sought, we need not go into the question as to whether the motion amounts to abuse of the Court’s process because of the alleged multiplicity of proceedings commenced by the applicant in regard to the same matter. 21.In conclusion, we find that since the applicant has failed to satisfy the twin principles for grant of relief under rule 5(2)(b), its motion must fail. The notice of motion dated 7th April 2026 is therefore dismissed with costs to the respondents. DATED AND DELIVERED AT ELDORET THIS 31ST DAY OF JULY 2026.M. GACHOKA C.Arb, FCIArb…………………………. JUDGE OF APPEALW. KORIR…………………………. JUDGE OF APPEALL. M. NDOLO…………………………. JUDGE OF APPEALI certify that this is a True copy of the originalSignedDEPUTY REGISTRAR