https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/11409

Glee Hotel Ltd v Equity Bank Kenya Ltd & another (Insolvency Petition E045 of 2026) [2026] KEHC 11409 (KLR) (Commercial and Tax) (23 July 2026) (Ruling) Neutral citation: [2026] KEHC 11409 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Insolvency Petition E045 of 2026 FG Mugambi, J July 23, 2026 Between Glee Hotel Limited Applicant and Equity Bank Kenya Ltd 1st Respondent Kamal Anantroy Bhatt 2nd Respondent Ruling Background and Introduction 1.The genesis of this matter was the appointment of the 2nd Respondent as Administrator of the Applicant Company by the 1st Respondent Bank, with effect from 6th July 2026. Pursuant to section 537 of the Insolvency Act, the Respondents duly filed a Notice of Appointment of the Administrator. 2.In response to the notification, the Applicant filed a Notice of Motion application dated 7th July 2026, through which it sought several orders. In substance, the Applicant sought to stay or suspend the Notice of Appointment of the Administrator and to restrain him from exercising any of the functions, powers, or duties of an administrator under the Insolvency Act. It further sought interim injunctive orders restraining the Respondents from advertising the Notice of Appointment or from taking possession of, disposing of, charging, leasing, transferring, or otherwise interfering with the Applicant's assets, undertaking, business, bank accounts, or management. 3.The Applicant also sought an order directing that the powers and management of the company remain with its duly constituted Board of Directors, and for the Administrator to be restrained from exercising any powers over it. On the substantive hearing of the application, the Applicant sought a final order terminating, setting aside, or suspending the Administrator's appointment altogether, together with the accompanying Notice of Appointment, Statutory Declaration, and Statement of Facts. 4.In the alternative, it sought directions under the Court's inherent jurisdiction, or under section 533(1)(f) of the Insolvency Act, permitting the Board to continue managing the company's day-to-day operations jointly with, or under the supervision of, the Administrator, pending further orders. 5.It is this application that prompted Notices of Preliminary Objection from both Respondents. The 1st Respondent's dated 7th July 2026 and the 2nd Respondent's dated 8th July 2026. I have read and considered the written submissions filed by all the parties. I must, however, note that the Applicant's submissions were filed out of time, only a day before the date fixed for this Ruling, which is regrettable. Notwithstanding this lapse, and in the interest of substantive justice and the need to determine all the issues arising with finality, I have proceeded to consider all the submissions filed by the parties in arriving at this decision. 6.Taken together, the Respondents raise three principal objections. First, they contend that none of the provisions cited by the Applicant as the basis for the application, that is, sections 1A, 1B, and 3A of the Civil Procedure Act, sections 522, 530, 531, 533, 536, 537 and 560 of the Insolvency Act and Regulation 102 of the Insolvency Regulations, 2016, confers jurisdiction on the Court to grant the restraining and injunctive orders sought, rendering the application fatally defective and incompetent. 7.Second, the Respondents challenge the capacity of the deponent of the supporting affidavit, MARY WAMBUI MUNGAI, asserting that she is neither a shareholder nor a director of the Applicant Company, contrary to what she avers in the application and depones in her affidavit, and that she therefore lacks the locus standi to file the application or swear the supporting affidavit. 8.Third, the Respondents contend that the matter is res judicata, relying on the consent judgment entered by Ado, J in Glee Hotel Limited & Mary Wambui Mungai V Equity Bank (Kenya) Limited, High Court Commercial Case No. E846 of 2025, delivered on 4th June 2026, which held that upon expiry of the specified 30-day period, or upon default of the stipulated condition, whichever occurred first, the Bank would be at liberty to exercise its statutory remedies and all other rights under the consent judgment, the charge instruments, and the law, without the necessity of seeking further leave of court. 9.On this basis, the Respondents argue that the present insolvency cause was filed solely to notify the Court of the Administrator's appointment under sections 534 and 537 of the Insolvency Act and Regulation 102 of the Insolvency Regulations, and that the Court lacks jurisdiction in these proceedings to grant an injunction or to terminate the Administrator's appointment. 10.They further submit that the application is incurably defective for seeking interim relief untethered to any pending suit, relying on the Court of Appeal's decision in Geoffrey Ndungu Theuri V Law Society of Kenya, [1988] eKLR for the principle that interim remedies cannot be granted in the absence of a substantive suit between the parties. Analysis and Determination 11.Before venturing into the substantive objections raised herein, I do find it prudent to first address the threshold issue of the preliminary objections. It is the Applicant's contention that the objections premised on res judicata and locus standi are improperly framed as such, in that their determination necessarily calls upon the Court to make findings on disputed questions of fact. In particular, the Applicant contends that it falls to be determined, as a matter of fact, whether the issues litigated and canvassed in HCCOMM No. E846 of 2025 are on all fours with those raised in the present matter, and further, whether Mary Wambui Mungai was indeed clothed with the requisite authority to swear the Supporting Affidavit to the Application dated 7th July 2026. 12.Having considered the totality of the record before me, it is my considered view that neither Mukisa Biscuit Manufacturing Co Ltd V West End Distributors, [1969] EA 696 nor Oraro V Mbaja, [2005] 1 KLR 141 stands as authority for the proposition that a preliminary objection is barred merely because the Court is called upon to have regard to some facts. Every point of law properly so called, including questions of jurisdiction or limitation, both of which were cited in Mukisa Biscuits, [supra] as paradigm examples of pure points of law, necessarily requires that much. What is barred, rather, is an objection that is obscured by, or entangled with, contested factual details that fall to be established through the ordinary processes of evidence. 13.Facts that are simply read off an undisputed record do not fall under the latter. A court may properly look at pleadings and documents already on record when determining a preliminary objection (Omondi V National Bank of Kenya, [2001] KLR 579). It is also trite that res judicata pleas have repeatedly been treated as competent preliminary objections where the earlier proceedings were placed before the court or their content was undisputed (see: Oliver Onserio Nyanducha V Josephine Nyanchera, [2016] eKLR). Conversely, such pleas have failed as preliminary objections where the earlier record was never placed before the court, or what it actually decided remained itself contested. 14.In this case the consent judgment of 4th June 2026 in HCCC E846/2025, its terms vis-à-vis and the date of the Administrator's appointment being 6th July 2026 are undisputed by either side. On locus standi, the same case applies with respect to the undisputed CR12 and the subsequent board resolution filed via a Further Affidavit sworn on 9th July 2026. The Applicant’s contention therefore fails and I do find that the Notices of Preliminary Objection are properly before the Court. I shall proceed to determine the substantive objections. i. The provisions under which the application was brought: 15.The Applicant anchors its Notice of Motion on sections 1A, 1B and 3A of the Civil Procedure Act and sections 522, 530, 531, 533, 536, 537 and 560 of the Insolvency Act together with Regulation 102 of the Insolvency Regulations, 2016. The Respondents contend that none of these provisions confers jurisdiction on this Court to grant the restraining and injunctive orders sought, rendering the application incompetent in its entirety. 16.It is their case that this insolvency cause was filed solely to notify the Court of the Administrator's appointment under sections 534 and 537, such that the Court has no jurisdiction in these proceedings to injunct or terminate that appointment. 17.First things first, Sections 530, 531 and 533 of the Insolvency Act fall within Division 3 of Part VIII, which governs the appointment of administrators by the Court. That is not the appointment route engaged here. The 2nd Respondent was appointed by the 1st Respondent Bank as holder of a floating charge, that is, an out-of-court appointment falling within Division 4 of Part VIII (sections 534–540), not by any court order. 18.The above provisions are therefore, on their face, addressed to a different mode of appointment altogether. Section 522 merely recites the objectives of administration and confers no jurisdiction of any kind. Section 536 goes to a substantive condition on the validity of an appointment and is therefore potentially relevant to the merits, but not itself a jurisdiction-conferring provision. Section 537 is a notification provision. Section 560 imposes a moratorium protecting the company and administration from other legal process. 19.The Respondents are therefore correct in noting that the specific provisions cited by the Applicants do not, on a fair reading, provide a jurisdictional basis for the injunctive and termination orders sought. Be that as it may, the true question is not whether the cited provisions confer jurisdiction, but whether jurisdiction to grant this species of relief exists in the Act at all, since a preliminary objection is properly directed at the existence of jurisdiction, not merely the accuracy of citation. 20.On that broader question, the Insolvency Act does vest this Court, as the designated insolvency court, with jurisdiction over challenges of the character sought by the Applicant. Sections 591 and 592 expressly provide that an administrator's conduct of the administration can be challenged and empower the Court to examine that conduct. Section 604 empowers the Court to remove an administrator from office. 21.This distinction matters because it is well settled that jurisdiction is a creature of the Constitution or statute, and cannot be conferred, enlarged, or diminished by the parties' own characterization of it (Samuel Kamau Macharia & Another V Kenya Commercial Bank Limited & 2 Others, [2012] eKLR). I would therefore agree with the Applicants that where jurisdiction genuinely exists in the substantive law governing the cause before the Court, a party's mis-citation, or even total omission, of the correct enabling provision is ordinarily a defect of form, not of jurisdiction, which is curable, in an appropriate case, rather than fatal in limine, particularly bearing in mind Article 159(2)(d) of the Constitution and the general judicial reluctance to allow technicalities to defeat substantive determination of disputes. As such, I decline to strike out the application on this ground alone. ii. Locus Standi: 22.The Respondents contend that Mary Wambui Mungai, the deponent of the Supporting Affidavit to the Application dated 7th July 2026, is neither a director nor a shareholder of the Applicant company, contrary to what she avers therein, and that she is, on that account, bereft of the capacity to file the Application or to swear the affidavit on the Applicant's behalf. The fact of status within the Company is not denied by the Applicant, who instead takes the position that the question does not properly fall for determination as a preliminary objection. The Applicant proceeds to point to a board resolution passed by Evelyn Nyambura Mungai, the sole director and shareholder of the Company, which according to them, had cured the earlier default. 23.The said resolution expressly authorizes Mary Wambui Mungai, who is described as “a person conversant with the affairs of the Company”, to swear, sign, verify and file affidavits and pleadings, to represent the Company in court, to instruct advocates, and to conduct negotiations, on the Company's behalf, in respect of these very proceedings. The question that arises, therefore, is whether such delegated authority suffices in law to cure the deficiency complained of. 24.Order 4 Rule 1(4) of the Civil Procedure Rules requires that a verifying affidavit for a corporate party be sworn by an officer of the company duly authorized. Read generously, the authority to swear an affidavit or institute proceedings on a company's behalf is not confined to directors or shareholders. It extends to any person to whom the board has delegated that function, provided the delegation is properly evidenced. This was the approach taken in Peeraj General Trading & Contracting Company Limited, Kenya & Another V Mumias Sugar Company Limited, [2016] KEHC 8119 (KLR) where a General Manager's authority to swear affidavits, conferred by a board resolution, was accepted as sufficient. 25.Equally well settled is that want of such authority at the time of filing is not fatal in the way the Respondents suggest. It is a curable procedural defect, not a jurisdictional one which means that proceedings instituted without proper authority may be ratified, and a board resolution establishing authority may be filed at any time before the matter is fixed for hearing, without necessarily invalidating the suit or the affidavit filed in the interim. This resonates with the pronouncement in Peeraj General Trading (supra) and Kaiser Investments Limited V Hua Run Company Limited & 3 Others [2021] KEHC 6598. 26.The Applicant contends that the objection has, by virtue of the board resolution, now been rendered moot. I note that no challenge has been mounted against Evelyn Nyambura Mungai's authority, as sole director, to pass the said resolution. That notwithstanding, I do not wish to be understood as treating the original false averment as a matter of no consequence. 27.It is clear that Ms. Mary Wambui Mungai swore, on oath, to a status she never in fact held. This is a matter that goes to the candour of the supporting affidavit, and it falls upon this Court to call out that conduct and to remind the Applicant that where a party invokes the equitable and discretionary jurisdiction of the Court, as the Applicant does here in seeking interlocutory injunctive relief, the requirement of utmost good faith remains a live and material consideration. That observation stands quite apart from, and is not to be conflated with, the question of capacity. The objection founded on locus standi is, accordingly, not sustained. iii. Res Judicata: 28.The Respondents contend that the question of the 1st Respondent's entitlement to exercise its statutory remedies is res judicata by virtue of the consent judgment recorded by Ado J. on 4th June 2026 in Glee Hotel Limited & Mary Wambui Mungai V Equity Bank (Kenya) Limited, HCCC No. E846 of 2025, which conditionally confirmed that the Bank would be at liberty to exercise its statutory remedies without further leave of court upon default. 29.The doctrine of res judicata is codified at section 7 of the Civil Procedure Act. The Supreme Court has restated its constituent elements which must be established conjunctively, not disjunctively in, Dina Management Ltd V County Government of Mombasa & 5 Others, [2023] KESC 30 as follows:“(a)a former judgment or order that was final;(b)that judgment or order having been on the merits;(c)rendered by a court of competent jurisdiction over the subject matter and the parties; and(d)identity of parties, subject matter, and cause of action between the two proceedings (John Florence Maritime Services Limited & Another V Cabinet Secretary, Transport & Infrastructure & 3 Others, [2021] KESC 39).” 30.Elements (a) and (c) are not seriously in dispute since the consent order was final and the High Court was plainly a court of competent jurisdiction over the parties and the subject matter of the facility dispute. Element (b), whether a consent judgment qualifies as a determination ‘on the merits’ is generally settled that a consent judgment, once recorded, has the same binding and conclusive effect as a judgment following a full trial, and stands unless set aside on recognized grounds (see the established line of authority following Flora N. Wasike V Destimo Wamboko, [1988] eKLR and Brooke Bond Liebig (T) Ltd V Mallya, [1975] EA 266). 31.It is element (d), the identity of subject matter and cause of action, that fails, and decisively so. As commonly pointed out and acknowledged, at the time the consent terms were recorded before Ado J., the Administrator had not yet been appointed. The consent order determined only the question of when the Bank would be at liberty to resort to its statutory remedies. It follows that the Judgment could not, as a matter of logical necessity, have adjudicated upon the issues that are now raised in the Application touching on the Administration, such as the appointment or conduct of the Administrator, for the simple reason that the election to place the Company under administration had not yet been made at the time the Judgment was rendered. 32.It is an uncontroverted fact that the Administrator's appointment took effect a full month after the consent judgment was recorded. In the circumstances, the objection founded on res judicata must equally fail. iv. The injunction not being founded on a suit: 33.The Respondents' objection proceeds on the premise that an injunction is, by its very nature, an interlocutory remedy incidental to a pending suit, and that, this insolvency cause having been filed solely for the purpose of notifying the Court of the Administrator's appointment, no injunction can competently be anchored thereto. This proposition is advanced by reliance on the decision in Geoffrey Ndungu Theuri V Law Society of Kenya, [1988] eKLR. 34.The Applicant takes issue with this submission, contending that what is before the Court is not an application for an interlocutory injunction under Order 40 of the Civil Procedure Rules, of the kind that must of necessity be anchored to an ordinary civil plaint, and that the authorities relied upon by the Respondents simply do not speak to an application brought within an existing insolvency cause under the Insolvency Act. For this proposition, the Applicant relies on Mayaka (suing on his own behalf and 53 others) V Rao (As Administrator of General Printers Ltd); General Printers Limited (Interested Party) (Under Administration), [2022] KEHC 3384 (KLR). 35.I agree with the submission that Geoffrey Ndungu Theuri, [supra] concerned a civil injunction sought under the general regime of Order 40 of the Civil Procedure Rules. That regime, and the principle that an injunction cannot be granted in a vacuum divorced from a substantive cause, is sound as far as it goes. The objection raised in this case does not survive scrutiny once the distinct statutory character of insolvency proceedings is properly appreciated. 36.It is my considered view that the Insolvency Act does not simply adopt the procedural framework of the Civil Procedure Rules by way of silent incorporation, but rather establishes its own, self-contained procedural universe through the operation of sections 591, 592 and 604 thereof. Of particular significance is section 692, which independently empowers the Court to grant injunctions in certain specified circumstances. That power is not couched in terms ancillary to a pending suit at all. Rather, it is engaged wherever the Court is satisfied that a person has engaged, or is threatening to engage, in conduct constituting a contravention of, or a failure to comply with, the provisions of the Act. 37.I make this observation because it seems to me that the character of an insolvency cause of this kind cannot be properly appreciated if one insists on measuring it against the template of an ordinary civil suit. A suit, in the conventional sense, is litigation from its very first breath. An insolvency cause commenced by notification under sections 534 and 537 is nothing of the sort. It does not open as an adversarial proceeding at all. It opens, quite literally, as a notice to the Court that a state of affairs has changed and that an administrator has been appointed over a company. At that point there is no plaintiff, no defendant, and no dispute for the Court to try. The cause is, in that sense, dormant. It exists as a docket under a single cause number, but it carries no litigious content of its own until something happens within it. 38.It is only when a party such as the company, the administrator, a creditor, or any other person with a recognized interest invokes one of the powers the Act reserves to the Court, that the cause acquires an adversarial character for the first time. 39.Mayaka (supra), is directly instructive in this regard. That decision established that an injunction sought under the Insolvency Act's own framework is not the same juridical creature as an Order 40 injunction, and is not parasitic on a conventional suit. I agree with the approach taken by the Court (Mabeya J) in which the Court struck out a plaint and an application for injunctive relief arising from insolvency proceedings holding instead that: ‘the plaintiffs should have instituted the current proceedings within Insolvency Cause No. HCCOMMIP E009 of 2021 In the Matter of General Printers Ltd’. 40.I therefore do not accept that the absence of a suit is fatal to the competence of an injunction sought under the insolvency framework. v. Any other applications being hosted in the present insolvency cause: 41.From the decision in Mayaka (supra), it is clear that this point resolves in the Applicant's favour. The weight of authority holds that matters relating to the administration of a company under the Insolvency Act must be brought by application within the existing insolvency cause, not commenced as a fresh suit. In Mark Properties Limited V Coulson Harney LLP Advocates; Le Mac Management Company Limited & Another, [2021] eKLR, Majanja J. held that such issues fall to be dealt with before the court seized of the insolvency cause. 42.The sui generis nature of the present administration proceedings confirms that there was never, at the point of notification, intended to be a suit properly so called. It is my view that the insolvency cause was always designed to remain open, so as to receive successive applications as and when disputes arose over the life of the administration, and to continue to do so for so long as the administration itself subsists. 43.This determination bears directly on the 2nd Respondent's own application. If, as the Respondents contend, this cause cannot host anything beyond a bare notification, then, their own application, which has also been filed within the very same cause, would be equally incompetent. The 2nd Respondent's own resort to these proceedings is, if anything, a concession that the cause is a proper forum for such applications, and it materially undercuts the objection now raised against the Applicant's use of that same forum. Disposition 44.Accordingly, the Preliminary Objections dated 7th July 2026 and 8th July 2026 are dismissed with costs. DATED, SIGNED AND DELIVERED AT NAIROBI THIS 23RD DAY OF JULY 2026.F. MUGAMBIJUDGEDelivered in presence of:Mumia & Ms Musando h/b for Prof Ojienda for the applicantMunyao for the administratorOndieki & SC K Kimani for the 1st respondentCourt Assistant: Lillian