https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/12821

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT NAIROBI** **COMMERCIAL AND TAX DIVISION** **HCCOMM NO. E617 OF 2025** **GOLDLEAF KENYA LIMITED ............... PLAINTIFF/APPLICANT** **VERSUS** **BANK OF BARODA KENYA LTD….. DEFENDANT/RESPONDENT** **RULING** 1. Before this Court for determination is the Notice of Motion dated 21st November, 2025, seeking a temporary injunction restraining the Respondent, whether by itself, its servants, or agents, from exercising its statutory power of sale or otherwise dealing with Warehouses/Godowns Nos. 9, 10 and 11 erected on L.R. No. 11895/60, Mavoko Municipality, Machakos County, pending the hearing and determination of the suit. In the alternative, the Applicant seeks an order prohibiting any registration or change of ownership, possession, lease, user, title or any other interest in the said property during the pendency of the suit. The Applicant also seeks costs of the application. 2. The application is supported by the grounds appearing on its face and the supporting and supplementary Affidavits sworn on 21st November, 2025, and 27th January, 2026. 3. The Applicant, contends that on 29th December, 2023, the Respondent unlawfully debited Kshs. 20,000,000/- from its account and transferred the funds to Keppel Investments Limited without any valid payment instructions. The Applicant maintains that the transaction was undertaken contrary to the account mandate, the contractual terms governing the account, established banking practice, and the Respondent's fiduciary obligations. 4. The Applicant further avers that, at the time of the impugned transaction, only Kshs. 4,300,000/- was available under the overdraft facility. Therefore, the Respondent could not lawfully effect a transfer of Kshs. 20,000,000/- without extending additional credit and obtaining proper authority. 5. The Applicant states that the Respondent declined to reverse the transaction despite repeated demands from them as well as Keppel Investments Limited. Instead it demanded payment of the resulting debit balance together with interest, penalties and bank charges and commenced enforcement of the securities securing the facility. 6. The Applicant contends that the depletion of its working capital crippled its milling business, ultimately forcing it to cease operations and dispose of assets in an effort to mitigate its losses. 7. The Applicant further alleges that the Respondent compelled it to execute an agreement dated 27th May, 2024, acknowledging liability for the disputed Kshs. 20,000,000/- together with accrued interest and charges. It contends that the agreement was procured under duress and is therefore unconscionable, oppressive and unenforceable. It also accuses the Respondent of withholding Kshs. 10,000,000/- from the proceeds of asset sales contrary to prior agreements, thereby aggravating its financial difficulties. 8. Consequently, the Applicant alleges negligence, breach of contract, breach of fiduciary duty, and breach of trust on the part of the Respondent. It argues that the Respondent has no lawful basis to demand repayment of the disputed amount or exercise its statutory power of sale. 9. The Applicant states that unless restrained, the Respondent will proceed with the sale of the charged properties, occasioning irreparable loss. It therefore urges the Court to preserve the status quo pending the determination of the dispute on its merits. 10. The application is opposed through a Replying Affidavit sworn on 10th December, 2025, by Wilson Mwaura, the Respondent's Credit Controller. He confirms the existence of a longstanding banker-customer relationship and states that the Applicant had, since 2015, enjoyed various credit facilities secured by legal charges, debentures, personal guarantees and corporate guarantees from related entities, including Keppel Investments Limited. 11. The Respondent states that by a letter of offer dated 3rd August, 2017, the Applicant's overdraft limit was increased to Kshs. 125,000,000/- and additional securities were advanced. It further contends that the letter of offer dated 20th December, 2023, reviewed the existing facilities and introduced a fluctuation option enabling utilisation beyond the approved overdraft limit. According to the Respondent, the Applicant expressly approved that arrangement through a board resolution and had on several occasions utilised funds beyond the original limit without objection. 12. The Respondent disputes the Applicant's assertion that only jointly executed written instructions could authorise transactions. It contends that the account mandate permitted any director to issue instructions and that payment instructions had routinely been given through verified email addresses, creating an established course of dealing between the parties. 13. The Respondent states that the transfer of Kshs. 20,000,000/- from the Applicant's account to Keppel Investments Limited was duly authorised thus lawful. 14. The Respondent further avers that the Applicant subsequently ratified the transaction through execution of a letter of offer dated 27th May, 2024, and a board resolution acknowledging the amount as part of its indebtedness. It adds that the Applicant later utilised an additional Kshs. 6,250,000/- under the fluctuation arrangement, bringing the excess utilisation to Kshs. 26,250,000/-. 15. The Respondent maintains that subsequent requests for reversal of the transaction were prompted by an internal dispute among the Applicant's directors rather than any wrongdoing on its part. 16. The Respondent denies that the disputed transaction occasioned the collapse of the Applicant's business. It avers that the Applicant's financial difficulties predated the impugned transaction as the Applicant had been in default since 2021. That, as early as April 2022, the Applicant had informed the Respondent of its intention to dispose of assets owing to financial challenges. 17. The Respondent also denies allegations of duress, maintaining that the restructuring arrangements of 27th May, 2024, were voluntarily executed and supported by a board resolution. 18. It further states that the requisite statutory notices were duly issued and that its statutory power of sale had crystallised as a result of the Applicant's persistent default. Accordingly, it contends that the Applicant has failed to establish a prima facie case, irreparable harm or that the balance of convenience favours the grant of an injunction. Consequently, the Respondent urges the court to dismiss the application with costs. 19. The application was canvassed through written submissions. The Applicant's submissions are dated 27th January, 2026, while the Respondent's submissions are dated 8th April, 2026. ***Applicant’s submission*** 1. The Applicant identifies several substantive issues for determination at trial, including whether the overdraft facility was governed by the letter of offer dated 20th December, 2023, whether the impugned debit was authorised in accordance with the account mandate, whether the Respondent breached its contractual and fiduciary obligations, whether the Respondent was justified in declining to reverse the disputed transaction, whether the restructuring agreement dated 27th May, 2024, was procured through economic duress or undue influence, and whether the Applicant suffered loss as a consequence of the Respondent's actions. 2. The Applicant argues that the Respondent acted illegally, negligently and in collusion with third parties by processing an unauthorised debit which immediately placed the account beyond its approved overdraft limit. The Applicant maintains that the Respondent should not be permitted to benefit from its own alleged wrongdoing through the accrual of interest, penalties and eventual enforcement of securities founded upon a disputed debt. 3. On the principles governing interlocutory injunctions, the Applicant relies on Order 40, rules 1 and 2 of the Civil Procedure Rules and the decision in **Giella v Cassman Brown & Co. Ltd *[1973] EA 358,*** submitting that it has satisfied all the requirements for the grant of injunctive relief. 4. As to whether there is a prima facie case, the Applicant contends that the documentary evidence demonstrates that immediately prior to the impugned transaction, the overdraft facility remained within the sanctioned limit and it was the Respondent's unilateral and unauthorised debit which created the excess borrowing. It argues that the transaction was processed contrary to the express operating mandate governing the account. The Applicant therefore submits that there exist serious triable issues regarding the legality of the impugned debit and the resulting indebtedness. 5. On irreparable harm, the Applicant submits that unless restrained, the Respondent will proceed with the sale of the charged properties, including the three warehouses from which the Applicant previously conducted its business operations. It argues that such sale would extinguish its equity of redemption and permanently deprive it of assets which remain integral to any future revival of its business. According to the Applicant, the resulting loss transcends mere financial compensation and cannot adequately be remedied by an award of damages 6. Finally, the Applicant submits that the balance of convenience favours preservation of the status quo pending trial. It contends that the Respondent will suffer no prejudice if the securities remain preserved until the legality of the disputed debit is determined, whereas a sale conducted before trial may render the suit nugatory. The Applicant therefore urges the Court to grant the injunction sought in the interests of justice. ***Respondent submissions*** 1. The Respondent opposes the application and submits that the Applicant has failed to satisfy any of the principles governing the grant of an interlocutory injunction. 2. The Respondent argues that no prima facie case has been established because the relationship between the parties is contractual and governed by the various banking instruments voluntarily executed by the Applicant. It contends that the Applicant has failed to identify any specific contractual provision breached by the Respondent and instead relies upon unsubstantiated allegations of fraud, negligence and bad faith. 3. Relying on Section 107 of the Evidence Act and the decision in ***Gatirau Peter Munya v Dickson Mwenda Kithinji & 2 Others* [2014] eKLR**, the Respondent submits that the burden of proof rests upon the party making allegations and that the Applicant has not discharged that burden. It further relies on ***Mrao Ltd v First American Bank of Kenya Ltd & 2 Others [2003] eKLR***and***Nguruman Limited v Jan Bonde Nielsen & 2 Others [2014] eKLR*** to argue that no legal or contractual right of the Applicant has been shown to have been infringed. 4. The Respondent maintains that the impugned transaction was processed in accordance to the established course of dealing between the parties. It further contends that the Applicant subsequently acknowledged the disputed liability through a restructuring letter of offer and board resolution thereby affirming the indebtedness now being challenged. 5. On irreparable harm, the Respondent submits that the Applicant's alleged losses are purely commercial and readily quantifiable in monetary terms. It argues that should the Applicant ultimately succeed at trial, any loss suffered can adequately be compensated through an award of damages. The Respondent therefore contends that the second limb in ***Giella v Cassman Brown*** has not been satisfied. 6. With regard to the balance of convenience, the Respondent submits that it favours the bank because the Applicant voluntarily offered the charged properties as security for the facilities advanced. Relying on ***Andrew Muriuki Wanjohi v Equity Building Society & 2 Others [2006] eKLR*,** the Respondent argues that once property is offered as security, it becomes a commodity for sale in the event of default, and courts should not interfere with a lender's contractual and statutory rights in the absence of clear evidence of illegality. 7. The Respondent therefore urges the Court to dismiss the application with costs. ***Analysis and Determination*** 1. I have carefully considered the pleadings, affidavits, annexures and submissions filed by parties. Although the parties have raised numerous factual and legal questions concerning the operation of the overdraft facility, the validity of the impugned debit of Kshs. 20,000,000/=, the account operating mandate, the legality of the restructuring agreement dated 27th May, 2024, and the propriety of the Respondent's exercise of its statutory power of sale, the present application is interlocutory in nature. At this stage, the Court is not called upon to make definitive findings on those contested issues. The sole issue falling for determination at this stage is **whether the Applicant has satisfied the legal threshold for the grant of an interlocutory injunction pending the hearing and determination of the suit.** 2. The applicable principles are set out under Order 40, rule 1 (a) of the Civil Procedure Rules and the case of ***Giella versus Cassman Brown and Company Limited (1973) E.A 385***, at page 360 where the court held as follows: - *“****The conditions for the grant of an interlocutory injunction are now, I think, well-settled in East Africa. 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****.”* 1. In the case of ***Mrao Limited –versus- First American Bank of Kenya and 2 Others (2003) KLR 125***, the Court of Appeal in determining what amounts to a prima facie case stated as follows: - *“****A prima facie case in a Civil Case includes but is not confined to a “genuine or arguable” case. It is a case which on the material presented to the court, a tribunal properly directing itself will conclude there exists a right which has apparently been infringed by the opposite party as to call for an explanation or rebuttal from the latter.”*** 1. It is equally settled that in determining whether a prima facie case has been established, the Court must refrain from conducting a mini trial or making definitive findings on contested facts. This position was set out in ***Nguruman Limited vs Jan Bonde Nielsen CA No. 77 of 2020*** where the Court of Appeal stated that at the interlocutory stage, the court is only required to determine whether the Applicant has demonstrated an apparent right which has been infringed or is threatened with infringement. 2. The Applicant’s case is anchored on the assertion that the Respondent unlawfully debited Kshs.20,000,000/= from its overdraft account on 29th December, 2023, without lawful instructions and in breach of the express account operating mandate. According to the Applicant, instructions affecting the account could only be acted upon if executed in accordance with the established signatory requirements. 3. The Applicant further contends that in effecting the transfer the Respondent extended additional credit outside the agreed contractual framework. It is therefore the Applicant's case that the Respondent breached its contractual, fiduciary and statutory obligations and that the disputed transaction is the genesis of the indebtedness now sought to be enforced. 4. The Respondent disputes the allegations in their entirety. It maintains that throughout the banking relationship instructions transmitted through verified email addresses had formed part of the established course of dealing between the parties. The Respondent further contends that the Applicant acknowledged and regularised the indebtedness through a board resolution and execution of a restructuring letter of offer. 5. The Applicant challenges the legitimacy of the very transaction that is alleged to have generated or substantially increased the indebtedness. The Applicant's case is therefore not confined to a contest over accounts or interest calculations; rather, it attacks the legal foundation upon which the Respondent now seeks to exercise its statutory power of sale. 6. From the material presently before Court, several substantial questions emerge, these include whether the account operating mandate permitted payment instructions by email; whether the alleged email instruction complied with the parties contractual arrangements; whether the Respondent acted within its authority in processing the impugned transfer; whether the fluctuation clause relied upon by the Respondent permitted transactions beyond the available overdraft limit; whether the restructuring agreement constituted voluntary ratification of the disputed transaction or was executed under circumstances amounting to economic duress; and whether the Respondent acted properly in declining to reverse the transaction after objections were raised. These are not frivolous issues. They go directly to the legality of the impugned debt, the validity of the outstanding indebtedness claimed by the Respondent and consequently, the propriety of the Respondent's intended exercise of its statutory power of sale. 7. I am therefore satisfied that the Applicant has demonstrated more than a merely arguable case. The evidence presently before Court raises genuine and substantial questions which can only be conclusively resolved at trial and are sufficient to establish a prima facie case within the meaning of ***Mrao Ltd v First American Bank of Kenya Ltd & 2 Others.*** 8. Having found that a prima facie case has been established, I now turn to the question whether the Applicant has demonstrated that it is likely to suffer irreparable injury incapable of compensation by damages if the injunction is not granted. The Respondent submits that the dispute is purely commercial and that any loss suffered by the Applicant can readily be quantified and compensated through damages. 9. The Applicant's complaint is not simply that the Respondent is exercising its statutory power of sale. Rather, it contends that the Respondent's own unlawful conduct created or substantially inflated the indebtedness which has now triggered the exercise of that statutory power. In the event those allegations are ultimately established at trial yet the charged properties have been sold, the Applicant's equitable right of redemption would have been permanently extinguished. 10. The Court notes that the very indebtedness giving rise to the exercise of the statutory power of sale is seriously contested on grounds of illegality and lack of authority. Therefore, if the securities were sold and the Applicant subsequently succeeded at trial, its equity of redemption would already have been irretrievably extinguished and an award of damages may not adequately restore the Applicant's proprietary rights. In those circumstances, I am persuaded that the Applicant has sufficiently demonstrated that the intended sale may occasion prejudice incapable of being adequately remedied through damages alone. 11. Finally, the balance of convenience, tilts in favour of preserving the status quo pending determination of the suit. Preservation of the charged properties will not extinguish the Respondent's rights to the securities should it ultimately succeed at trial. On the other hand, permitting the sale to proceed before determination of the legality of the disputed debt may render the entire suit nugatory if the Applicant ultimately succeeds. The interests of justice therefore favour maintaining the existing state of affairs pending the hearing of the suit. 12. Consequently, I find that the Notice of Motion dated 21st November, 2025, has merit. Accordingly, I make the following orders; 1. **A temporary injunction is hereby issued restraining the Respondent/Defendant, whether by itself, its servants, agents or otherwise howsoever, from advertising for sale, selling by public auction or private treaty, transferring, alienating, disposing of or in any other manner dealing with Warehouses/Godowns Numbers 9, 10 and 11 erected on L.R. No. 11895/60, Mavoko Municipality, Machakos County, or any other securities provided by the Applicant, pending the hearing and determination of the suit.** 2. **In view of the order granted in (a) above, prayer (d) of the application is unnecessary.** 3. **Costs of the application shall be in the cause.** 13. Orders accordingly. ***Delivered, Dated and Signed virtually this 4th day of August, 2026*** **RHODA RUTTO** **JUDGE** **Court Assistant: Wabwire**