https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/8099

Muraguri & another v Co-operative Bank of Kenya Ltd (Commercial Case E002 of 2025) [2026] KEHC 8099 (KLR) (Commercial and Tax) (10 June 2026) (Ruling) Neutral citation: [2026] KEHC 8099 (KLR) Republic of Kenya In the High Court at Nyandarua Commercial and Tax Commercial Case E002 of 2025 KW Kiarie, J June 10, 2026 Between Chrispo Njoroge Muraguri 1st Plaintiff Moppax Link Enterprises Ltd 2nd Plaintiff and Co-Operative Bank Of Kenya Ltd Respondent Ruling 1.The plaintiffs/applicants moved the court through a Notice of Motion dated the 17th day of December 2025. The application is brought under sections 90 (2) (a) and (b)and section 97 of the Land Act, sections 3 and 3A of the Civil Procedure Act, Order 40 Rule 1 & Order 51 of the Civil Procedure Rules. They are seeking the following orders:a.That this application be certified as urgent and be heard ex parte in the first instance.b.That pending the hearing and determination of this application inter parties, this honourable court be pleased to issue an order of temporary injunction restraining the respondents either by themselves, their employees, servants and or agents from advertising for sale, selling by way of public auction, private treaty or in any other manner whatsoever, transferring, alienating, registering any transfer, executing a transfer as a chargee or in any other manner whatsoever dealing with all that parcel of land known as Title Number Nyandarua/South Kinangop/5445 either by way of transfer, sale, gift, charge, and or mortgage.c.That pending the hearing and determination of this suit, this honourable court be pleased to issue an order of temporary injunction restraining the respondents either by themselves, their employees, servants and or agents from advertising for sale, selling by way of public auction, private treaty or in any other manner whatsoever, transferring, alienating, registering any transfer, executing a transfer as a chargee or in any other manner whatsoever dealing with all that parcel of land known as Title Number Nyandarua/South Kinangop/5445, either by way of transfer, sale, gift, charge, and or mortgage.d.That the costs of this application be provided for. 2.The application was premised on the following grounds:a.The defendant approved and offered a development facility of Kshs. 20,143,262 to the 2nd plaintiff for the specific and disclosed purpose of developing a petrol station on title Number Nyandarua/South Kinangop/5445, which property is registered in the name of the 1st plaintiff, and was knowingly accepted by the defendant as third-party security.b.The said facility was expressly structured to be disbursed in tranches, and the defendant was at all material times aware that completion of the petrol station project, and the generation of income to service the facility, depended on progressive drawdowns of the approved loan.c.Pursuant to the facility, the defendant permitted an initial drawdown of Kshs. 7,029,208 only, which sum was manifestly insufficient to complete the project and was advanced on the understanding that further tranches would be released subject to compliance with agreed conditions.d.The 2nd plaintiff utilized the initial drawdown strictly for the intended development and undertook substantial construction works on the suit property, which remain incomplete solely due to lack of further funding.e.Despite the plaintiffs' compliance with the facility requirements and in the absence of any material default at the time, the defendant without lawful, rational or cogent justification refused to release the balance of the approved facility, thereby frustrating the commercial purpose of the loan.f.The defendant thereafter demanded repayment of the initial drawdown and issued statutory notices under sections 90 and 96 of the Land Act, 2012, notwithstanding that the inability to complete the project and the alleged default arose directly and materially from the defendant's refusal to disburse the balance of the facility.g.By withholding further disbursements and subsequently invoking its statutory power of sale, the Defendant has effectively engineered a default and now seeks to benefit from its own conduct, which conduct is unfair, oppressive and unconscionable.h.The Defendant's intended exercise of its statutory power of sale in the circumstances of this case is not a bona fide enforcement of security, but an inequitable and disproportionate response that offends the principles governing the exercise of a chargee's statutory remedies.i.The plaintiffs have raised serious and weighty triable issues for determination by this honourable court, including whether the defendant lawfully exercised its contractual discretion, whether the alleged default is legally sustainable, and whether the statutory power of sale is being exercised in good faith.j.Unless restrained, the defendant's actions will result in the loss of the suit property and the destruction of substantial development already undertaken, thereby occasioning irreparable loss and rendering the suit nugatory.k.The plaintiffs have established a prima facie case with a probability of success, stand to suffer irreparable harm, and the balance of convenience overwhelmingly favours preservation of the status quo pending the hearing and determination of this suit.l.This honourable court is vested with jurisdiction under section 103 of the Land Act, 2012, to grant relief against the exercise of statutory remedies where such exercise is unfair, unconscionable or oppressive, as is demonstrably the case herein. 3.The respondents opposed the application on the following grounds:a.The applicant approached the respondent bank herein for a mortgage facility of Kshs. 20,143,262b.The total construction cost was Kshs. 25,164,385.78, and the customer was therefore required to inject their equity contribution of Kshs. 5,021,153.78 is the difference between the loan funds and the total project costs.c.The bank's construction facilities are disbursed in tranches owing to the nature of the construction. The tranches are guided by the drawdown schedule and or loan disbursement schedule prepared by the Customer’s Quantity Surveyor.d.After the disbursement of the first tranche, we held a meeting with the customer in our offices on 3/12/2024 and went through the drawn schedule to make him fully aware of the expected milestones.e.That whereas it is true that the loan facility was to be disbursed in tranches, the release of each tranche was pegged on the satisfaction by the customer (applicant) of the provisions/requirements in the disbursement schedule and a favourable Quantity Surveyor report that funds had been utilized as required in the contracted documents.f.That failure to comply with the above does not entitle the customer to the release of the 2nd tranche.g.The allegations by the applicant that the disbursed funds in the 1st tranche were properly utilized in the project fully are contradicted by the report of the project Quantity Surveyors, which shows a departure from the disbursement schedule and diversion of funds.h.In view of the said repayment default, it is legally sound for the bank to exercise its statutory power of sale.i.The applicant has not come to court with clean hands. 4.Any party requesting a temporary injunction before the hearing of the case must meet the criteria outlined in Giella v Cassman Brown & Company Limited [1973] EA 358. The court stated: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. 5.After reviewing the application and submissions from both parties, I understand the need for caution to avoid addressing disputed issues. Focusing on the core issues of the case is risky. In my view, if the applicants' requested orders are denied, the hearing might be pointless, and they could suffer irreparable harm that cannot be remedied by money. 6.The application is therefore allowed. Costs will abide with the outcome of the suit. DELIVERED AND SIGNED AT NYANDARUA, THIS 10TH DAY OF JUNE 2026.KIARIE WAWERU KIARIEJUDGE