https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/10150

**THE REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA** **AT NAIROBI** **COMMERCIAL AND TAX DIVISION** **HCOMM NO. 396 OF 2014** NITI DISTRIBUTORS LIMITED………………………………….….PLAINTIFF VERSUS OCCIDENTAL INSURANCE COMPANY LIMITED………….…DEFENDANT **RULING** 1. There are two Notice of Motion applications for determination. The first one is dated 5th November 2025 and the second one is dated 11th November, 2025. They were filed by the defendant, hereinafter referred to as **‘Occidental’** and by the plaintiff, hereinafter referred to as **‘Niti’**, respectively. 2. In the first application by **Occidental**, it was filed under Order 50 Rules 1 and 3 of the Civil Procedure Rules, 2010 and Section 91 of the Civil Procedure Act. It seeks orders to have **Niti** pay the sum of Kshs.5,000,000/=, with interest at Court rates from 25th July 2019, until payment in full. It also seeks to have the costs awarded to **Niti** in **MCCOMMSU No. E238 of 2025,** be set off from the sum of Kshs 5,000,000/=. 3. **Occidental’s** application is premised on the grounds set out on the face of it, and the supporting affidavit sworn on 5th November 2025 by Mr. Michael Shisia, its Legal Officer. Mr. Shisia deposed that Judgment was delivered in this matter on 7th February 2019 in favour of **Niti**, which had sued for indemnity of goods allegedly stolen from its premises on 30th May 2013, in the sum of Kshs.23,013,842.00. He averred that **Occidental** lodged an Appeal to the Court of Appeal and also filed Notice of Motion application seeking stay of execution. 4. He deposed that the application was allowed on condition that **Occidental** pays Kshs.5,000,000/= and issues a Bank Guarantee of Kshs. 12,500,000/=, which it complied with on 27th July 2019. 5. Mr. Shisia stated that the Court of Appeal delivered its Judgment on 24th January 2025, in favour of **Occidental** and set aside all consequential Orders. He urged this Court to order for restitution of the sum of Kshs.5,000,000/= paid as security to be remitted, since **Niti** has refused and/or ignored to do so. 6. Mr. Shisia stated that **Occidental** filed a case, being **MCCOMMSU E238 of 2025** demanding payment of the sum of Kshs.5,000,000/= which was withdrawn with costs to **Niti**. He urged this Court to allow **Niti** to set off the costs awarded in the lower Court suit, from the sum of Kshs.5,000,000/= and pay the balance. He urged this Court to allow the application in the interest of justice. 7. The application was opposed vide the replying affidavit sworn on 12th November 2025 by Mr. Manish Shah. Mr. Shah averred that **Occidental** did not disclose to the Court that **Niti** had lodged an Appeal to the Supreme Court through a Notice of Appeal dated 7th February 2025. He further averred that **Occidental** had filed a suit being **MCCOMMSU E238 of 2025**,to which it had filed a defence and an application to strike out the suit for being defective. He stated that **Occidental** conceded that the suit was fatally defective and withdrew the entire suit. He argued that the application by **Occidental** is an abuse of the Court process since it ought to have settled the costs ordered in the withdrawn suit**.** 8. In the second application by **Niti**, dated 11th November 2025, it was filed pursuant to Sections 1A, 1B, 3A and 6 of the Civil Procedure Act and Order 25 of the Civil Procedure Rules, 2010. It seeks to stay the proceedings in **MCCOMMSU E238 of 2025** and for orders that **Occidental** pays the costs in the said suit,before prosecuting its application dated 5th November 2025. 9. The application dated 11th November 2025 is premised on the grounds on the face of it, and the supporting affidavit of Mr. Manish Shah sworn on 12th November 2025. Mr. Shah reiterated the averments contained in the replying affidavit to the application by **Niti**, dated 5th November 2025. 10. He stated that **Occidental** had filed **MCCOMMSU E238 of 2025,** to which **Niti** filed a defence and an application to strike out the said suit, which it withdrew. He stated that the application by **Occidental** dated 5th November 2025 is an abuse of Court process, and it should not be determined until costs are paid to **Niti** in **MCCOMMSU E238 of 2025**. Mr. Shah filed a supplementary affidavit sworn on 17th December 2025 and averred that the costs being claimed by **Niti** were assessed and a Certificate of Costs was issued in the sum of Kshs.203,300/=. 11. **Occidental** did not file any response to the application dated 11th November, 2025. 12. This Court directed that the two applications would be canvassed simultaneously by way of written submissions. **Occidental** filed submissions in respect to the two applications through the law firm of Morara Apiemi & Nyangito Advocates dated 23rd January 2026. **Niti** filed submissions dated 16th January 2026 for each application separately, through the law firm of E.K. Mutua & Co Advocates. 13. On the issue of the merits of the applications dated 5th November 2025 and 11th November 2025, Ms Odira, learned Counsel for **Occidental** submitted that there are several undisputed facts in this case. She stated that the Judgment that had been delivered in the main case between the parties herein was dismissed by the Court of Appeal, which had initially ordered for payment of Kshs.5,000,000/= as security, as a condition for stay of execution. Counsel stated that **Occidental** filed the suit in **MCCOMMSU E238 of 202,** seeking a refund of the Kshs.5,000,000/=, which was subsequently withdrawn with costs to **Niti.** She stated that **Occidental** then filed the application dated 5th November 2025 seeking the refund of Kshs.5,000,000/=, which is yet to be made. 14. Ms Odira cited Section 91 of the Civil Procedure Act, which allows for restitution to the position parties would have been, if the decree was not varied or reversed. She stated that the Court of Appeal’s Judgment set aside the Judgment of 7th February 2019 and all consequential orders, which means that the sum of Kshs.5,000,000/= should be paid to **Occidental**, pursuant to Section 91 of the Civil Procedure Act. 15. She cited the case of **Westmont Power (Kenya) Limited v Kenya Oil Company Limited** [2014] KECA 454 (KLR), where the Court of Appeal held that there is no justification for a party to hold onto money paid in a decree that was subsequently reversed. 16. Counsel stated that **Niti** in its replying affidavit had stated that it lodged a Notice of appeal to the Supreme Court, but cited Rule 38(1) of the Supreme Court Rules, which provides for filing of an Appeal within 30 days of the filing of the Notice of Appeal, but the Notice of Appeal was filed on 7th February 2025, after the lapse of thirty (30) days, and the Notice of Appeal is deemed to have been struck out. She cited the case of **Multichoice Kenya Ltd v Wananchii Group (Kenya) Limited, Communication Commission of Kenya & Kenya Broadcasting Corporation** (Civil Appeal 368 of 2014) [2020], to support her position. 17. She submitted that a Notice of Appeal does not amount to a stay of execution. She stated that since the case was determined on its meris, **Occidental** is entitled to a refund of the Kshs.5,000,000/- paid to **Niti.** 18. Ms Odira submitted that **Occidental** is entitled to payment of costs and interest, owing to **Niti’s** refusal to repay the amount despite demand letters and the Judgment of the Court of Appeal. She relied on the case of **Patrick Okello Obilo v South Nyanza Sugar Company Limited** [2017] KEHC 5599 (KLR), where the Court awarded interest on a claimed amount for refund, which had been unlawfully withheld from the date of delivery of the appellate Court’s Judgment. 19. On the issue as to whether **Niti’s** application has merits, Ms Odira relied on the threshold set out for stay of proceedings in **Halsbury’s Laws of England, 4th Edition**, **Vol 37** at page 330 and 332, stating that stay of proceedings should only be granted sparingly and in exceptional circumstances. Counsel argued that there is no need to stay the proceedings given that the application by **Occidental** is seeking to set off the same costs. She added that the set off if allowed, will not only reduce the amount to be paid by **Niti** but also lead to expedient determination of the applications which is in the interest of justice. 20. Mr. E.K. Mutua (SC), learned Counsel for **Niti** in submitting on the first application dated 5th November 2025, stated that this Court should exercise its discretion and halt the restitution of Kshs.5,000,000/= in order to give **Niti** an opportunity to pursue the Appeal at the Supreme Court. He urged this Court not to penalize **Niti** to pay interest on the amount in issue, because it was lawfully paid pursuant to a Court Order. He attributed the delay to the action of **Occidental** in filing **MCCOMMSU E238 of 2025,** seeking restitution which was withdrawn on 22nd October 2025. 21. On the second application dated 11th November 2025, Mr. E.K Mutua (SC), reiterated that in the withdrawn suit in **MCCOMMSU E238 of 2025,** costs were assessed at Kshs.202,300/=. He argued that **Niti’s** application seeks to stay the proceedings pending payment of the taxed costs in the withdrawn matter. He relied on the provisions of Order 25 Rule 4 of the Civil Procedure Rules, which allows for stay of a subsequent suit, until costs have been paid in the initial discontinued suit. He cited the case of **Church Road Development Co. Ltd v Barclays Bank of Kenya Ltd & 2 others** [2006] eKLR, which allowed stay of proceedings of a subsequent suit, pending payment of costs in an earlier suit. **ANALYSIS AND DETERMINATION.** 1. I have considered the two Notice of Motion applications, with their respective supporting affidavits, the replying affidavits and the supplementary affidavit file by **Niti**. I have also considered the submissions filed by Counsel for the parties. The issues for determination are whether an order for restitution should be made and if an order for stay for proceedings should be granted. **Whether an order for restitution should be made.** 1. At first, there is need to outline the undisputed facts of this case. It is common ground that Judgment was delivered in this suit by Hon. J. A. Makau J., on 7th February 2019, in favour of **Niti** in the sum of Kshs.23,013,842.00. **Occidental** being aggrieved by the said Judgment lodged Appeal No. 132 of 2019 to the Court of Appeal. **Occidental** also filed an application dated 25th March 2019, seeking orders for stay of execution pending the hearing and determination of the Appeal. Hon. Okwany J., in a Ruling delivered on 27th June 2019 allowed the said application on condition that **Occidental** pays Kshs.5,000,000/=, being part of the decretal sum to **Niti** and furnishes a bank guarantee in the sum of Kshs12,500,000/= as security for the due performance of the decree. 2. This Court has seen annexture BO-2 attached to the supporting affidavit of Mr. Michael Shisia sworn on 5th November 2025, containing the Judgment of the Court of Appeal, which overturned the Judgment delivered 7th February 2019. The Court of Appeal also set aside all the consequential orders arising from the said Judgment. This prompted **Occidental** to file the application dated 5th November 2025, seeking restitution of the sum of Kshs.5,000,000/= and interest. 3. The law on restitution is provided for under Section 91(1) of the Civil Procedure Act, which states thus: ***“Where and in so far as a decree is varied or reversed, the Court of first instance shall, on the application of the party entitled to any benefit by way of restitution or otherwise, cause such restitution to be made as will, so far as may be, place the parties in the position they would have occupied but for such decree or such part thereof as has been varied or reversed; and for this purpose the Court may make any orders, including orders for the refund of costs and for the payment of interest, damages, compensation and mesne profits, which are properly consequential on such variation or reversal.”*** 1. The Court of Appeal when addressing the above provisions of the law in the case of **Cyrus Komo v Hannah Nyambura Gikamu** [2018] KECA 881 (KLR), held as follows- ***“That provision is concerned with restoration to a party, on the variation or reversal of a decree, what has been lost to such party in consequence of such decree. The principle behind that provision is that on the reversal or variation of the decree, the law imposes an obligation on the party to the suit who received the benefit of the reversed decree to make restitution to the other party for what he has lost. [ See Mulla on the Code of******Civil Procedure, 14th edition, volume 1 para 144 at page 731]”*** 1. Similarly, the High Court in the case of **Kericho Technical Institute v Finmax Community Based Group & 3 others** (Civil Suit 20 of 2013) [2025] KEHC 1121 (KLR) (26 February 2025) (Ruling),while addressing the same issue of restitution held as follows- ***“It is therefore the finding of this Court that the crux of the matter at hand is a money decree, which money was released to the Plaintiff/Respondent as security pending the hearing and determination of the Appeal filed in Nakuru Court of Appeal No. 120 of 2017, the appeal having been heard and determined in favour of the Defendants/Applicants, it is therefore paramount that the funds released to the Plaintiff/Respondent be refunded in restituting the Defendants/Applicants in line with the provisions of Section 91 of the***[***Civil Procedure Act***](https://new.kenyalaw.org/akn/ke/act/1924/3)***, 2010.”*** 1. Given the express provisions of Section 91(1) of the Civil Procedure Act on the issue of restitution, and given the fact that the Court of Appeal overturned the Judgment of 7th February 2019 and all consequential orders, it follows that there is no reason to deny **Occidental** an order for restitution, of the amount of Kshs.5,000,000/= which was paid in compliance with Court orders. 2. **Niti** raised an issue that it has lodged an Appeal to the Supreme Court through a Notice of Appeal dated 7th February 2025. **Occidental** in its submissions argued that the said Notice of Appeal was filed outside the timeline of 30 days and that it stood automatically struck out for having been filed out of time. This Court agrees with **Occidental** and holds that a Notice of Appeal is an expression of interest to appeal. This was stated in the case of **The Chairman Board of Governors Highway Secondary School v William Mmosi Moi,** Civil Application No. 277of 2005 (Bosire, Githinji and Waki, JJ.A), in the following words- ***“A notice of appeal is however only a formal notification of an intention to appeal and it cannot be said that the aggrieved party had “preferred” an appeal at that stage.”*** 1. Further, **Niti** has not obtained any orders for stay of execution, to warrant this Court to halt its processes. See the decision in **Kenya Shell Limited v Benjamin Karuga Kibiru & another** [1986] KECA 94 (KLR), where the Court of Appeal held that- ***“ An intended appeal does not automatically operate as a stay.”*** 1. In any event, whether there is an Appeal to the Supreme Court is not an issue for determination at this juncture. This Court maintains the position that the said Notice of Appeal is only an intention to file an Appeal, and the said Notice does not mean that an automatic stay of execution was granted. **If an order for stay for proceedings should be granted.** 1. In the above application, **Niti** argued that since **Occidental** was ordered to pay costs which were assessed at Kshs.202,300/= in **MCCOMMSU No. E238 of 2025**, the same ought to be paid first before determination of the application dated 5th November 2025, pursuant to Order 25 Rule 4 of the Civil Procedure Rules. The said provisions state as follows- *“****4. If any subsequent suit shall be brought before payment of the costs of a discontinued suit, upon the same, or substantially the same cause of action, the Court may order a stay of such subsequent suit until such costs shall have been paid.”*** 1. From the above provisions, it is a requirement for payment of costs in a withdrawn suit to be paid first, before a subsequent suit can proceed. In this instance, this Court notes that **Occidental** admits that it ought to pay the costs as per the Certificate of Costs, but prays that the said sum to be set off from the amount of Kshs.5,000,000/=. The concept of setoff was addressed in the case of **Kenya Oil Company Ltd v Kenya Ports Authority** [2009] KEHC 2482 (KLR), as follows- ***“The authors of Atkin’s Encyclopedia of Court Forms in Civil Proceedings, 2nd Edition volume I, 1978 Issue, aptly set out the import of a set off in a defence:*** **“*59. Set-off. Where a claim by a defendant to a sum of money (whether of an ascertained amount or not) is relied on as a defence to the whole or part of a claim made by the plaintiff it may be included in the defence and set off against the plaintiff’s claim, whether or not it is also added as a counterclaim (h). A set-off is in its nature a defence rather than a cross-claim (j). A right of set-off normally arises where the plaintiff’s claim is a debt or liquidated demand and the defendant has cross-claim for a debt or liquidated demand which, if established, will extinguish or reduce the plaintiff’s money claim (k), and should be pleaded as such*.”** 1. Given that the costs of Kshs.202,300/= are not disputed and the sum of Kshs. 5,000,000/= is also not disputed, this Court sees no harm in **Niti** deducting the sum of Kshs.202,300/= from the sum of Kshs.5,000,000/= and paying the balance to **Occidental**. Given the reasoning in this Ruling, this Court declines to exercise its discretion to stay further proceedings in this matter pending the payment of costs. 2. In the end, this Court makes the following orders- 3. **The Notice of Motion application dated 5th November 2025 is merited and allowed in terms that the plaintiff, Niti Distributors Limited, shall pay the defendant, Occidental Insurance Company Limited, the sum of Kshs 5,000,000/= less the setoff amount of Kshs 202,300/=, being the sum of Kshs. 4,797,700.00 within 30 days hereof;** 4. **The Notice of Motion application dated 11th November 2025 has already been determined in paragraph (i) above.** 5. **Each party shall bear the costs of its own application.** It is so ordered. **DATED, SIGNED and DELIVERED at KIAMBU on this 19TH day of JUNE 2026. Ruling delivered through Microsoft Teams Online Platform.** **NJOKI MWANGI** **JUDGE** **In the presence of:-** Mr. Kalii for the plaintiff Ms Mithiani h/b for Ms Odira for the defendant Julia – Court Assistant.