https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1102

Njeru Industries Ltd & 2 others v I & M Bank Limited (Civil Application E548 of 2025) [2026] KECA 1102 (KLR) (12 June 2026) (Ruling) Neutral citation: [2026] KECA 1102 (KLR) Republic of Kenya In the Court of Appeal at Nairobi Civil Application E548 of 2025 W Karanja, AO Muchelule & WK Korir, JJA June 12, 2026 Between Njeru Industries Limited 1st Applicant Henry Paul Ireri Njeru (Suing on Behalf of the Estate of Prostasio Njeru) 2nd Applicant Christina Warue Njeru (Suing on Behalf of the Estate of Protasio Njeru) 3rd Applicant and I & M Bank Limited Respondent (Being an application for an injunction following the ruling and order of the High Court at Nairobi (J.W.W. Mongare, J.) dated 1st September 2025 in COMM. Case No. E599 of 2024) Ruling 1.By way of motion dated 15th September 2025 pursuant to Rule 5(2)(b) and Rule 47 of the Court of Appeal Rules, 2022, the applicants herein sought temporary injunctive orders restraining the respondent, its agents, servants, and any purported administrators from taking over or interfering with the management, control, and operations of the 1st applicant company, including assuming possession, administration, receivership, liquidation, or holding themselves out as administrators of the company. They further sought to restrain the respondent from repossessing, advertising, selling, disposing of, or otherwise alienating the charged properties and the applicants’ equipment and movable assets. The injunctions were sought pending the inter-partes hearing of the application, the hearing and determination of the intended appeal, and the determination of the pending High Court proceedings. Additionally, the applicants sought preservation of the status quo in respect of the 1st applicant’s business, land, and equipment pending the resolution of the dispute, on the basis that the balance of convenience favoured maintaining the existing state of affairs. 2.The application is grounded on the contention that, following the superior court’s ruling of 1st September 2025 dismissing the applicants’ application for injunctive relief and vacating interim orders, the respondent commenced enforcement measures by advertising the appointment of joint administrators over the 1st applicant and threatening to repossess, sell, and dispose of the applicants’ charged land and equipment, including property forming part of the estate of the late Protasio Njeru. The applicants contend that they have lodged a Notice of Appeal and that the intended appeal raises arguable issues regarding the superior court’s alleged misapplication of the principles in Giella -vs- Cassman Brown & Co. Ltd [1973] EA. 358 and Nguruman Ltd -vs- Jan Bonde Nielsen & 2 Others [2014] eKLR by treating an alleged admission of debt as conclusive against injunctive relief, failure to consider the protections afforded under Article 40 of the Constitution and section 45 of the Law of Succession Act, dismissal of evidence of fraud, coercion, unconscionability and expert repayment reports, and failure to properly assess the balance of convenience and the risk of irreparable harm. They further contend that unless restrained, the respondent’s enforcement actions will render the intended appeal nugatory by causing irreversible loss of estate property, disruption of the 1st applicant’s business operations, loss of goodwill and livelihoods, and harm not adequately compensable by damages, while the balance of convenience favours preservation of the status quo pending determination of the intended appeal and the pending High Court proceedings. 3.In the supporting affidavit, Henry Paul Ireri Njeru (the 2nd applicant) averred that following the superior court’s dismissal of their application for injunctive relief, the respondent commenced enforcement measures, including insolvency proceedings and the proposed appointment of administrators, threatening to take over the management and operations of the 1st applicant and realize the charged properties. They reiterate that they have lodged an intended appeal raising arguable issues regarding the superior court’s alleged misapplication of the principles governing interlocutory injunctions, failure to consider evidence of fraud, coercion, unconscionable terms, irregular interest charges, repayment evidence, and statutory and constitutional protections relating to estate property. The applicants contend that they have substantially repaid the loan facilities and that an independent audit revealed unlawful interest charges, compounding of penal interest, and misapplication of repayments, which inflated the alleged indebtedness, while the Deed of Settlement was procured through coercion and irregularities. They further maintain that some of the charged properties form part of the estate of the late Protasio Njeru and that their realization would unlawfully deprive beneficiaries of their inheritance. According to the applicants, administration, liquidation, or sale of the charged assets would disrupt the 1st applicant’s business, adversely affect employees and dependent farmers, destroy goodwill and livelihoods, and cause irreparable harm not compensable by damages, thereby rendering the intended appeal nugatory unless the status quo is preserved pending its determination. 4.The motion is opposed. Samuel Irungu, the Senior Manager in the Credit Department of the respondent, averred that it is not in dispute that, upon the request of the 1st applicant, the respondent advanced various loan facilities which the 1stapplicant subsequently defaulted on. He stated that the outstanding amount is USD 6,250,000.00, notwithstanding prolonged negotiations between the parties. As a result of those negotiations, the 1st applicant freely and voluntarily executed a Deed of Settlement dated 5th February 2024. The respondent contends that the applicants have not demonstrated any coercion, fraud, or undue influence in the execution of the said deed as alleged. It was further averred that the respondent has at all times applied the contractual interest rates as stipulated in the letters of offer and the security instruments, and that a dispute on the computation of interest does not constitute a sufficient basis for the grant of the orders sought. It was also stated that the fact that succession proceedings relating to the estate of the late Protasio Njeru are pending does not bar the respondent from commencing or continuing lawful loan recovery proceedings. The respondent further averred that the applicants have merely raised grounds of appeal without demonstrating that the intended appeal is arguable. 5.With respect to the nugatory aspect, it was submitted that the intended appeal would not be rendered nugatory because the applicants have failed to honour their repayment obligations and have on several occasions acknowledged their indebtedness to the respondent. It was further argued that by charging the suit properties as security for the loan facilities, the applicants converted the properties into commercial security available for realization upon default. Any loss allegedly suffered by the applicants would in any event be quantifiable and capable of compensation in damages. The respondent also maintained that it is financially capable of compensating any proven loss should the intended appeal succeed, among other grounds. 6.The background to this motion is that vide motion dated 14th October 2024, the applicants moved the superior court seeking a temporary injunction restraining the respondent from exercising its statutory power of sale, appointing receivers or managers, or otherwise interfering with their business operations pending determination of the suit. They contended that the alleged indebtedness was disputed and that the respondent had failed to provide accurate and reconciled statements of account. They further argued that the demand for repayment was founded on a Deed of Settlement which they alleged was oppressive and unconscionable. The applicants maintained that they had made substantial repayments towards the loan facilities and that the outstanding amount was unclear and contested. They also asserted that some of the charged properties formed part of the estate of the late Protasio Njeru and that their disposal prior to completion of succession proceedings would violate Article 40 of the Constitution and prejudice the beneficiaries’ proprietary interests. On that basis, they sought preservation of the status quo pending determination of the suit. The respondent opposed the application on the basis that it had advanced various loan facilities secured by legal charges and other security instruments, which the applicants had defaulted on. It maintained that it had lawfully issued demand notices and was entitled to exercise its statutory power of sale. The respondent further relied on a Deed of Settlement executed after negotiations, which restructured the debt but which the applicants had breached. It contended that the applicants had been kept fully informed of the loan status through periodic statements and correspondence. The respondent denied allegations of fraud, coercion, or unconscionable conduct, asserting that the securities were voluntarily created and that the application was an attempt to frustrate lawful recovery of an admitted debt. 7.In its ruling, the superior court (J.W.W. Mongare, J.) held that the applicants failed to meet the threshold for the grant of an interlocutory injunction under Giella -vs- Cassman Brown (supra) It found that the applicants did not establish a prima facie case, noting that they did not deny indebtedness but only disputed the amount and timing of repayment and enforcement. The superior court further held that allegations of fraud, coercion, and unconscionability were not supported by sufficient evidential material and,therefore, remained unsubstantiated. It also held that property charged as security becomes available for realization upon default and that the existence of estate or succession claims did not override the respondent’s security interest. Having found no prima facie case, the superior court declined to consider the remaining limbs of irreparable harm and balance of convenience, and accordingly dismissed the application and vacated the interim orders with costs. 8.We heard this application on 16th December 2025. Learned counsel Ms. Mbelete was present for the applicants. She relied on her written submissions and submitted that the application satisfied both limbs under Rule 5(2)(b) of the Court of Appeal Rules. On the arguability limb, counsel contended that the superior court misapplied the principles in Giella -vs- Cassman Brown (supra) by determining the application solely on the basis of alleged indebtedness and failing to undertake the requisite inquiry into whether a prima facie case had been established; whether irreparable harm would be suffered; and where necessary, the balance of convenience. Counsel further argued that the respondent's enforcement action was founded on a Deed of Settlement whose debt figure was disputed on grounds that it had allegedly been inflated through unlawful interest charges during a moratorium period, compounding of interest, misapplication of repayments, and other irregularities. Although the Deed of Settlement reflected an acknowledged debt of Kshs.6.25 million, counsel maintained that a subsequent audit and the respondent's own statements revealed that the debt had in fact been discharged and that the respondent had failed to prove any outstanding indebtedness. According to counsel, these issues raised bona fide and arguable grounds for appeal. 9.On the nugatory aspect, counsel submitted that the respondent had commenced enforcement measures, including the proposed appointment of administrators and the threatened realization of charged assets. It was argued that administration would result in loss of control of the tea business, revocation of licences, loss of market access, goodwill and business operations, while the sale of the charged properties would permanently deprive the applicants and estate beneficiaries of family land that had been held for generations. Counsel maintained that such losses were irreversible and could not adequately be compensated by an award of damages. In response to the respondent's reliance on the commercial character of charged property, counsel accepted that a charge converts property into commercial security but argued that the debt secured by the charge had already been discharged and that the respondent could not continue to treat the property as available security. 10.Learned counsel, Ms. C. Mwai appeared alongside Ms. F. Kendi for the respondent. She relied on her written submissions arguing that the applicants had failed to establish either an arguable appeal or that the intended appeal would be rendered nugatory. On the arguability limb, counsel argued that it was undisputed that the respondent had advanced loan facilities to the first applicant, that the applicant had defaulted in repayment, and that it had repeatedly acknowledged its indebtedness through correspondence and by executing a Deed of Settlement and a subsequent addendum restructuring the debt. Counsel submitted that those documents constituted clear acknowledgements of liability and demonstrated that the respondent had repeatedly accommodated the applicants despite continued default. Accordingly, the intended appeal lacked any arguable basis. 11.On the nugatory limb, counsel submitted that the charged properties and commercial assets had been voluntarily offered as security and had thereby become commodities for sale capable of valuation, realization and monetary compensation. It was argued that any loss suffered by the applicants would be reversible or adequately compensable by damages, particularly given that the respondent was a regulated commercial bank with the financial capacity to make restitution should the appeal ultimately succeed. Counsel further contended that the applicants' assertions regarding collapse of business operations and loss of goodwill were speculative and self-inflicted, having arisen from the applicants' own decision to pledge their business assets as security. Counsel also maintained that sentimental, familial or generational attachment to charged property could not be invoked to defeat the respondent's right to enforce its security after default. 12.Under Rule 5(2)(b) of the Court of Appeal Rules, 2022, this Court exercises an original and discretionary jurisdiction, distinct from its appellate jurisdiction, to grant orders of stay of execution, stay of proceedings, or injunction pending appeal. An applicant seeking such relief must satisfy the twin principles, namely: that the intended appeal is arguable, and that unless the order sought is granted, the appeal, if successful, will be rendered nugatory. These requirements are cumulative in the sense that both must be met before the Court can exercise its discretion in favour of the applicant. An arguable appeal, for purposes of this jurisdiction, is not one that must necessarily succeed, but one that raises at least a bona fide and non- frivolous issue deserving of consideration on appeal. The decision in Trust Bank Ltd & Another -vs- Investech Bank Ltd & 3 Others [2000] eKLR is a good guide. 13.In the present application, the applicants seek interlocutory injunctive relief pending the hearing and determination of an intended appeal arising from a ruling of the superior court dismissing their application for injunction pending suit. The effect of the present motion is to invite this Court, at an interlocutory appellate stage, to interfere with the exercise of discretion by the superior court in declining to grant interim injunctive relief, a jurisdiction that must be exercised sparingly and only where the threshold under Rule 5(2)(b) is clearly met. In Mbogo & Another -vs- Shah [1968] EA 98, it was held that this Court should not interfere with the exercise of the discretion of a Judge unless it is satisfied that the Judge, in exercising his or her discretion misdirected himself or herself in some matter and as a result arrived at a wrong decision, or unless it is clear from the case as a whole that the judge was clearly wrong in the exercise of his or her discretion and that as a result an injustice has been occasioned. 14.Having considered the material placed before the Court, we are not persuaded that the applicants have demonstrated an arguable appeal. It is not disputed that the respondent advanced secured financial facilities to the 1st applicant, which remain outstanding following default. The record further indicates that the parties engaged in restructuring arrangements culminating in a Deed of Settlement and related instruments, which, on their face, reflect an acknowledgment of indebtedness and agreed repayment terms. The superior court, in declining the injunction, considered the material before it and found that the allegations of fraud, coercion, and unconscionability were not supported by sufficient evidential basis at that interlocutory stage. At this stage of the Rule 5(2)(b) inquiry, and without delving into the merits of the intended appeal, the applicants have not demonstrated any apparent misdirection of principle or arguable question warranting appellate interrogation sufficient to satisfy the low but mandatory threshold of arguability. 15.Even assuming, without deciding, that an arguable appeal exists, the applicants have not demonstrated that the intended appeal will be rendered nugatory if the order sought is declined. The subject matter comprises charged properties and business assets voluntarily offered as security for the repayment of loan facilities. Upon default, such securities are, by operation of law and contract, available for realization. The applicants have not shown that any resulting loss would be irreversible or incapable of adequate monetary compensation, particularly in light of the respondent’s status as a regulated financial institution. The allegations of irreparable harm arising from disruption of business operations, loss of goodwill, and prejudice to estate interests, while serious in narrative, remain insufficiently demonstrated as matters that would defeat the efficacy of the intended appeal if not preserved by an injunction. We agree with the respondent that, as a regulated commercial bank, they have the financial capability to make restitution were the appeal to ultimately succeed. 16.Accordingly, and bearing in mind that the Court must guard against determining the merits of the intended appeal at this interlocutory stage, we find that the applicants have failed to satisfy the twin requirements under Rule 5(2)(b) of the Court of Appeal Rules. The discretion of this Court is, therefore, not properly invoked in their favour. The motion dated 15th September 2025 seeking interlocutory injunctive relief pending the intended appeal accordingly fails and is dismissed with costs. DATED AND DELIVERED AT NAIROBI, THIS 12TH DAY OF JUNE 2026.W. KARANJA........................................JUDGE OF APPEALA.O. MUCHELULE........................................JUDGE OF APPEALW. KORIR........................................JUDGE OF APPEALI certify that this is a true copy of the original.SignedDEPUTY REGISTRAR.