https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/8393

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA** **AT MILIMANI** **COMMERCIAL AND TAX DIVISION** **HCCOMM NO. E483 OF 2024** NJUCA CONSOLIDATED CO. LIMITED...……….………….....1ST PLAINTIFF WAKUGA HOLDINGS LIMITED……………………….………2ND PLAINTIFF COCHEM SERVICES LIMITED…………………………………3RD PLAINTIFF PARIC HARDWARE PRODUCTS LIMITED……………………4TH PLAINTIFF -VERSUS- EQUITY BANK KENYA LIMITED.…….………………...…...…..DEFENDANT **RULING** 1. Before me is a Notice of Motion application dated 16th August 2024 filed by the plaintiffs pursuant to the provisions of Sections 1A, 1B & 3A of the Civil Procedure Act, Order 40 of the Civil Procedure Rules, Sections 90, 96 & 97 of the Land Act, Section 44 of the Banking Act and all enabling provisions of the law. 2. The plaintiffs seek orders for temporary injunction restraining the defendant, its employees, agents, servants, or any other person acting through it, from disposing of, transferring, or otherwise dealing with properties known as L.R. Nos. 4953/1836 to 1845, L.R. Nos. 4953/1828 to 1833, and L.R. Nos. 4953/2484, 2485, 2486, 2492, 2494, 2496, 2497, 2500, 2501, 28503, 2503, 2504, 2508, 2807, 2511, 2515, 2516, 2522, 2523, 25256, 2526, 2597, 2528, R530, 9531, 2532, 2533, 2536, 2539, 2542, 2544, 2547, 2550, 2551, 2552, 2555, 2556, 2558, 2560, 2563, 2564, 2566, 2569, 2570, 2573, 2580, and 2581, L.R. No. Mainland North/Section VI/194 (C.R. No. 2028), and L.R. No. Mainland North/Section I/5472 (C.R. No. 18823) pending the hearing and determination of this suit. The plaintiffs also pray for an order requiring the defendant to immediately withdraw all Notices to sell or auction the listed properties and to halt any ongoing or planned auction process until the suit is heard and determined. 3. The application is premised on the grounds on the face of the Motion, and it is supported by an affidavit sworn on the same day by Ms Muthoni Njoroge, a Director of the plaintiff companies. Ms Njoroge averred that the plaintiffs and the defendant entered into a Loan Agreement on 31st August 2021 for Kshs.1,372,011,449.00 repayable over 164 months, and that the plaintiffs have since made payments totaling Kshs.204,944,152.59. She deposed that on 22nd May 2023, the defendant issued a Statutory Notice claiming the plaintiffs had defaulted, alleging arrears of Kshs.101,135,785.72 and a total loan balance of Kshs.1,664,421,079.81, which she contended was overstated. She asserted that attempts at amicable resolution, including a meeting on 16th August 2023, failed as the defendant proceeded to issue 45-day Redemption Notices on 17th October 2023 and 23rd October 2023, and notifications of sale of the plaintiffs’ properties on 28th October and 30th August 2023, indicating inflated arrears and a total debt of Kshs.1,732,166,687.56. 4. Ms Njoroge stated that following continued Notices of Sale in August 2024, the plaintiffs alleging bad faith, overcharged interest, and undervaluation of the properties, filed a suit and an application for temporary injunction at the Environment and Land Court, where interim orders were granted and extended pending transfer of the said suit to the Commercial Division. She averred that the defendant’s recovery process is illegal and that the properties securing the impugned loan are grossly undervalued, with security exceeding the alleged arrears by over Kshs.5,000,000,000/=. 5. In opposition to the application herein, the defendant filed a replying affidavit sworn on 29th August 2024 by Mr. Kariuki King’ori, the defendant’s Manager Legal Services. He averred that the plaintiffs had previously filed **Milimani ELC No. E196 of 2023** and obtained *ex parte* injunctive orders, and that the file was transferred from the Environment and Land Court (ELC) to the Commercial Division but A. Visram J., held that he did not have the jurisdiction to deal with a suit transferred from the ELC. Mr. King’ori contended that this suit constitutes an abuse of Court process under Section 6 of the Civil Procedure Act. He also contended that the plaintiffs have not made any payments towards the debt since obtaining prior injunctive reliefs and are acting in bad faith to avoid repaying a loan admittedly due. He asserted that Statutory and Redemption Notices were properly served upon the plaintiffs by email and registered post, and that the plaintiffs received them, including the forty-five-day Redemption Notices. 6. Mr. King’ori maintained that the defendant was under no obligation to accept the plaintiffs’ repayment proposals, which lack concreteness, and that any disputes over arrears, interest or penalties do not preclude the exercise of the defendant’s statutory power of sale. With regard to property valuations, Mr. King’ori stated that the suit properties were lawfully valued by Licensed Valuers. He averred that the plaintiffs’ counter-valuations are flawed, and in any event, any discrepancies with regard to valuation can be addressed through damages. He deposed that the plaintiffs do not stand to suffer any irreparable harm from the sale of the suit properties, as the properties were charged as security for the loan and the debt significantly exceeds their value. 7. In a rejoinder, the plaintiffs filed a further affidavit sworn on 29th September 2025 by Ms Ann Muthoni Njoroge, the plaintiffs’ Director. She denied the defendant’s assertions regarding delays in withdrawing **Milimani ELC No. E196 of 2023** and explained that the delay was due to the sudden death of their previous Advocate, but steps to withdraw the said case are now pending. She confirmed that the plaintiffs contacted the Court Annexed Mediation Registry to explore a negotiated settlement, emphasizing a desire to preserve the long-standing business relationship between the parties herein and restructure the loan repayment. 8. Ms Njoroge asserted that the plaintiffs have made payments towards the subject loan, including Kshs.19,387,033.00 on 9th July 2025 and that engagement of IRAC revealed excessive and unlawful interest charges by the defendant. She disputed claims of unwillingness to service the loan, citing economic hardships and outstanding debts owed to them, which if recovered, would allow repayment of interest and the principal amount. She contended that the original property valuations were grossly undervalued and the plaintiffs have since conducted a re-evaluation of the suit properties. 9. The instant application was canvassed by way of written submissions. The plaintiffs’ submissions were filed on 1st October 2025 by the law firm of Wanjiru Mwangi Advocates, whereas the defendant’s submissions were filed by the law firm of Muriu, Mungai & Company Advocates LLP on 6th February 2025. 10. Mr. Chege, learned Counsel for the plaintiffs submitted that the plaintiffs have suspected that the defendant has been charging excessive interest and punitive penalties since obtaining the loan, making it difficult to service the loan. He stated that to verify this, the plaintiffs engaged IRAC which found that the interest and penalties applied were unlawful and oppressive, in breach of the *in duplum* doctrine under Section 44A of the Banking Act. Counsel asserted that contrary to the defendant’s narrative, the plaintiffs have made payments, including Kshs.19,387,033.00 on 9th July 2024, and remain willing and able to continue servicing the loan, especially once debts owed to them by government agencies, including the Judiciary, are settled. 11. Mr. Chege cited the Court of Appeal case of **Kenya National Examination Council v Republic; GGN & 9 others (Ex parte)** [1997] KECA 58 (KLR) and maintained that economic hardships arising from COVID-19 and the general economic climate in Kenya justify the plaintiffs' temporary difficulties. He contended that the defendant undervalued the charged properties during the auction process, breaching their statutory duty under Section 97 of the Land Act, to obtain the best reasonably obtainable price. Counsel stated that the plaintiffs appointed Tulifox Valuers to revalue the properties and they are also willing to engage a mutually agreed independent valuer at their own cost. To buttress these submissions, he referred to the cases of **Palmy Company Limited v Consolidated Bank of Kenya Limited** [2014] KEHC 4811 (KLR) and **David Ngugi Ngaari v Kenya Commercial Bank Limited** [2015] KEHC 4064 (KLR). 12. Mr. Kongere, learned Counsel for the defendant relied on the Court of Appeal case of **Mrao Ltd v First American Bank of Kenya Ltd & 2 others** [2003] KECA 175 (KLR) and submitted that the plaintiffs have failed to establish a *prima facie* case with a probability of success to warrant being granted the orders being sought herein. Counsel further submitted that all Notices relating to the suit properties were duly served upon the plaintiffs by registered post and email. He stated that the plaintiffs’ claim of non-service is unsubstantiated, as the Notices were addressed to the postal and email addresses provided by the plaintiffs themselves, and any failure to receive them does not excuse non-compliance. Counsel relied on the Court of Appeal case of **Housing Finance Co. of Kenya Ltd, James K. Kagete & Savings & Loan Kenya Ltd v Samuel Kiti Lewa** [2019] KECA 350, to assert his position. 13. Mr. Kongere cited the cases of **Seahawk General Logistics Limited, Matrix Logistics Limited & Wanzala Dan Samuel v Stanbic Bank Kenya Limited** [2021] KEHC 7813 (KLR) and **Khan & another v Habib Bank AG Zurich & another** [2022] KEHC 130, and submitted that the plaintiffs have failed to deposit the sum of Kshs.30,000,000/= required under the injunction of 30th August 2024 and have presented no tangible repayment plan. He further submitted that lenders are not obliged to accept gratuitous repayment proposals and may insist on strict contractual compliance, particularly where no immediate capability to repay exists. He referred to the Court of Appeal case of **Mwaniki Wa Ndegwa v National Bank of Kenya Ltd & Mary Mbuki Mugambi** [2016] KECA 388, and argued that the law does not require exhausting remedies against the principal before pursuing guarantors, especially in instances where the principal borrower’s security is inadequate as is the case herein. 14. Counsel relied on the case of **Khan v Habib Bank AG Zurich & another** [2022] KEHC 130 and contended that a mere dispute over the amount or interest rate does not restrain a lender whose statutory power of sale has accrued. He submitted that the plaintiffs’ IRAC report confirms that the plaintiffs still owe the defendant Kshs.1,636,773,691.32, and that the interest variation was approved by the Central Bank of Kenya under Section 44 of the Banking Act, Cap 488. 15. Mr. Kongere submitted that the Tuliflocks Limited Report presented by the plaintiffs is unreliable, as it contained properties not owned by the plaintiffs. He claimed that the counter-valuation alone does not justify being granted an order for injunction. He asserted that once land is offered as security, its sale cannot lead to irreparable injury. He argued that given that the loan of approximately Kshs.1,999,527,352.06 far exceeds the security value of Kshs.1,020,400,000/=, the balance of convenience tilts in favour of the defendant. **ANALYSIS AND DETERMINATION.** 1. I have considered the application herein, the grounds on the face of it and the affidavits in support thereof. I have also considered the replying affidavit filed by the defendant and the written submissions filed by Counsel for the parties. The issues that arise for determination are: – 2. **Whether an order for temporary injunction should issue; and** 3. **Whether the defendant should be compelled to withdraw all Notices to sell or auction the listed properties.** **Whether an order for temporary injunction should issue.** 1. Interlocutory injunctions are provided for under Order 40 Rule 1 of the Civil Procedure Rules, 2010, which states that: – ***Where in any suit it is proved by affidavit or otherwise:-*** 1. ***that any property in dispute in a suit is in danger of being wasted, damaged, or alienated by any party to the suit, or wrongfully sold in execution of a decree; or*** 2. ***that the defendant threatens or intends to remove or dispose of his property in circumstances affording reasonable probability that the plaintiff will or may be obstructed or delayed in the execution of any decree that may be passed against the defendant in the suit, the court may by order grant a temporary injunction to restrain such act, or make such other order for the purpose of staying and preventing the wasting, damaging, alienation, sale, removal, or disposition of the property as the court thinks fit until the disposal of the suit or until further orders."*** 3. In an application for an interlocutory injunction, the onus is on the applicant to satisfy the Court that it should grant an injunction. Being a discretionary remedy, it is granted on the basis of sound evidence and applicable legal principles. The Court in the case of **Nguruman Limited v Jan Bonde Nielsen & 2 others** [2014] KECA 606 (KLR), when dealing with an application similar to this one held as follows: – ***In an interlocutory injunction application, the applicant has to satisfy the triple requirements to;*** 1. ***establish his case only at a prima facie level,*** 2. ***demonstrate irreparable injury if a temporary injunction is not granted, and*** 3. ***ally any doubts as to (b) by showing that the balance of convenience is in his favour.”*** 4. The Court of Appeal in the case of **Mrao Ltd v First American Bank of Kenya Ltd & 2 others** (supra), considered what constitutes a *prima facie* case and held as hereunder - ***So what is a prima facie case? I would say that in civil cases it is a case in which on the material presented to the Court a tribunal properly directing itself will conclude that there exists a right which has apparently been infringed by the opposite party as to call for an explanation or rebuttal from the latter. A prima facie case is more than an arguable case. It is not sufficient to raise issues but the evidence must show an infringement of a right, and the probability of success of the Applicant’s case upon trial. That is clearly a standard, which is higher than an arguable case.*** 1. It is not disputed that the plaintiffs obtained loan facilities from the defendant and that the suit properties in issue were charged as security. It is further not disputed that the plaintiffs fell into arrears, prompting the defendant to issue Statutory Notices under Sections 90 & 96 of the Land Act. The plaintiffs however contended that the sums demanded are inflated owing to excessive and unlawful interest charges, in breach of Section 44A of the Banking Act and the *in duplum* Rule. In support of this contention, the plaintiffs relied on a Report prepared by IRAC. 2. The defendant on the other hand maintained that all interest variations were approved by the Central Bank of Kenya and that the IRAC Report itself confirms that a substantial debt remains due and owing from the plaintiffs to the defendant. The defendant asserted that a dispute as to the exact amount owing does not bar a chargee from exercising its statutory power of sale. 3. From the affidavit evidence relied on by the plaintiffs, it is apparent that they acknowledge their indebtedness to the defendant, but take issue with the amount claimed and the method applied in computing the debt, especially with respect to the interest charged. It is however now well settled that such a dispute, in and of itself, does not *prima facie* invalidate the Statutory Notices issued or defeat the defendant’s right to exercise its statutory power of sale over charged properties, as long as the procedural requirements stipulated under the Land Act, have been complied with. In the oft cited case of **Jim Kennedy Kiriro Njeru v Equity Bank (K) Limited** [2019] eKLR, the Court held as follows: – ***I wish set it clear that in accordance with the already existing jurisprudence, a dispute touching on the amount payable or interest chargeable without more is not a ground for restraining a chargee from exercising its statutory power of sale. In the case of Priscillah Krobought Grant vs. Kenya Commercial Finance Co. Ltd. and 2 Others, Court of Appeal at Nairobi, Civil Application No. Nai 227 of 1995 (108/95 V.R) (unreported), the court stated as follows: -*** ***“Finally, it will bear repetition, we think if we were to state that a court does not normally grant an injunction to restrain a mortgagee from exercising its statutory power of sale solely on the grounds that there is a dispute as to the amount due under the mortgage – see Barmal Kanji Shah & Another Vs. Shah Depar Devji (1965) E. A. 91, 32 Halsbury’s*** ***Laws of England (4th Edition) paragraph 725 and Uhuru Highways Development Ltd. Vs. Central Bank Kenya and 2 Others, Civil Application No. Nai 140 of 1995 (unreported) per Kwach J. A.*** 1. The Court in the above case went further to quote **Halsbury’s Laws of England Vol. 32** (4th Edition) paragraph 725 which outlines the circumstances in which a mortgagee or chargee may be restrained from exercising his statutory power of sale, as hereunder: - ***The mortgagee will not be restrained from exercising his power of sale because the amount due is in dispute, or because the mortgagor has begun a redemption action, or because the mortgagor objects to the manner in which the sale is arranged. He will be restrained however if the mortgagor pays the amount claimed into court, that is, the amount which the mortgagee claims to be due to him, unless, on the terms of the mortgage, the claim is excessive.*** 1. The record shows that the defendant has exhibited evidence of service of the Statutory and Redemption Notices by registered post and email to the addresses supplied by the plaintiffs. The plaintiffs on the other hand have not tendered cogent evidence to rebut that presumption of service. I am therefore satisfied that the plaintiffs were duly served with the requisite Statutory Notices provided for under the Land Act. 2. With regard to the allegation of undervaluation of the suit properties, Section 97 of the Land Act obligates a chargee to obtain the best price reasonably obtainable at the time of sale. The plaintiffs have annexed a counter-valuation report disputing the defendant’s valuation. The existence of competing Valuation Reports, without proof of fraud, collusion or bad faith, does not automatically entitle an applicant to an order of an injunctive relief, as any proven breach of the statutory duty of care if proved, is compensable in damages under the provisions of Section 99(4) of the Land Act. 3. The Court of Appeal in **Etrade Limited & another v Thrift Estates Limited & 2 others** [2019] KECA 557 (KLR), in determining whether or not an allegation that the suit property was undervalued is enough to warrant a party being granted an order for injunction, held that: – ***The fact that they have alleged that the sale by public auction was fraudulently conducted by the chargee does not prima facie prove that they were are entitled to the orders of injunction sought. Statutory provisions in the event of such an eventuality is clear. If a party is aggrieved by the way the sale was conducted by public auction, he can only seek to be awarded damages. The plaintiffs cannot therefore say that they would suffer irreparable loss which cannot be compensated by damages if the order of injunction is not granted. Damages will be adequate compensation to them. Further, the balance of convenience tilts in favour of the 5th defendant who purchased the property in the public auction. He has invested his financial resources but has been unable to enjoy the use of the said properties. It would be inequitable to keep the 5th defendant away from his property just because the plaintiffs feel aggrieved by the way the chargee exercised its statutory power of sale in a public auction. In the premises therefore and for the reasons stated, the application for injunction must fail. It lacks merit. It is hereby dismissed with costs to the defendants.*** 1. This Court finds that the plaintiffs’ allegation that the suit properties were undervalued is not enough to warrant this Court to grant them an order for injunction. This Court is also of the finding that the plaintiffs have not established a *prima facie* case with a probability of success to warrant being granted an order for interlocutory injunction. 2. There is no dearth of authorities to support the legal position that a property offered as security becomes a commodity for sale in the event of default. See in the oft cited case of **Shimmers Plaza Limited v National Bank of Kenya Limited** [2013] KEHC 363 (KLR), where it was held as follows- ***The judge below found that no prima facie case was established and secondly that damages could infact be an adequate compensation as the appellant’s guaranteed security had been converted into a commodity for sale upon the same being charged to the respondent.*** 1. Bearing in mind the above decision, and considering the fact that the value of the suit properties can be readily ascertained through valuation, the defendant being a financial institution, would be capable of compensating the plaintiffs if this suit is ultimately decided in their favour. I find that the plaintiffs do not stand to suffer irreparable injury that cannot be adequately compensated by an award of damages in the event that the instant application not allowed. 2. Having found that no *prima facie* case has been established, the issue of balance of convenience does not arise. However, based on the analysis I have made, the balance of convenience tilts in favour of the defendant since the plaintiffs can always be compensated by an award of damages, in the event that this suit is successful. 3. In addition to the foregoing, it is not disputed that the plaintiffs were previously granted a conditional interlocutory injunction, but they did not demonstrate compliance with the conditional orders previously issued for depositing the sum of Kshs.30,000,000/=, in their loan account. It is trite that equity aids the vigilant, not the indolent. In the absence of evidence of substantial compliance or a concrete repayment plan, this Court is not persuaded that the plaintiffs have made out a case to warrant being granted an interlocutory injunction. **Whether the defendant should be compelled to withdraw all Notices to sell or auction the listed properties.** 1. This Court is of the considered view that the order being sought in the above issue is in the nature of a mandatory injunction, which is being sought at an interlocutory stage. It is now well settled that an order for mandatory injunction can only be granted in clear and exceptional circumstances. 2. In view of this Court’s finding that the plaintiffs have not established any illegality or fundamental defect in the issuance of the Statutory and Redemption Notices, there exists no basis upon which the Court can compel withdrawal of all Notices to sell or auction the listed properties. To do so would amount to unjustly fettering the defendant’s accrued statutory power of sale. 3. In the result, this Court finds that the plaintiffs’ application dated 16th August 2024 is not merited. It is hereby dismissed with costs to the defendant. It is so ordered. **DATED, SIGNED**and**DELIVERED**at**KIAMBU**on this **12TH** day of**JUNE 2026.** **Ruling delivered through Microsoft Teams Online Platform.** **NJOKI MWANGI** **JUDGE** **In the presence of:-** Ms Wanjiru Mwangi h/b Mr. Chege for the plaintiffs/applicants Ms Cheruiyot h/b for Mr. Kongere for the defendant Ms Julia – Court Assistant.