[2022] KEHC 617 (KLR)

Orbit Chemical Industries Ltd v P.N. Mashru Limited (Civil Appeal E144 of 2021) [2022] KEHC 617 (KLR) (Commercial and Tax) (12 May 2022) (Ruling)

Neutral citation: [2022] KEHC 617 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Civil Appeal E144 of 2021

JN Mulwa, J

May 12, 2022

Between

Orbit Chemical Industries Ltd

Applicant

and

P.N. Mashru Limited

Respondent

Ruling

1. Before the court is the Appellant’s Notice of Motion dated 2nd December, 2021 brought under Article 47(1) and 50(1) and (2) of the Constitution of Kenya, Sections 1A (1), IB, 3A and 63(e) of the Civil Procedure Act, Order 42 Rule 6 of the Civil Procedure Rulesand all other enabling provisions of the law. The applicant seeks an order of stay of execution of the ruling delivered on 3rd November, 2021 by Hon. Edgar Kagoni in Nairobi CMCC No. 832 of 2019: P.N. Mashru Limited v Orbit Chemical Industries Limited and all consequential orders thereto pending the hearing and determination of the substantive Appeal filed herein.

2. The application is based on the grounds on the face of the motion and the Supporting Affidavit of the Appellant’s Director, Sachen Chandaria. He avers that the Appellant has an arguable appeal as it was condemned unheard to pay the Respondent the disputed sums of Kshs. 2,875,540/- and USD. 55,372. 56 together with costs of the suit and interest. That as such, the Appellant stands to suffer substantial loss and damages if an order for stay of execution is not granted by this court as the Respondent may not be able to refund the decretal sum. Further, that there has been no inordinate delay in filing the instant application as the Ruling was delivered by the trial court on 3rd November, 2021. Lastly, that the Appellant is ready and willing to furnish such reasonable security as the court may find sufficient.

3. In opposition, the Respondent filed a Replying Affidavit sworn on 16th December, 2021 by its Business Development Manager Mwango Khamis Mwango. He averred that the Appellant did not place any evidence before the trial court to persuade the learned magistrate to exercise discretion in its favour and that the applicant has not satisfied the criteria for the grant of the reliefs sought in the application. It is further stated that the application is a dilatory tactic employed by the Appellant to delay and/or to obstruct the Respondent from enjoying the fruits of its judgment. Lastly, it is averred that the appropriate security in the circumstances herein would be a deposit of the entire decretal sum in a joint interest earning account within timelines prescribed by this honorable Court.

4. The only issue for determination is whether the Appellant has satisfied the conditions for the grant of stay of execution.

5. To begin with, it is important to note that the grant of stay of execution of a decree pending appeal is an exercise of court’s discretion which discretion must be exercised judiciously. See Butt v Rent Restriction Tribunal [1979] eKLR. Further, it is noteworthy that at this stage, the court is not concerned with the merits or otherwise of the appeal. An applicant is only required to satisfy the conditions for stay of execution laid down under Order 42 Rule 6 (1) & (2) of the Civil Procedure Rules which provides that:“6. (1)No appeal or second appeal shall operate as a stay of execution or proceedings under a decree or order appealed from except in so far as the court appealed from may order but, the court appealed from may for sufficient cause order stay of execution of such decree or order, and whether the application for such stay shall have been granted or refused by the court appealed from, the court to which such appeal is preferred shall be at liberty, on application being made, to consider such application and to make such order thereon as may to it seem just, and any person aggrieved by an order of stay made by the court from whose decision the appeal is preferred may apply to the appellate court to have such order set aside.(2)No order for stay of execution shall be made under subrule (1) unlessa.the court is satisfied that substantial loss may result to the applicant unless the order is made and that the application has been made without unreasonable delay; andb.such security as the court orders for the due performance of such decree or order as may ultimately be binding on him has been given by the applicant."

6. From the said provisions, it is clear that in order to succeed in an application for stay of execution, an applicant must demonstrate that substantial loss may result unless the order of stay is issued; that the application has been brought without undue delay; and must give security for the due performance of any decree or order that may ultimately be found to be binding on the applicant.

7. In the instant case, it is not disputed that the present application was filed timeously and without undue delay. The ruling of the lower court was delivered on 3rd November, 2021 and the instant application was filed just a month later on 2nd December, 2021.

8. As regards substantial loss, the Applicant maintained that if the contested colossal decretal sums of Kshs. 2,875,540 and USD. 55,372. 56 are paid to the Respondent before the Appellant is given a chance to ventilate its appeal, it will occasion substantial loss on its business as the Respondent is likely to have consumed the judgment sum by the time the appeal is determined. Reliance was placed on Michael Ntouthi Mitheu v Abraham Kivondo Musau(2021) eKLR.

9. On the other hand, the Respondent argues that the Appellant has not demonstrated in clear terms the nature of substantial loss it is likely to suffer should stay not be granted. The Respondent therefore urged the court to decline to grant the Appellant the order for stay so as to allow it to enjoy the fruits of its judgment.

10. It is well settled that substantial loss is the cornerstone of the jurisdiction for granting stay. For that reason, an applicant must demonstrate the substantial loss it stands to suffer if stay is not granted in order to justify keeping a decree holder out of the fruits of his or her judgment. In Kenya Shell Limited v Benjamin Karuga Kibiru & another [1986] eKLR, Platt JA stated thus:“It is usually a good rule to see if order XLI rule 4 of the Civil Procedure Rules can be substantiated. If there is no evidence of substantial loss to the applicant, it would be a rare case when an appeal would be rendered nugatory by some other event. Substantial loss in its various forms, is the corner stone of both jurisdictions for granting a stay. That is what has to be prevented. Therefore, without this evidence it is difficult to see why the respondents should be kept out of their money.”

11. There is no doubt that the sums of Kshs. 2,875,540 and USD. 55,372. 56 awarded to the Respondent in the impugned judgment are substantial amounts of money as rightly asserted by the Appellant. The Appellant expressed its apprehension about the Respondent’s capacity to repay the same in the event that the appeal succeeds. Having done so, the burden shifted to the Respondent to controvert the assertion by proving that it is capable of refunding the colossal amounts of money but it failed to do that. In the premises, I hold the view that the Appellant has established that it stands to suffer substantial loss if stay is not granted.

12. On the question of security, the Appellant stated that it has submitted itself to the direction of the Court by expressing its willingness to furnish reasonable security. However, the Appellant urged that the Court to be guided by fairness and justice in determining the appropriate security. The Respondent on its part reiterated its earlier position that the Appellant should be ordered to deposit the entire decretal sum in joint interest earning account

13. It is well settled that a court has discretion to determine the extent and nature of the security to be provided where a party is seeking stay of execution. I am satisfied that the Appellant has satisfied this condition as it has stated that it is ready and willing to furnish any such security as may be ordered by this court.

14. For the foregoing reasons, the court finds that the application dated 2nd December, 2021 is merited. The application is allowed on condition that the Appellant deposits the entire decretal sum into an interest earning account, in the joint names of the parties’ respective advocates, within 45 days of this ruling. If the order is not complied with, the stay shall lapse automatically. The cost of the application will abide the outcome of the appeal.Orders accordingly.

DATED SIGNED AND DELIVERERD AT NAIROBI THIS 12THDAY OF MAY 2022. J. N. MULWAJUDGE.