https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/9745

Sayani Brothers & Company (K) Ltd v Affilited Business Contractors Ltd & another (Civil Case 178 of 2013) [2026] KEHC 9745 (KLR) (Commercial and Tax) (2 July 2026) (Ruling) Neutral citation: [2026] KEHC 9745 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Civil Case 178 of 2013 F Gikonyo, J July 2, 2026 Between Sayani Brothers & Company (K) Limited Decree holder and Affilited Business Contractors Limited Judgment debtor and HFC Limited (Now HFCB Ltd) Objector Ruling 1.The objector/ applicant filed the notice of motion dated 21.7.2025 seeking in the main: -1.orders to permanently restrain the decree holder or their agents from proclaiming, attaching and/ or selling Land Reference No. 209/9346 IR No. 3490 and2.a declaration that any purported sale, transfer and registration of the subject property by the decree holder to any third party is unlawful, null and void and of no legal effect. 2.The application is brought under Order 22 Rules 51, 52 & 53 of the Civil Procedure Rules. It is supported by the affidavit sworn by the objector’s legal manager, Hedaya Malesi on 21.7.2025. 3.It was deposed that between May 2009 and June 2013 the objector issued various loan facilities to the judgment debtor secured by charges registered over the subject property on various dates. That the judgment debtor had an outstanding loan balance of Kshs. 140,707,335.26 as of 16.7.2025. Therefore, the objector has an overriding interest in the subject property superseding the right of the decree holder and any other creditors. 4.The grounds in support of the application are: -1.The decree holder issued a statutory demand notice dated 19.3.2025 to the judgment debtor seeking to sell the subject property in satisfaction of the decree dated 19.3.2025.2.The decree holder seeks to unlawfully and illegally sell the subject property.3.The statutory demand notice has lapsed and there is a high probability that the subject property will be sold to the objector’s detriment. Response 5.The decree holder opposed the application through the replying affidavit sworn by its director, Bhavika Seyani on 6.8.2025. 6.It was highlighted that: -1.According to the terms of the charge, the objector's recourse is to call up the judgment debtor to settle the entire facilities due.2.The objector does not state in any manner that the charged property is not sufficient to redeem both the outstanding loan and the decretal sum herein.3.It having served a statutory demand notice, which has not been set aside, it follows that the charged property is now subject of insolvency proceedings and liable to be attached save that the objector's claim would be paid in priority.4.The fact that a property of a judgment debtor subject of insolvency proceedings is charged is not an immunity to bar sale or to hold a Decree holder or a Creditor in perpetuity. Objector’s Submissions 7.The objector filed written submissions dated 1.9.2025. It submitted that it has demonstrated beneficial interest in the subject property. It relied on Stephen Kiprotich Koech v Edwin K. Barchilei; Joel Sitienei (Objector) [2019] eKLR and Arun C. Sharma v Ashana Raikundalia T/A A. Raikundalia & Co. Advocates & 4 others [2014] eKLR on the threshold in objection proceedings. 8.The objector submitted that the decree holder ought to have conducted due diligence before proceeding to issue the statutory demand. It argued that execution proceedings and liquidation proceedings are distinct and separate and as such the decree holder cannot purport to litigate the liquidation proceedings in this suit. 9.The objector relied on Desbro (Kenya) Limited v General Printers Limited; I & M Bank Limited & NCBA Bank Kenya PLC (Objector/ Applicants) [2021] KEHC 12972 (KLR) where the court held that the objector’s interest in the defendant’s attached assets took precedence of the plaintiff. 10.The objector asserted that like in the Desbro case [supra], the execution process has not been completed, and its interests rank higher than the decree holders. 11.The objector further submitted that it has demonstrated the three pillars of injunctions, prima facie case, irreparable injury and balance of convenience. It relied on Nguruman Limited v Jan Bonde Nielsen & 2 others [2014] eKLR. 12.In particular, the objector highlighted that it has adduced evidence that the subject property is charged to it. It also highlighted that it stands to suffer irreparable injury that cannot be compensated by damages as it would lose its security. That if the subject property is attached and/ or sold, the objector will have no way to recover the money owed in case of default by the judgment debtor. 13.The objector pointed out that it is not a party to the proceedings between the decree holder and the judgment debtor and that it would be a major inconvenience for its security to be attached and that it would upset the agreement between it and the judgment debtor. Decree holder’s submissions 14.The decree holder filed written submissions dated 18.11.2025. It submitted that Order 22 Rule 48 (1) does not bar an attachment of an immovable property which is charged or mortgaged. 15.The decree holder challenged the objector’s election to seek permanent reliefs yet it is a chargee. That the objector is shielding the judgment debtor from honouring its obligations to pay the decretal sum instead of limiting itself to protect its interest. 16.The decree holder concurred that the objector's debt ranks higher than its interest in the subject property. It however asserted that the issue of ranking of the debt is a matter to be addressed at the point of settlement of terms of sale. Analysis and Determination 17.I have considered the notice of objection, the application, affidavits, submissions and authorities cited. 18.The objector’s application is expressed to be brought under Order 22 Rules 51, 52 and 53 of the Civil Procedure Rules. 19.Order 22 Rule 51 is on objection to attachment. Sub rule (1) provides that: -(1)Any person claiming to be entitled to or to have a legal or equitable interest in the whole of or part of any property attached in execution of a decree may at any time prior to payment out of the proceeds of sale of such property give notice in writing to the court and to all the parties and to the decree-holder of his objection to the attachment of such property. 20.The background is that the decree holder served a statutory demand notice dated 19.3.2025 upon the judgment debtor. It was calling upon the judgment debtor to satisfy the decree issued on 27.2.2025 by the Hon. Deputy Registrar, Hon. Stellah Sagwe. 21.Order 22 Rule 51 applies where there has been attachment of property in execution of a decree and a third party claims a legal or equitable interest in that property. 22.In this matter, the subject property has NOT been attached in execution of the decree, only that, the decree holder has issued a statutory demand notice. 23.A statutory demand notice is a prelude to insolvency proceedings. 24.Once a statutory demand notice is issued, the debtor has 21 days to comply or apply to set aside the statutory demand, or the creditor may apply for a liquidation order. Regulation 17 of the Insolvency Regulations 25.A company's failure to comply with a statutory demand may be evidence of inability to pay debts. Section 384 of the Insolvency Act 26.Of a pointed significance to this application is the understanding that a statutory demand for purposes of the Insolvency Act is not an attachment of property in execution of a decree. 27.Making the issue that falls for determination to be: Whether the objector can import the provisions of Order 22 Rule 51 to object to a statutory demand? 28.The decree holder argued that the charged property is now subject of insolvency proceedings and liable to be attached. 29.On the other hand, the objector argued that its interest in the judgment debtor’s property takes precedence over the decree holder’s. 30.The decree holder admits that the objector's debt ranks higher than its interest in the subject property. 31.Therefore, there is no dispute that the objector has an interest in the subject property as the chargee. 32.That notwithstanding, there is no indication whether the decree holder has either applied for a liquidation order or filed a liquidation petition. Therefore, arguments that the property is subject of insolvency proceedings is misplaced. 33.Howsoever, a general principle of insolvency law is that ordinarily a secured creditor ranks higher than an unsecured creditor in respect to the debtor’s secured assets. 34.In the Desbro case [supra] the court held that the objectors’ interest in the attached assets of the defendant took precedence over that of the plaintiff. The court observed that whereas the defendant’s assets have been attached by the plaintiff who is the executing creditor herein, the execution process has not been completed since the assets have not been sold. 35.The Desbro case [supra] is distinguishable from the present case where the decree holder has not yet applied for execution through attachment of the subject property. 36.Therefore, it is my considered view that the objection application, filed before proclamation or application for attachment, is premature. I also find that exporting the provisions of Order 22 Rule 51 to object to a statutory demand is not appropriately situated. I doubt whether the objector has any standing to reply to a statutory demand notice issued to the debtor. 37.The approach adopted is misdirected and inappropriate. Permanent injunctive relief 38.Further, in the present case, the objector has sought a permanent injunction to restrain the decree holder from proclaiming, attaching and selling the subject property. 39.In my considered view, the prayer for permanent injunctive relief is problematic especially within objection proceedings, which are meant to determine whether the property is liable for attachment after proclamation. 40.The decree holder asserted that the issue of ranking of the debt is a matter to be addressed at the point of settlement of terms of sale. This argument is not ripe or available in the circumstances of this case. 41.Finally, the declaration sought is again premature because the incidence of sale has not arisen. Disposal 42.In conclusion, the application dated 21.7.2025 is dismissed with no order as to costs given the relationships claimed amongst the parties. DATED, SIGNED AND DELIVERED AT NAIROBI THROUGH MICROSOFT TEAMS ONLINE APPLICATION THIS 2ND DAY OF JULY, 2026-------------F. GIKONYO MJUDGEIn the presence of: -Bundotich for plaintiffDachi for ObjectorCA – Ivan/Aggrey