1. This ruling is in respect of three applications, that is; the first 1st application filed by the Plaintiff dated 18th February 2026, the second application filed by the 2nd Defendant dated 14th April 2026 and the 3rd application filed by the 1st Defendant dated 20th April 2026.
Application dated 18th February 2026
2. The Plaintiff moved the court under Articles 22, 23, 40 and 159 of the Constitution, Sections 1A, 1B and 3A of the Civil Procedure Act, and Order 40 rules 1, 2, and 4. In a nutshell, the Plaintiff seeks an interim injunctive order restraining the 2nd Defendant from releasing, transferring or otherwise dealing with monies held in Account Numbers 1003028001823 (KES) and 1003043000097 (EURO) operated by the 1st Defendant at the 2nd Defendant bank, being funds arising from the Kilifi Last Mile Connectivity Project, pending hearing and determination of the application and the suit. The Plaintiff further seeks preservation orders directing that all monies deposited into the said accounts be preserved and held intact by the 2nd Defendant pending determination of the suit, and costs of the application.
3. The application is premised on the grounds on the face of it and supported by the annexed affidavit of Karim Meghji who depones that the Plaintiff entered into a subcontracting and financing arrangement with the 1st Defendant for the supply of electrical infrastructure materials under the Kilifi Last Mile Connectivity Project. That pursuant to the arrangement, the Plaintiff financed, procured and supplied materials valued at Kshs. 61,578,919/=, relying on the 1st Defendant’s award under the project funded by Agence Française de Dévelopment (AFD).
4. The deponent averred that it was a fundamental term of the parties’ arrangement that the Plaintiff’s representative, Mr. Mikhail Karim Meghji, would be introduced as a mandatory signatory to the 1st Defendant’s Kenya Shillings and Euro project accounts held at the 2nd Defendant Bank. It was contended that although the 1st Defendant passed board resolutions introducing the Plaintiff’s representative as a mandatory signatory and the Bank initially acknowledged the mandate, the Plaintiff later discovered that the mandate had not been effectively implemented or maintained.
5. The Plaintiff deponed that the 2nd Defendant was fully aware of its financial exposure, the purpose of the signatory mandate, and the risk of dissipation of project funds, yet failed to preserve the agreed security structure. It was further stated that in December 2025 the Plaintiff became aware that the Ministry of Energy and Petroleum had forwarded payment vouchers relating to the project for settlement of funds payable under the contract.
6. The Plaintiff further averred that it incurred substantial expenditure in financing and supplying project materials, including payments to suppliers, transport costs and letters of credit charges, amounting to Kshs. 61,578,919/=, which sums remained unpaid save for minimal advances. It was contended that despite repeated demands, the 1st Defendant had failed and/or refused to settle the Plaintiff’s dues.
7. The deponent maintained that the Plaintiff had established a clear proprietary and equitable interest in the project funds by virtue of the financing arrangement, the agreed mandatory signatory structure and the traceability of the project payments. And that unless restrained, the 1st Defendant and the 2nd Defendant were likely to release and dissipate the funds held in the stated accounts thereby defeating the Plaintiff’s contractual and equitable security, thereby rendering recovery of its capital expenditure and profits impossible.
8. The application is opposed by the affidavit of Paul Mutemi sworn on 17th March 2026. He depones that the Plaintiff had failed to satisfy the principles governing grant of interlocutory injunctions under Order 40 Rule 1 of the Civil Procedure Rules. It was argued that the alleged claim of Kshs. 61,578,919/= was unverified, exaggerated and included undelivered materials and VAT allegedly not applicable to the suppliers. The 1st Respondent further contended that no funds had been disbursed into the project account and that the application was speculative and intended to unjustly freeze the account notwithstanding existing obligations to suppliers.
9. The deponent denied that the Plaintiff had entered into a subcontracting or supply arrangement with the 1st Defendant, maintaining instead that the agreement dated 14th August 2025 was purely a financing arrangement. It was averred that the Plaintiff lacked the technical qualifications and approvals required of a subcontractor or supplier and that all materials were delivered directly by approved manufacturers to project sites, as evidenced by delivery notes annexed to the affidavit.
10. The 1st Defendant deponed that granting the injunctive orders sought would frustrate implementation of the project, disrupt payments tied to performance certificates, expose the 1st Defendant to claims by suppliers and third parties, and risk breach of contract with the Ministry of Energy and Petroleum, including recall of performance guarantees.
11. It was further averred that the Plaintiff itself breached the arrangement on or about 27th September 2025 by unilaterally suspending operations and preventing manufacturers from releasing materials. The deponent stated that despite the existence of agreed alternative dispute resolution mechanisms, the Plaintiff failed to exhaust the same. It was also contended that the 1st Defendant made several attempts to resolve the dispute amicably through correspondence dated 21st and 23rd October 2025, whose efforts were allegedly ignored.
12. The deponent further stated that owing to the Plaintiff’s alleged breach and interference with the project, the 1st Defendant lawfully removed the Plaintiff’s representative as a mandatory signatory to the project bank account through a board resolution dated 4th February 2026. It was asserted that the Bank acted within its mandate and in accordance with the 1st Defendant’s instructions and governing instruments.
13. The 1st Defendant additionally averred that vendors had issued demands for unpaid supplies, demonstrating that the Plaintiff had not settled the alleged amounts. It was further contended that the contractual payment structure had not crystallized, that no invoices or reconciliation of accounts had been undertaken by the Plaintiff, and that no obligation to pay had arisen in respect of the alleged claims.
Application dated 14th April 2026
14. The 2nd Defendant, Middle East Bank Kenya Limited, moved the Court by way of an interpleader application under Order 34 of the Civil Procedure Rules seeking leave to institute interpleader proceedings in respect of funds held in Account Nos. 1003028001823 and 100304300097 in the name of the 1st Defendant, Nyikaland International Technologies Group Limited. The Bank further sought leave to deposit into Court the sum of Kshs.44,378,548.30, a discharge from liability upon such deposit, a preservatory order restraining further instructions over the accounts, and protection from adverse proceedings pending determination of the competing claims.
15. The application was premised on the grounds on its face and supported by the affidavit sworn by Edith Omolo, the Bank’s Head of Risk and Compliance, who deponed that the dispute arose following board resolutions passed by the 1st Defendant regarding the removal and subsequent revocation of Mr. Mikhail Karim Meghji as a mandatory signatory to the accounts receiving proceeds from the project contract identified as KPL/68.5/OC7/8/23/BO1 LOT 17 Kilifi County. It was further deponed that the Bank had received conflicting instructions concerning operation of the accounts and the legal status of the signatory mandates.
16. The 1st Defendant opposes the application through the undated replying affidavit of Paul Mutemi. He depones that the Plaintiff was merely a financier under the agreement dated 14th August 2025 and not a subcontractor or supplier in the project. That the Plaintiff’s role was limited to financing approved vendors and not extending to any technical execution of the project.
17. It was further stated that the Plaintiff breached the agreement by unilaterally suspending operations and preventing the release of materials, thereby disrupting the project. It is averred that despite attempts to resolve the dispute through alternative dispute resolution mechanisms, the Plaintiff failed to engage, prompting the 1st Defendant to lawfully remove Mr. Mikhail Karim Meghji as a signatory to the project accounts through a board resolution dated 4th February 2026.
18. He maintains that the 1st Defendant is the lawful account holder and entitled to operate the project accounts for purposes of paying suppliers and implementing the Kenya Power Last Mile Connectivity Project. It is further contended that the Plaintiff neither issued invoices nor complied with the contractual payment procedures and that any alleged claim remains unverified and disputed.
19. The deponent avers that the funds credited into the accounts were project funds remitted by the National Treasury, the European Union and Agence Française de Dévelopment (AFD) for implementation of the Kenya Power project, and that freezing the accounts would jeopardize completion of the project, expose the 1st Defendant to contractual breaches and third-party claims, and risk termination of the project.
20. Consequently, the 1st Defendant urges the Court to vacate the freezing orders issued on 15th April 2026, contending that the Plaintiff would suffer no prejudice compensable in damages while the 1st Defendant stands to suffer irreparable harm.
21. The Plaintiff, however, did not oppose preservation of the disputed funds by deposit into Court, but maintained that such preservation should not absolve the Bank from liability or entitle it to costs.
Application dated 20th April 2026
22. The 1st Defendant, Nyikaland Group Limited, moved the Court under Articles 47 and 50(1) of the Constitution, Orders 34, 40 rule 7, Order 51 Rule 1 of the Civil Procedure Rules, and sections 1A, 1B and 63(c) & (e) of the Civil Procedure Act, and sought the following orders:
i. An order to vary the orders of this court issued on 15th April 2026 n respect to all operations of account number 1003028001823 (Kshs.) and 10030430000097 pending the hearing and determination of the suit.
ii. In the alternative an order permitting the 1st Defendant to continue operating the said accounts and directing the 2nd Defendant to honour all instructions issued thereto by the 1st Defendant pending determination of this Application, on condition that the 1st Defendant indemnifies the 2nd Defendant against any claims, losses or liabilities that may arise from the continued operation of the said accounts.
iii. An order for the interpleader pleadings be expedited and be heard on a priority basis owing to the completion timelines of the project.
iv. An order directing the Plaintiff and the 2nd Defendant to disclose, on oath, the source, manner, and circumstances under which they obtained the letter dated 9th December 2025 addressed to the Principal Secretary, National Treasury by the Principal Secretary, Ministry of Energy and Petroleum, the same being a confidential Government communication, and to produce any authority or basis upon which they came into possession thereof.
v. Upon inquiry into the source and use of the letter dated 9th December 2025, to issue such orders and/or sanctions as it may deem fit against the Plaintiff and/or the 2nd Defendant for the improper use of a confidential Government communication in these proceedings.
vi. Costs be provided for.
23. The application is premised on the grounds of the face of it and supported by the affidavit of Paul Mutemi, sworn on 20th April 2026. He avers that he is the Director of the 1st Defendant. And that the 1st Defendant operates earlier stated bank accounts held with the 2nd Defendant in the ordinary course of its business as an international EPC contractor. The 1st Defendant is currently undertaking a Kenya Power PLC last-mile electricity project scheduled for completion by 25th May 2026. He avers that the project forms part of a critical national electrification programme under the Government Delivery Unit within the Office of the President and is governed by strict timelines, continuous supervision, accountability mechanisms, structured work schedules and daily targets.
24. He avers that on 13th April 2026, the sum of Kshs. 44,378,548.30 was credited into the account, being payments for the works undertaken. On 14th April 2026, the 2nd Defendant allegedly froze and/or restricted the account without notice or a court order.
25. He further contends that the restriction led to the 2nd Defendant's dishonoring of several payment instruments issued to financiers and advocates despite sufficient funds being available, thereby exposing the 1st Defendant to contractual breaches, disruption of project execution, and interference with its right to legal representation and fair hearing.
26. He further avers that the 2nd Defendant subsequently obtained ex parte orders on 15th April 2026 and failed to disclose to the Court the existence of earlier pending applications concerning similar freezing orders. It is contended that the non-disclosure was deliberate and intended to procure ex parte relief outside the existing procedural framework, causing economic prejudice to the 1st Defendant. He also accuses the 2nd Defendant of colluding with the Plaintiff rather than as act as a neutral stakeholder.
27. He further deponed that the funds in question were traceable project-specific funds paid by Agence Francaise de Development (AFD) on behalf of the Government of Kenya for execution of the infrastructure project and were earmarked for service providers, suppliers, and financiers.
28. He avers that the Plaintiff’s claim remains a contested monetary claim unsupported by the underlying transactions, in which no proprietary right has been established, and the continued restriction of the account is unjustified. He avers that under the Contract, the 1st Defendant is entitled to receive substantial further payments, the total contract value being approximately KES 466,594,315.00 and EURO 1,864,639.15, and that payments are made in tranches based on certified works, with additional sums remaining due and payable to the 1st Defendant as the project progresses.
29. He contends that the freezing of the account has halted project execution, disrupted payments, exposed the 1st Defendant to default and reputational damage. He avers that the completion of the project has been jeopardized within the extended deadline of 25th May 2026. He avers that it remains a going concern capable of satisfying any decree that may ultimately be issued and argues that the continued restriction of the account effectively amounts to compelling the furnishing of security before trial and poses a challenge on the 1st Defendant in renewing and/or extending the Performance Guarantee.
30. The 1st Defendant therefore urges the Court to set aside the freezing orders, restore full operation of the accounts, and states that it is willing to indemnify the 2nd Defendant against any claims arising therefrom.
31. The 2nd Defendant opposes the application through the Replying affidavit sworn by Edith Omolo on 4th May 2026. She depones that when the matter first came before the court on 19th March 2026, no funds had been received into the 1st Defendant’s account and consequently, the court declined to grant interim injunctive orders. The position, however, changed upon receipt of substantial funds on 13th April 2026 and 17th April 2026, amounting to Kshs. 44,378,548.30 and Kshs. 14,792,849.40 respectively, thereby crystallizing the competing claims between the Plaintiff and the 1st Defendant.
32. She avers that the Plaintiff and the 1st Defendant had laid competing claims over the said funds, exposing the Bank to the risk of double liability, conflicting legal obligations and multiplicity of proceedings. Consequently, the Bank moved the Court through interpleader proceedings dated 14th April 2026 seeking directions on the rightful entitlement to the funds, and on 15th April 2026, the Court directed the Bank not to honour any instructions relating to the account pending hearing of the interpleader proceedings.
33. She avers that the 2nd Defendant is a neutral stakeholder with no proprietary or beneficial interest in the disputed funds and that its actions were undertaken in good faith and in fulfilment of its legal and fiduciary obligations. It denied allegations of collusion and contended that the Applicant had ignored the existence of competing claims and reliefs sought against the Bank.
34. She further contends that after commencement of the proceedings, the 1st Defendant demanded closure of the subject accounts and transfer of the disputed funds to another financial institution, which, according to the Bank heightened the risk of dissipation of the funds and justified the institution of interpleader proceedings. The deponent maintained that the temporary restrictions imposed on the account were lawful, proportionate and necessary to preserve the subject matter pending judicial determination.
35. She avers that the 2nd Defendant made full disclosure of all material facts within its knowledge at the time of filing the interpleader application, and that the Bank was neither privy to the underlying contractual arrangements between the Plaintiff and the 1st Defendant nor capable of adjudicating the competing rights claimed over the funds.
36. It was contended that the issue of entitlement to the funds is properly before the Court in the interpleader proceedings and that the Bank is bound by any directions issued therein. That the application is misconceived and merely sought to shift blame onto the Bank, which had acted lawfully in preserving disputed funds pending determination by the Court.
37. The three applications were argued and submitted on orally before Court.
Analysis and determination
38. I have carefully considered the three applications, the affidavits on record, the rival submissions by counsel and the authorities cited. I have isolated the following issues for determination are whether:
i. The Plaintiff has established grounds for grant of injunctive and preservatory relief.
ii. The 2nd Defendant properly invoked interpleader proceedings under Order 34 of the Civil Procedure Rules.
iii. Sufficient grounds have been established to warrant variation and/or discharge of the interim preservatory orders issued on 15th April 2026; and
iv. Who should bear costs.
39. On the first issue, interlocutory injunctions are provided for under Order 40 Rules (1), (a) and (b) of the Civil Procedure Rules. And the principles governing grant of interlocutory injunctions are now settled in Giella v Cassman Brown & Co. Ltd [1973] EA 358, where the Court held that:
“Firstly, an applicant must show a prima facie case with a probability of success. Secondly, an interlocutory injunction will not normally be granted unless the applicant might otherwise suffer irreparable injury, which would not adequately be compensated by an award of damages. Thirdly, if the Court is in doubt, it will decide an application on the balance of convenience.”
40. These principles were reaffirmed by the Court of Appeal in Nguruman Limited v Jan Bonde Nielsen & 2 Others [2014] eKLR, where the Court emphasized that all the above three conditions and stages are to be applied as separate, distinct and logical hurdles which the applicant is expected to surmount sequentially. If the applicant establishes a prima facie case, that alone is not sufficient basis to grant an interlocutory injunction, the court must further be satisfied that the injury the respondent will suffer, in the event the injunction is not granted, will be irreparable. In other words, if damages recoverable in law is an adequate remedy and the respondent is capable of paying, no interlocutory order of injunction should normally be granted, however strong the applicant’s claim may appear at that stage. If prima facie case is not established, then irreparable injury and balance of convenience need no consideration. The existence of a prima facie case does not permit “leap-frogging” by the applicant to injunction directly without crossing the other hurdles in between.
41. A prima facie case is defined in Mrao Ltd v First American Bank of Kenya Ltd & 2 others [2003] KLR 125 as one 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 to call for an explanation or rebuttal from the latter. A prima facie case is more than an arguable case...”
42. In the present case, the Plaintiff contends that it financed the procurement and supply of electrical infrastructure materials for the Kilifi Last Mile Connectivity Project to the tune of Kshs. 61,578,919/=. It further relies on the agreement dated 2nd September 2025 under which its representative was to be introduced as a mandatory signatory to the project accounts maintained at the 2nd Defendant bank. It is the Plaintiff’s case that the sums advanced remain unpaid and that, unless the funds are preserved, there exists a real risk of dissipation to its detriment.
43. The 1st Defendant, however, disputes the Plaintiff’s claim and maintains that the Plaintiff merely acted as a financier and not as a subcontractor or supplier. It further contends that the Plaintiff breached the agreement by suspending operations and interfering with the release of materials, and that continued freezing of the project accounts threatens implementation of an ongoing public infrastructure project.
44. At this interlocutory stage, the Court is not required to make definitive findings on the merits of the rival contractual positions. Nonetheless, the material placed before Court demonstrates that the Plaintiff participated in financing aspects of the project and that arrangements existed concerning operation of the project accounts and signatory mandates. It is equally not disputed that substantial project funds have since been credited into the said accounts. In that regard, the Court is satisfied that there exists a genuine dispute regarding entitlement to and application of the project fund.
45. The Court must, however, balance the competing interests before it. The evidence on record demonstrates that the subject funds relate to an ongoing Kenya Power Last Mile Connectivity Project scheduled for completion by 25th May 2026 under the Government Delivery Unit electrification programme. The evidence further demonstrates that freezing of the accounts has disrupted payments to suppliers, financiers and service providers and poses a real risk of interruption of the project.
46. The Court cannot ignore the public interest dimensions attendant to this dispute. In Suleiman v Amboseli Resort Limited [2004] KEHC 2624 (KLR) Ojwang J. (as he then was) observed that:
“…the Court, responding to prayers for interlocutory injunctive relief, should always opt for the lower rather than the higher risk of injustice.”
47. In the circumstances of this case, I am not persuaded that the Plaintiff has established a prima facie proprietary claim over the funds sufficient to justify a complete freezing of the accounts pending trial.
48. On irreparable harm, the Plaintiff’s claim, though arguable, is fundamentally monetary in nature and is capable of compensation by an award of damages should the suit ultimately succeed.
49. On the balance of convenience, I find that it tilts in favour of permitting continued operation of the accounts for purposes of implementation and completion of the project.
50. However, considering that the 1st Defendant disputes the amounts claimed by the Plaintiff, I find merit in preserving part of the disputed funds pending hearing and determination of the suit so as to safeguard the substratum of the dispute and balance the competing interests of the parties. In the premises, the Plaintiff’s application succeeds only to the extent of the issuance of limited preservatory orders.
51. I now turn to the second issue on the interpleader application dated 14th April 2026. The law governing interpleader proceedings is provided under Section 58 of the Civil Procedure Act and Order 34 of the Civil Procedure Rules.
52. Order 34 Rule 2 thereof sets out the conditions to be satisfied before interpleader relief may issue. According to this provision, an interpleader must satisfy:
a) That the applicant claims no interest in the subject matter in dispute other than for charges or costs;
b) That there is no collusion between the applicant and any of the claimants;
c) That the applicant is willing to pay or transfer the subject matter into court or to dispose of it as the court may direct.
53. The purpose of interpleader proceedings is to protect a neutral stakeholder faced with rival claims over the same subject matter from exposure to multiple suits or double liability. The stakeholder merely seeks the Court’s direction as to who the property or funds should properly be released.
54. In the instant case, it is not disputed that the 2nd Defendant holds funds amounting to Kshs. 44,378,548.30 in the accounts operated by the 1st Defendant. The material before the Court further demonstrates that competing claims have been asserted by the Plaintiff and the 1st Defendant over the said funds. The Plaintiff claims an equitable and contractual interest arising from the financing arrangement and signatory mandate, while the 1st Defendant maintains that the funds constitute project monies.
55. Therefore, I am satisfied that the 2nd Defendant was exposed to competing claims and conflicting obligations regarding the operation of the accounts and the disbursement of the funds, and the institution of interpleader proceedings was therefore not without basis.
56. The Court also notes that there is substantive allegations pleaded against the 2nd Defendant relating to the operation of the accounts, the handling of the signatory mandate and the alleged freezing of the accounts. Those allegations raise serious issues which require interrogation at the trial.
57. Accordingly, while the Court is satisfied that the 2nd Defendant properly invoked the interpleader jurisdiction of the Court for purposes of preservation and protection against competing claims, I am not persuaded that the Bank can, at this interlocutory stage, obtain a complete discharge from liability before the substantive issues pleaded against it are heard and determined.
58. The prayer seeking discharge of the 2nd Defendant from all liability is therefore premature and is declined.
59. On the third issue, the 1st Defendant seeks the discharge and/or variation of the preservatory orders issued on 15th April 2026. Order 40 Rule 7 of the Civil Procedure Rules which provides that a court may discharge, vary or set aside any injunction order on application by any party who is dissatisfied with such order. The Court’s discretionary jurisdiction in that respect is subject to sufficient cause being shown, and must be exercised judiciously.
60. From the material before the Court, it is evident that the subject funds relate to an ongoing public infrastructure project under the Kenya Power Last Mile Connectivity Programme scheduled for completion by 25th May 2026. The Court will not ignore the public interest dimensions attendant to the implementation of a national electrification project. Equally, the Court must ensure that the Plaintiff’s claim, if ultimately successful, is not rendered nugatory.
61. In balancing the competing rights and interests of the parties, I am persuaded that continued blanket freezing of the accounts pending hearing and determination of the suit would occasion disproportionate prejudice not only to the 1st Defendant but also to third parties involved in execution of the project.
62. There are sufficient grounds established to warrant variation of the preservatory orders issued on 15th April 2026.
63. As a consequence, I make the following orders:
i. A preservatory order is hereby issued preserving the sum of Kshs. 30,000,000/= currently held in Account Nos. 1003028001823 and 10030430000097 pending further orders of the Court.
ii. The 1st Defendant shall be at liberty to operate the subject accounts strictly for purposes of implementation of the Kenya Power Last Mile Connectivity Project, payment of suppliers, service providers, statutory obligations and project-related expenses.
iii. The 2nd Defendant shall continue holding the preserved funds subject to further directions of the Court.
iv. The interim freezing orders issued on 15th April 2026 are hereby varied and or set aside, to the extent in (i) and (ii) above.
v. The interpleader proceedings and the main suit shall be expedited and heard on a priority basis.
vi. The prayer seeking discharge of the 2nd Defendant from liability is declined at this stage.
vii. The prayer seeking disclosure and inquiry into acquisition of the Government correspondence dated 9th December 2025 is deferred to the substantive hearing, where evidence may properly be led and tested.
viii. Costs of the three applications shall abide the outcome of the main suit.
RULING delivered virtually, dated and signed at NAIROBI
This 21st day of May 2026.
P.M. MULWA
JUDGE
In the presence of:
Mr. Kamenju & Mr. Omondi h/b for Mr. Ikua for 1st Defendant
Ms. Kiiru for 2nd Defendant
Court Assistant: Lispa
Application dated 18th February 2026
2. The Plaintiff moved the court under Articles 22, 23, 40 and 159 of the Constitution, Sections 1A, 1B and 3A of the Civil Procedure Act, and Order 40 rules 1, 2, and 4. In a nutshell, the Plaintiff seeks an interim injunctive order restraining the 2nd Defendant from releasing, transferring or otherwise dealing with monies held in Account Numbers 1003028001823 (KES) and 1003043000097 (EURO) operated by the 1st Defendant at the 2nd Defendant bank, being funds arising from the Kilifi Last Mile Connectivity Project, pending hearing and determination of the application and the suit. The Plaintiff further seeks preservation orders directing that all monies deposited into the said accounts be preserved and held intact by the 2nd Defendant pending determination of the suit, and costs of the application.
3. The application is premised on the grounds on the face of it and supported by the annexed affidavit of Karim Meghji who depones that the Plaintiff entered into a subcontracting and financing arrangement with the 1st Defendant for the supply of electrical infrastructure materials under the Kilifi Last Mile Connectivity Project. That pursuant to the arrangement, the Plaintiff financed, procured and supplied materials valued at Kshs. 61,578,919/=, relying on the 1st Defendant’s award under the project funded by Agence Française de Dévelopment (AFD).
4. The deponent averred that it was a fundamental term of the parties’ arrangement that the Plaintiff’s representative, Mr. Mikhail Karim Meghji, would be introduced as a mandatory signatory to the 1st Defendant’s Kenya Shillings and Euro project accounts held at the 2nd Defendant Bank. It was contended that although the 1st Defendant passed board resolutions introducing the Plaintiff’s representative as a mandatory signatory and the Bank initially acknowledged the mandate, the Plaintiff later discovered that the mandate had not been effectively implemented or maintained.
5. The Plaintiff deponed that the 2nd Defendant was fully aware of its financial exposure, the purpose of the signatory mandate, and the risk of dissipation of project funds, yet failed to preserve the agreed security structure. It was further stated that in December 2025 the Plaintiff became aware that the Ministry of Energy and Petroleum had forwarded payment vouchers relating to the project for settlement of funds payable under the contract.
6. The Plaintiff further averred that it incurred substantial expenditure in financing and supplying project materials, including payments to suppliers, transport costs and letters of credit charges, amounting to Kshs. 61,578,919/=, which sums remained unpaid save for minimal advances. It was contended that despite repeated demands, the 1st Defendant had failed and/or refused to settle the Plaintiff’s dues.
7. The deponent maintained that the Plaintiff had established a clear proprietary and equitable interest in the project funds by virtue of the financing arrangement, the agreed mandatory signatory structure and the traceability of the project payments. And that unless restrained, the 1st Defendant and the 2nd Defendant were likely to release and dissipate the funds held in the stated accounts thereby defeating the Plaintiff’s contractual and equitable security, thereby rendering recovery of its capital expenditure and profits impossible.
8. The application is opposed by the affidavit of Paul Mutemi sworn on 17th March 2026. He depones that the Plaintiff had failed to satisfy the principles governing grant of interlocutory injunctions under Order 40 Rule 1 of the Civil Procedure Rules. It was argued that the alleged claim of Kshs. 61,578,919/= was unverified, exaggerated and included undelivered materials and VAT allegedly not applicable to the suppliers. The 1st Respondent further contended that no funds had been disbursed into the project account and that the application was speculative and intended to unjustly freeze the account notwithstanding existing obligations to suppliers.
9. The deponent denied that the Plaintiff had entered into a subcontracting or supply arrangement with the 1st Defendant, maintaining instead that the agreement dated 14th August 2025 was purely a financing arrangement. It was averred that the Plaintiff lacked the technical qualifications and approvals required of a subcontractor or supplier and that all materials were delivered directly by approved manufacturers to project sites, as evidenced by delivery notes annexed to the affidavit.
10. The 1st Defendant deponed that granting the injunctive orders sought would frustrate implementation of the project, disrupt payments tied to performance certificates, expose the 1st Defendant to claims by suppliers and third parties, and risk breach of contract with the Ministry of Energy and Petroleum, including recall of performance guarantees.
11. It was further averred that the Plaintiff itself breached the arrangement on or about 27th September 2025 by unilaterally suspending operations and preventing manufacturers from releasing materials. The deponent stated that despite the existence of agreed alternative dispute resolution mechanisms, the Plaintiff failed to exhaust the same. It was also contended that the 1st Defendant made several attempts to resolve the dispute amicably through correspondence dated 21st and 23rd October 2025, whose efforts were allegedly ignored.
12. The deponent further stated that owing to the Plaintiff’s alleged breach and interference with the project, the 1st Defendant lawfully removed the Plaintiff’s representative as a mandatory signatory to the project bank account through a board resolution dated 4th February 2026. It was asserted that the Bank acted within its mandate and in accordance with the 1st Defendant’s instructions and governing instruments.
13. The 1st Defendant additionally averred that vendors had issued demands for unpaid supplies, demonstrating that the Plaintiff had not settled the alleged amounts. It was further contended that the contractual payment structure had not crystallized, that no invoices or reconciliation of accounts had been undertaken by the Plaintiff, and that no obligation to pay had arisen in respect of the alleged claims.
Application dated 14th April 2026
14. The 2nd Defendant, Middle East Bank Kenya Limited, moved the Court by way of an interpleader application under Order 34 of the Civil Procedure Rules seeking leave to institute interpleader proceedings in respect of funds held in Account Nos. 1003028001823 and 100304300097 in the name of the 1st Defendant, Nyikaland International Technologies Group Limited. The Bank further sought leave to deposit into Court the sum of Kshs.44,378,548.30, a discharge from liability upon such deposit, a preservatory order restraining further instructions over the accounts, and protection from adverse proceedings pending determination of the competing claims.
15. The application was premised on the grounds on its face and supported by the affidavit sworn by Edith Omolo, the Bank’s Head of Risk and Compliance, who deponed that the dispute arose following board resolutions passed by the 1st Defendant regarding the removal and subsequent revocation of Mr. Mikhail Karim Meghji as a mandatory signatory to the accounts receiving proceeds from the project contract identified as KPL/68.5/OC7/8/23/BO1 LOT 17 Kilifi County. It was further deponed that the Bank had received conflicting instructions concerning operation of the accounts and the legal status of the signatory mandates.
16. The 1st Defendant opposes the application through the undated replying affidavit of Paul Mutemi. He depones that the Plaintiff was merely a financier under the agreement dated 14th August 2025 and not a subcontractor or supplier in the project. That the Plaintiff’s role was limited to financing approved vendors and not extending to any technical execution of the project.
17. It was further stated that the Plaintiff breached the agreement by unilaterally suspending operations and preventing the release of materials, thereby disrupting the project. It is averred that despite attempts to resolve the dispute through alternative dispute resolution mechanisms, the Plaintiff failed to engage, prompting the 1st Defendant to lawfully remove Mr. Mikhail Karim Meghji as a signatory to the project accounts through a board resolution dated 4th February 2026.
18. He maintains that the 1st Defendant is the lawful account holder and entitled to operate the project accounts for purposes of paying suppliers and implementing the Kenya Power Last Mile Connectivity Project. It is further contended that the Plaintiff neither issued invoices nor complied with the contractual payment procedures and that any alleged claim remains unverified and disputed.
19. The deponent avers that the funds credited into the accounts were project funds remitted by the National Treasury, the European Union and Agence Française de Dévelopment (AFD) for implementation of the Kenya Power project, and that freezing the accounts would jeopardize completion of the project, expose the 1st Defendant to contractual breaches and third-party claims, and risk termination of the project.
20. Consequently, the 1st Defendant urges the Court to vacate the freezing orders issued on 15th April 2026, contending that the Plaintiff would suffer no prejudice compensable in damages while the 1st Defendant stands to suffer irreparable harm.
21. The Plaintiff, however, did not oppose preservation of the disputed funds by deposit into Court, but maintained that such preservation should not absolve the Bank from liability or entitle it to costs.
Application dated 20th April 2026
22. The 1st Defendant, Nyikaland Group Limited, moved the Court under Articles 47 and 50(1) of the Constitution, Orders 34, 40 rule 7, Order 51 Rule 1 of the Civil Procedure Rules, and sections 1A, 1B and 63(c) & (e) of the Civil Procedure Act, and sought the following orders:
i. An order to vary the orders of this court issued on 15th April 2026 n respect to all operations of account number 1003028001823 (Kshs.) and 10030430000097 pending the hearing and determination of the suit.
ii. In the alternative an order permitting the 1st Defendant to continue operating the said accounts and directing the 2nd Defendant to honour all instructions issued thereto by the 1st Defendant pending determination of this Application, on condition that the 1st Defendant indemnifies the 2nd Defendant against any claims, losses or liabilities that may arise from the continued operation of the said accounts.
iii. An order for the interpleader pleadings be expedited and be heard on a priority basis owing to the completion timelines of the project.
iv. An order directing the Plaintiff and the 2nd Defendant to disclose, on oath, the source, manner, and circumstances under which they obtained the letter dated 9th December 2025 addressed to the Principal Secretary, National Treasury by the Principal Secretary, Ministry of Energy and Petroleum, the same being a confidential Government communication, and to produce any authority or basis upon which they came into possession thereof.
v. Upon inquiry into the source and use of the letter dated 9th December 2025, to issue such orders and/or sanctions as it may deem fit against the Plaintiff and/or the 2nd Defendant for the improper use of a confidential Government communication in these proceedings.
vi. Costs be provided for.
23. The application is premised on the grounds of the face of it and supported by the affidavit of Paul Mutemi, sworn on 20th April 2026. He avers that he is the Director of the 1st Defendant. And that the 1st Defendant operates earlier stated bank accounts held with the 2nd Defendant in the ordinary course of its business as an international EPC contractor. The 1st Defendant is currently undertaking a Kenya Power PLC last-mile electricity project scheduled for completion by 25th May 2026. He avers that the project forms part of a critical national electrification programme under the Government Delivery Unit within the Office of the President and is governed by strict timelines, continuous supervision, accountability mechanisms, structured work schedules and daily targets.
24. He avers that on 13th April 2026, the sum of Kshs. 44,378,548.30 was credited into the account, being payments for the works undertaken. On 14th April 2026, the 2nd Defendant allegedly froze and/or restricted the account without notice or a court order.
25. He further contends that the restriction led to the 2nd Defendant's dishonoring of several payment instruments issued to financiers and advocates despite sufficient funds being available, thereby exposing the 1st Defendant to contractual breaches, disruption of project execution, and interference with its right to legal representation and fair hearing.
26. He further avers that the 2nd Defendant subsequently obtained ex parte orders on 15th April 2026 and failed to disclose to the Court the existence of earlier pending applications concerning similar freezing orders. It is contended that the non-disclosure was deliberate and intended to procure ex parte relief outside the existing procedural framework, causing economic prejudice to the 1st Defendant. He also accuses the 2nd Defendant of colluding with the Plaintiff rather than as act as a neutral stakeholder.
27. He further deponed that the funds in question were traceable project-specific funds paid by Agence Francaise de Development (AFD) on behalf of the Government of Kenya for execution of the infrastructure project and were earmarked for service providers, suppliers, and financiers.
28. He avers that the Plaintiff’s claim remains a contested monetary claim unsupported by the underlying transactions, in which no proprietary right has been established, and the continued restriction of the account is unjustified. He avers that under the Contract, the 1st Defendant is entitled to receive substantial further payments, the total contract value being approximately KES 466,594,315.00 and EURO 1,864,639.15, and that payments are made in tranches based on certified works, with additional sums remaining due and payable to the 1st Defendant as the project progresses.
29. He contends that the freezing of the account has halted project execution, disrupted payments, exposed the 1st Defendant to default and reputational damage. He avers that the completion of the project has been jeopardized within the extended deadline of 25th May 2026. He avers that it remains a going concern capable of satisfying any decree that may ultimately be issued and argues that the continued restriction of the account effectively amounts to compelling the furnishing of security before trial and poses a challenge on the 1st Defendant in renewing and/or extending the Performance Guarantee.
30. The 1st Defendant therefore urges the Court to set aside the freezing orders, restore full operation of the accounts, and states that it is willing to indemnify the 2nd Defendant against any claims arising therefrom.
31. The 2nd Defendant opposes the application through the Replying affidavit sworn by Edith Omolo on 4th May 2026. She depones that when the matter first came before the court on 19th March 2026, no funds had been received into the 1st Defendant’s account and consequently, the court declined to grant interim injunctive orders. The position, however, changed upon receipt of substantial funds on 13th April 2026 and 17th April 2026, amounting to Kshs. 44,378,548.30 and Kshs. 14,792,849.40 respectively, thereby crystallizing the competing claims between the Plaintiff and the 1st Defendant.
32. She avers that the Plaintiff and the 1st Defendant had laid competing claims over the said funds, exposing the Bank to the risk of double liability, conflicting legal obligations and multiplicity of proceedings. Consequently, the Bank moved the Court through interpleader proceedings dated 14th April 2026 seeking directions on the rightful entitlement to the funds, and on 15th April 2026, the Court directed the Bank not to honour any instructions relating to the account pending hearing of the interpleader proceedings.
33. She avers that the 2nd Defendant is a neutral stakeholder with no proprietary or beneficial interest in the disputed funds and that its actions were undertaken in good faith and in fulfilment of its legal and fiduciary obligations. It denied allegations of collusion and contended that the Applicant had ignored the existence of competing claims and reliefs sought against the Bank.
34. She further contends that after commencement of the proceedings, the 1st Defendant demanded closure of the subject accounts and transfer of the disputed funds to another financial institution, which, according to the Bank heightened the risk of dissipation of the funds and justified the institution of interpleader proceedings. The deponent maintained that the temporary restrictions imposed on the account were lawful, proportionate and necessary to preserve the subject matter pending judicial determination.
35. She avers that the 2nd Defendant made full disclosure of all material facts within its knowledge at the time of filing the interpleader application, and that the Bank was neither privy to the underlying contractual arrangements between the Plaintiff and the 1st Defendant nor capable of adjudicating the competing rights claimed over the funds.
36. It was contended that the issue of entitlement to the funds is properly before the Court in the interpleader proceedings and that the Bank is bound by any directions issued therein. That the application is misconceived and merely sought to shift blame onto the Bank, which had acted lawfully in preserving disputed funds pending determination by the Court.
37. The three applications were argued and submitted on orally before Court.
Analysis and determination
38. I have carefully considered the three applications, the affidavits on record, the rival submissions by counsel and the authorities cited. I have isolated the following issues for determination are whether:
i. The Plaintiff has established grounds for grant of injunctive and preservatory relief.
ii. The 2nd Defendant properly invoked interpleader proceedings under Order 34 of the Civil Procedure Rules.
iii. Sufficient grounds have been established to warrant variation and/or discharge of the interim preservatory orders issued on 15th April 2026; and
iv. Who should bear costs.
39. On the first issue, interlocutory injunctions are provided for under Order 40 Rules (1), (a) and (b) of the Civil Procedure Rules. And the principles governing grant of interlocutory injunctions are now settled in Giella v Cassman Brown & Co. Ltd [1973] EA 358, where the Court held that:
“Firstly, an applicant must show a prima facie case with a probability of success. Secondly, an interlocutory injunction will not normally be granted unless the applicant might otherwise suffer irreparable injury, which would not adequately be compensated by an award of damages. Thirdly, if the Court is in doubt, it will decide an application on the balance of convenience.”
40. These principles were reaffirmed by the Court of Appeal in Nguruman Limited v Jan Bonde Nielsen & 2 Others [2014] eKLR, where the Court emphasized that all the above three conditions and stages are to be applied as separate, distinct and logical hurdles which the applicant is expected to surmount sequentially. If the applicant establishes a prima facie case, that alone is not sufficient basis to grant an interlocutory injunction, the court must further be satisfied that the injury the respondent will suffer, in the event the injunction is not granted, will be irreparable. In other words, if damages recoverable in law is an adequate remedy and the respondent is capable of paying, no interlocutory order of injunction should normally be granted, however strong the applicant’s claim may appear at that stage. If prima facie case is not established, then irreparable injury and balance of convenience need no consideration. The existence of a prima facie case does not permit “leap-frogging” by the applicant to injunction directly without crossing the other hurdles in between.
41. A prima facie case is defined in Mrao Ltd v First American Bank of Kenya Ltd & 2 others [2003] KLR 125 as one 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 to call for an explanation or rebuttal from the latter. A prima facie case is more than an arguable case...”
42. In the present case, the Plaintiff contends that it financed the procurement and supply of electrical infrastructure materials for the Kilifi Last Mile Connectivity Project to the tune of Kshs. 61,578,919/=. It further relies on the agreement dated 2nd September 2025 under which its representative was to be introduced as a mandatory signatory to the project accounts maintained at the 2nd Defendant bank. It is the Plaintiff’s case that the sums advanced remain unpaid and that, unless the funds are preserved, there exists a real risk of dissipation to its detriment.
43. The 1st Defendant, however, disputes the Plaintiff’s claim and maintains that the Plaintiff merely acted as a financier and not as a subcontractor or supplier. It further contends that the Plaintiff breached the agreement by suspending operations and interfering with the release of materials, and that continued freezing of the project accounts threatens implementation of an ongoing public infrastructure project.
44. At this interlocutory stage, the Court is not required to make definitive findings on the merits of the rival contractual positions. Nonetheless, the material placed before Court demonstrates that the Plaintiff participated in financing aspects of the project and that arrangements existed concerning operation of the project accounts and signatory mandates. It is equally not disputed that substantial project funds have since been credited into the said accounts. In that regard, the Court is satisfied that there exists a genuine dispute regarding entitlement to and application of the project fund.
45. The Court must, however, balance the competing interests before it. The evidence on record demonstrates that the subject funds relate to an ongoing Kenya Power Last Mile Connectivity Project scheduled for completion by 25th May 2026 under the Government Delivery Unit electrification programme. The evidence further demonstrates that freezing of the accounts has disrupted payments to suppliers, financiers and service providers and poses a real risk of interruption of the project.
46. The Court cannot ignore the public interest dimensions attendant to this dispute. In Suleiman v Amboseli Resort Limited [2004] KEHC 2624 (KLR) Ojwang J. (as he then was) observed that:
“…the Court, responding to prayers for interlocutory injunctive relief, should always opt for the lower rather than the higher risk of injustice.”
47. In the circumstances of this case, I am not persuaded that the Plaintiff has established a prima facie proprietary claim over the funds sufficient to justify a complete freezing of the accounts pending trial.
48. On irreparable harm, the Plaintiff’s claim, though arguable, is fundamentally monetary in nature and is capable of compensation by an award of damages should the suit ultimately succeed.
49. On the balance of convenience, I find that it tilts in favour of permitting continued operation of the accounts for purposes of implementation and completion of the project.
50. However, considering that the 1st Defendant disputes the amounts claimed by the Plaintiff, I find merit in preserving part of the disputed funds pending hearing and determination of the suit so as to safeguard the substratum of the dispute and balance the competing interests of the parties. In the premises, the Plaintiff’s application succeeds only to the extent of the issuance of limited preservatory orders.
51. I now turn to the second issue on the interpleader application dated 14th April 2026. The law governing interpleader proceedings is provided under Section 58 of the Civil Procedure Act and Order 34 of the Civil Procedure Rules.
52. Order 34 Rule 2 thereof sets out the conditions to be satisfied before interpleader relief may issue. According to this provision, an interpleader must satisfy:
a) That the applicant claims no interest in the subject matter in dispute other than for charges or costs;
b) That there is no collusion between the applicant and any of the claimants;
c) That the applicant is willing to pay or transfer the subject matter into court or to dispose of it as the court may direct.
53. The purpose of interpleader proceedings is to protect a neutral stakeholder faced with rival claims over the same subject matter from exposure to multiple suits or double liability. The stakeholder merely seeks the Court’s direction as to who the property or funds should properly be released.
54. In the instant case, it is not disputed that the 2nd Defendant holds funds amounting to Kshs. 44,378,548.30 in the accounts operated by the 1st Defendant. The material before the Court further demonstrates that competing claims have been asserted by the Plaintiff and the 1st Defendant over the said funds. The Plaintiff claims an equitable and contractual interest arising from the financing arrangement and signatory mandate, while the 1st Defendant maintains that the funds constitute project monies.
55. Therefore, I am satisfied that the 2nd Defendant was exposed to competing claims and conflicting obligations regarding the operation of the accounts and the disbursement of the funds, and the institution of interpleader proceedings was therefore not without basis.
56. The Court also notes that there is substantive allegations pleaded against the 2nd Defendant relating to the operation of the accounts, the handling of the signatory mandate and the alleged freezing of the accounts. Those allegations raise serious issues which require interrogation at the trial.
57. Accordingly, while the Court is satisfied that the 2nd Defendant properly invoked the interpleader jurisdiction of the Court for purposes of preservation and protection against competing claims, I am not persuaded that the Bank can, at this interlocutory stage, obtain a complete discharge from liability before the substantive issues pleaded against it are heard and determined.
58. The prayer seeking discharge of the 2nd Defendant from all liability is therefore premature and is declined.
59. On the third issue, the 1st Defendant seeks the discharge and/or variation of the preservatory orders issued on 15th April 2026. Order 40 Rule 7 of the Civil Procedure Rules which provides that a court may discharge, vary or set aside any injunction order on application by any party who is dissatisfied with such order. The Court’s discretionary jurisdiction in that respect is subject to sufficient cause being shown, and must be exercised judiciously.
60. From the material before the Court, it is evident that the subject funds relate to an ongoing public infrastructure project under the Kenya Power Last Mile Connectivity Programme scheduled for completion by 25th May 2026. The Court will not ignore the public interest dimensions attendant to the implementation of a national electrification project. Equally, the Court must ensure that the Plaintiff’s claim, if ultimately successful, is not rendered nugatory.
61. In balancing the competing rights and interests of the parties, I am persuaded that continued blanket freezing of the accounts pending hearing and determination of the suit would occasion disproportionate prejudice not only to the 1st Defendant but also to third parties involved in execution of the project.
62. There are sufficient grounds established to warrant variation of the preservatory orders issued on 15th April 2026.
63. As a consequence, I make the following orders:
i. A preservatory order is hereby issued preserving the sum of Kshs. 30,000,000/= currently held in Account Nos. 1003028001823 and 10030430000097 pending further orders of the Court.
ii. The 1st Defendant shall be at liberty to operate the subject accounts strictly for purposes of implementation of the Kenya Power Last Mile Connectivity Project, payment of suppliers, service providers, statutory obligations and project-related expenses.
iii. The 2nd Defendant shall continue holding the preserved funds subject to further directions of the Court.
iv. The interim freezing orders issued on 15th April 2026 are hereby varied and or set aside, to the extent in (i) and (ii) above.
v. The interpleader proceedings and the main suit shall be expedited and heard on a priority basis.
vi. The prayer seeking discharge of the 2nd Defendant from liability is declined at this stage.
vii. The prayer seeking disclosure and inquiry into acquisition of the Government correspondence dated 9th December 2025 is deferred to the substantive hearing, where evidence may properly be led and tested.
viii. Costs of the three applications shall abide the outcome of the main suit.
RULING delivered virtually, dated and signed at NAIROBI
This 21st day of May 2026.
P.M. MULWA
JUDGE
In the presence of:
Mr. Kamenju & Mr. Omondi h/b for Mr. Ikua for 1st Defendant
Ms. Kiiru for 2nd Defendant
Court Assistant: Lispa