1. The Plaintiffs’ application before this Court is dated 19th December 2025 and seeks orders for a temporary injunction. The application is supported by the grounds set out on its face and the affidavit sworn by the 2nd Plaintiff on 19th December 2025. The 2nd Plaintiff deponed that he has been a director of the 1st Plaintiff since 1977 and its Managing Director since 1989. He further stated that he is also a shareholder of the 1st Plaintiff.
He averred that the Defendant issued a statutory notice dated 12th November 2025 seeking to realize securities held in respect of facilities advanced to the 1st Plaintiff in order to recover the sum of Kshs. 840,943,543. He narrated that in 2008, the Defendant granted the 1st Plaintiff an overdraft facility of Kshs. 5,000,000 and a term loan facility of Kshs. 2,000,000. According to him, the overdraft facility was intended to provide working capital for the 1st Plaintiff’s commercial operations, while the term loan represented a takeover from another lender and no fresh funds were disbursed.
He further stated that the Defendant subsequently offered the 1st Plaintiff a facility restructuring through a letter of offer converting the aforesaid overdraft into another overdraft facility of Kshs. 50,000,000, which the 1st Plaintiff accepted. He deponed that over the years the Defendant continuously rolled over the overdraft facilities into fresh overdraft facilities and converted term loans into fresh term loans. In support thereof, he produced thirteen letters of offer issued between 3rd December 2009 and 19th October 2022.
He stated that, in order to secure the said facilities, the 1st Plaintiff, the 5th Plaintiff, and himself charged the following properties:
o L.R. No. MOMBASA/BLOCK XIII/134;
o L.R. No. MN/I/547; and
o L.R. No. KILIFI/KALIA NGOMBE/JIMBA/683.
2. The 2nd Plaintiff further stated that in respect of the first property, a legal charge and further charge were registered on 18th February 2013 and 4th April 2017 respectively. In relation to the second property, a legal charge, further charge, second further charge, and third further charge were registered on 7th July 2009, 28th May 2010, 5th December 2011, and 4th April 2017 respectively. As regards the third property, a legal charge dated 29th March 2018 was created.
He also deponed that the 3rd, 4th, and 5th Plaintiffs, together with himself, executed personal guarantees to secure the facilities. His principal complaint is that the Defendant failed to explain the true legal and financial consequences attendant to the execution of the various letters of offer, which he contends resulted in unlawful accrual of interest, penalties, and charges that materially inflated the principal sum.
He further contended that the numerous fresh overdraft facilities were structured in a manner intended to circumvent the in duplum rule provided under Section 44A of the Banking Act. He stated that the 1st Plaintiff executed the letters of offer based on the longstanding relationship between the parties and in the expectation that the Defendant would act in good faith. According to him, the restructuring arrangements were presented as routine administrative measures intended merely to regularize the account.
3. The 2nd Plaintiff further averred that the Managing Director of the Defendant personally pressured him into executing one of the letters of offer that consolidated all the overdrafts and term loans into a facility amounting to Kshs. 600,000,000. He maintained that no fresh funds were advanced during the restructuring process and that the Defendant merely credited itself through internal account entries to offset existing balances, effectively lending to the 1st Plaintiff in order to pay itself.
He recalled that the 1st Plaintiff had been subjected to a winding-up petition in 2014, which hindered its ability to trade until the petition was dismissed in 2018. During that period, penalties and interest allegedly escalated substantially. He stated that even after the 1st Plaintiff resumed making payments, the debt ballooned to approximately Kshs. 1,000,000,000 despite payments exceeding Kshs. 700,000,000 having been made. According to him, the increase was attributable to accumulated penalties and interest on the outstanding balance.
He also stated that although he maintained fixed deposit accounts with the Defendant, no interest was credited thereon. He further lamented that despite the substantial payments made, the Defendant proceeded to seize and forcefully sell two properties, namely L.R. Nos. MN/VI/4692 and MN/VI/4695 registered in the name of the 1st Plaintiff, and L.R. No. KWALE/GALU/KINONDO/670 registered in his own name.
Lastly, he averred that one of the charged properties constitutes his matrimonial home jointly owned by himself and his wife.
4. The Defendant filed a replying affidavit sworn by one Faith Ndonga, the Defendant’s Legal Manager. She confirmed that the aforementioned properties had been charged to secure facilities amounting to Kshs. 1,083,718,485 and provided extensive particulars relating thereto, substantially corresponding with the facts narrated by the 2nd Plaintiff.
She further outlined the detailed terms and conditions contained in the letter of offer dated 19th August 2022. She deponed that the 1st Plaintiff failed to make payments as and when they fell due and that despite repeated demands, the 1st Plaintiff neglected to regularize the account.
Consequently, she stated that the Defendant issued a statutory notice pursuant to Section 90 of the Land Act. However, before the expiry of the ninety-day period, the Plaintiffs obtained interim orders halting the statutory sale process.
She further provided detailed figures demonstrating the Plaintiffs’ continued default and asserted that the Defendant had, over the years, granted moratoriums and restructured the facilities through various letters of offer at the request of the 1st Plaintiff. According to her, the restructuring arrangements were voluntarily executed and supported by consideration.
She also detailed the process leading to the execution of the letters of offer, including the passing of corporate resolutions authorizing the borrowing facilities.
5. Ms. Ndonga further deponed that the Plaintiffs are experienced businessmen who executed the letters of offer after the terms had been explained to them by their advocates and/or financial advisors. She therefore contended that they cannot resile from duly executed contractual agreements.
She further asserted that the Defendant has always complied with the in duplum rule and maintained that an injunction cannot issue to restrain the exercise of a statutory power of sale where the debt remains outstanding.
She also averred that the Defendant is a reputable financial institution capable of satisfying any award of damages, thereby negating one of the essential requirements for the grant of an injunction as set out in Giella v Cassman Brown .
6. Both parties filed written submissions, which this Court has carefully considered. The sole issue for determination at this interlocutory stage is whether the Plaintiffs’ application has merit.
7. Having carefully considered the application, the responses thereto, the rival submissions by counsel, and the authorities cited, this Court finds as follows:
a)
The Court of Appeal in Nguruman Limited v Jan Bonde Nielsen & 2 Others [2014] eKLR reaffirmed that the principles in Giella v Cassman Brown [1973] EA 358 are to be applied sequentially and held:
“These are the three pillars on which rests the foundation of any order of injunction, interlocutory or permanent. It is established 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…”
b)
The extensive details concerning the execution of the various letters of offer, together with the terms and conditions thereof, demonstrate that this matter requires a full hearing, particularly in view of the colossal sums involved.
At this interlocutory stage, it would be premature to conclusively determine whether the in duplum rule was violated. Notably, while the Defendant acknowledges that the original overdraft facility was Kshs. 5,000,000, the chronology and subsequent restructuring arrangements raise serious questions requiring substantive interrogation at trial.
The Court further notes the Plaintiffs’ contention that the Defendant repeatedly issued overdraft facilities whose proceeds were internally applied to settle existing liabilities, with the 1st Plaintiff allegedly receiving only temporary moratoriums. These are complex and technical matters that can only properly be resolved upon hearing evidence.
Accordingly, this Court is satisfied that the Plaintiffs have established a prima facie case with a probability of success. See Mrao Ltd v First American Bank of Kenya Ltd & 2 Others [2003] KLR 125.
c)
On the issue of irreparable injury, this Court relies on the decision in Nguruman Limited v Jan Bonde Nielsen & 2 Others (supra), where the Court held:
“The equitable remedy of temporary injunction is issued solely to prevent grave and irreparable injury; that is injury that is actual, substantial and demonstrable; injury that cannot adequately be compensated by an award of damages.”
d)
This Court is satisfied that the Plaintiffs have also met this threshold. The Plaintiffs risk losing substantial assets and potentially facing financial ruin similar to what allegedly occurred in 2014. More significantly, one of the charged properties is alleged to be the matrimonial home of the 2nd Plaintiff and his wife.
.
e)
On the balance of convenience, Ombwayo J. in Pius Kipchirchir Kogo v Frank Kimeli Tenai [2018] eKLR held:
“The court should issue an injunction where the balance of convenience is in favor of the plaintiff…”
In the present case, the balance of convenience tilts in favour of preserving the status quo pending the hearing and determination of the suit. While the Defendant is undoubtedly a reputable financial institution, the practical difficulties involved in compensating for the sale of unique properties, including a matrimonial home, cannot be ignored.
The Court is also alive to the social and human consequences attendant upon the exercise of the statutory power of sale in the prevailing circumstances.
Accordingly, the Plaintiffs have satisfied the threshold for a temporary injunction.
f)
The Defendant argued that a temporary injunction cannot be issued to restrain the exercise of a statutory power of sale. While that proposition is generally correct, equity will not permit a wrong to be without a remedy. Equity also looks at substance rather than form.
In the present matter, there exists a genuine concern that the exercise of the statutory power of sale may potentially conflict with the protections afforded under Section 44A of the Banking Act.
This Court reiterates the observations made in Kenya Hotels Ltd v Oriental Commercial Bank Ltd (Formerly Delphis Bank Ltd) [2019] eKLR:
“The in duplum rule is concerned with public interest and its key aim was to protect borrowers from exploitation by lenders who permit interest to accumulate to astronomical figures…”
g)
Although the facts are distinguishable, this Court notes that in Francis Mbaria Wambugu v Jijenge Credit Limited [2020] KEHC 2586 (KLR), the Court was inclined to restrain the exercise of a statutory power of sale where the circumstances justified equitable intervention.
The equity of redemption remains sacrosanct and ought not to be defeated merely through procedural reliance on the statutory power of sale. Section 44A(1) of the Banking Act limits the recoverable amount once a loan becomes non-performing.
The critical issue requiring determination at trial is whether the execution of fresh letters of offer constituted genuinely new loan facilities, notwithstanding that no fresh disbursements were allegedly made to the 1st Plaintiff.
h)
In the upshot, the application dated 19th December 2025 is hereby allowed. A temporary injunction is hereby issued restraining the Defendant, whether by itself, its servants, agents, auctioneers, or otherwise, howsoever, from advertising for sale, selling, transferring, alienating, disposing of, or in any other manner interfering with the Plaintiffs’ charged properties pending the hearing and determination of this suit.
For avoidance of doubt, the injunction shall apply to:
• L.R. No. MOMBASA/BLOCK XIII/134;
• L.R. No. MN/I/547; and
• L.R. No. KILIFI/KALIA NGOMBE/JIMBA/683.
The costs of the application shall abide in the cause
Further, given the nature of the dispute and the substantial amounts involved, this suit shall be expedited and is hereby fixed for mention on 17th June 2026 for purposes of pre-trial conference and further directions.
In the meantime, the parties are encouraged to settle this matter out of court. The dispute is really about the reconciliation of accounts, and the Plaintiffs are reminded that the only solution is to meet their obligations
8. It is so ordered.
DATED, SIGNED, AND DELIVERED AT MOMBASA THROUGH MICROSOFT TEAMS/OPEN COURT THIS ……13th… DAY OF ……May……… 2026.
HON. LADY JUSTICE W. K. MICHENI
JUDGE
In the presence of:
Mr. Kisinga for the Defendant
Ms. Wanjiru for the Applicant
Bebora – Court Assistant
He averred that the Defendant issued a statutory notice dated 12th November 2025 seeking to realize securities held in respect of facilities advanced to the 1st Plaintiff in order to recover the sum of Kshs. 840,943,543. He narrated that in 2008, the Defendant granted the 1st Plaintiff an overdraft facility of Kshs. 5,000,000 and a term loan facility of Kshs. 2,000,000. According to him, the overdraft facility was intended to provide working capital for the 1st Plaintiff’s commercial operations, while the term loan represented a takeover from another lender and no fresh funds were disbursed.
He further stated that the Defendant subsequently offered the 1st Plaintiff a facility restructuring through a letter of offer converting the aforesaid overdraft into another overdraft facility of Kshs. 50,000,000, which the 1st Plaintiff accepted. He deponed that over the years the Defendant continuously rolled over the overdraft facilities into fresh overdraft facilities and converted term loans into fresh term loans. In support thereof, he produced thirteen letters of offer issued between 3rd December 2009 and 19th October 2022.
He stated that, in order to secure the said facilities, the 1st Plaintiff, the 5th Plaintiff, and himself charged the following properties:
o L.R. No. MOMBASA/BLOCK XIII/134;
o L.R. No. MN/I/547; and
o L.R. No. KILIFI/KALIA NGOMBE/JIMBA/683.
2. The 2nd Plaintiff further stated that in respect of the first property, a legal charge and further charge were registered on 18th February 2013 and 4th April 2017 respectively. In relation to the second property, a legal charge, further charge, second further charge, and third further charge were registered on 7th July 2009, 28th May 2010, 5th December 2011, and 4th April 2017 respectively. As regards the third property, a legal charge dated 29th March 2018 was created.
He also deponed that the 3rd, 4th, and 5th Plaintiffs, together with himself, executed personal guarantees to secure the facilities. His principal complaint is that the Defendant failed to explain the true legal and financial consequences attendant to the execution of the various letters of offer, which he contends resulted in unlawful accrual of interest, penalties, and charges that materially inflated the principal sum.
He further contended that the numerous fresh overdraft facilities were structured in a manner intended to circumvent the in duplum rule provided under Section 44A of the Banking Act. He stated that the 1st Plaintiff executed the letters of offer based on the longstanding relationship between the parties and in the expectation that the Defendant would act in good faith. According to him, the restructuring arrangements were presented as routine administrative measures intended merely to regularize the account.
3. The 2nd Plaintiff further averred that the Managing Director of the Defendant personally pressured him into executing one of the letters of offer that consolidated all the overdrafts and term loans into a facility amounting to Kshs. 600,000,000. He maintained that no fresh funds were advanced during the restructuring process and that the Defendant merely credited itself through internal account entries to offset existing balances, effectively lending to the 1st Plaintiff in order to pay itself.
He recalled that the 1st Plaintiff had been subjected to a winding-up petition in 2014, which hindered its ability to trade until the petition was dismissed in 2018. During that period, penalties and interest allegedly escalated substantially. He stated that even after the 1st Plaintiff resumed making payments, the debt ballooned to approximately Kshs. 1,000,000,000 despite payments exceeding Kshs. 700,000,000 having been made. According to him, the increase was attributable to accumulated penalties and interest on the outstanding balance.
He also stated that although he maintained fixed deposit accounts with the Defendant, no interest was credited thereon. He further lamented that despite the substantial payments made, the Defendant proceeded to seize and forcefully sell two properties, namely L.R. Nos. MN/VI/4692 and MN/VI/4695 registered in the name of the 1st Plaintiff, and L.R. No. KWALE/GALU/KINONDO/670 registered in his own name.
Lastly, he averred that one of the charged properties constitutes his matrimonial home jointly owned by himself and his wife.
4. The Defendant filed a replying affidavit sworn by one Faith Ndonga, the Defendant’s Legal Manager. She confirmed that the aforementioned properties had been charged to secure facilities amounting to Kshs. 1,083,718,485 and provided extensive particulars relating thereto, substantially corresponding with the facts narrated by the 2nd Plaintiff.
She further outlined the detailed terms and conditions contained in the letter of offer dated 19th August 2022. She deponed that the 1st Plaintiff failed to make payments as and when they fell due and that despite repeated demands, the 1st Plaintiff neglected to regularize the account.
Consequently, she stated that the Defendant issued a statutory notice pursuant to Section 90 of the Land Act. However, before the expiry of the ninety-day period, the Plaintiffs obtained interim orders halting the statutory sale process.
She further provided detailed figures demonstrating the Plaintiffs’ continued default and asserted that the Defendant had, over the years, granted moratoriums and restructured the facilities through various letters of offer at the request of the 1st Plaintiff. According to her, the restructuring arrangements were voluntarily executed and supported by consideration.
She also detailed the process leading to the execution of the letters of offer, including the passing of corporate resolutions authorizing the borrowing facilities.
5. Ms. Ndonga further deponed that the Plaintiffs are experienced businessmen who executed the letters of offer after the terms had been explained to them by their advocates and/or financial advisors. She therefore contended that they cannot resile from duly executed contractual agreements.
She further asserted that the Defendant has always complied with the in duplum rule and maintained that an injunction cannot issue to restrain the exercise of a statutory power of sale where the debt remains outstanding.
She also averred that the Defendant is a reputable financial institution capable of satisfying any award of damages, thereby negating one of the essential requirements for the grant of an injunction as set out in Giella v Cassman Brown .
6. Both parties filed written submissions, which this Court has carefully considered. The sole issue for determination at this interlocutory stage is whether the Plaintiffs’ application has merit.
7. Having carefully considered the application, the responses thereto, the rival submissions by counsel, and the authorities cited, this Court finds as follows:
a)
The Court of Appeal in Nguruman Limited v Jan Bonde Nielsen & 2 Others [2014] eKLR reaffirmed that the principles in Giella v Cassman Brown [1973] EA 358 are to be applied sequentially and held:
“These are the three pillars on which rests the foundation of any order of injunction, interlocutory or permanent. It is established 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…”
b)
The extensive details concerning the execution of the various letters of offer, together with the terms and conditions thereof, demonstrate that this matter requires a full hearing, particularly in view of the colossal sums involved.
At this interlocutory stage, it would be premature to conclusively determine whether the in duplum rule was violated. Notably, while the Defendant acknowledges that the original overdraft facility was Kshs. 5,000,000, the chronology and subsequent restructuring arrangements raise serious questions requiring substantive interrogation at trial.
The Court further notes the Plaintiffs’ contention that the Defendant repeatedly issued overdraft facilities whose proceeds were internally applied to settle existing liabilities, with the 1st Plaintiff allegedly receiving only temporary moratoriums. These are complex and technical matters that can only properly be resolved upon hearing evidence.
Accordingly, this Court is satisfied that the Plaintiffs have established a prima facie case with a probability of success. See Mrao Ltd v First American Bank of Kenya Ltd & 2 Others [2003] KLR 125.
c)
On the issue of irreparable injury, this Court relies on the decision in Nguruman Limited v Jan Bonde Nielsen & 2 Others (supra), where the Court held:
“The equitable remedy of temporary injunction is issued solely to prevent grave and irreparable injury; that is injury that is actual, substantial and demonstrable; injury that cannot adequately be compensated by an award of damages.”
d)
This Court is satisfied that the Plaintiffs have also met this threshold. The Plaintiffs risk losing substantial assets and potentially facing financial ruin similar to what allegedly occurred in 2014. More significantly, one of the charged properties is alleged to be the matrimonial home of the 2nd Plaintiff and his wife.
.
e)
On the balance of convenience, Ombwayo J. in Pius Kipchirchir Kogo v Frank Kimeli Tenai [2018] eKLR held:
“The court should issue an injunction where the balance of convenience is in favor of the plaintiff…”
In the present case, the balance of convenience tilts in favour of preserving the status quo pending the hearing and determination of the suit. While the Defendant is undoubtedly a reputable financial institution, the practical difficulties involved in compensating for the sale of unique properties, including a matrimonial home, cannot be ignored.
The Court is also alive to the social and human consequences attendant upon the exercise of the statutory power of sale in the prevailing circumstances.
Accordingly, the Plaintiffs have satisfied the threshold for a temporary injunction.
f)
The Defendant argued that a temporary injunction cannot be issued to restrain the exercise of a statutory power of sale. While that proposition is generally correct, equity will not permit a wrong to be without a remedy. Equity also looks at substance rather than form.
In the present matter, there exists a genuine concern that the exercise of the statutory power of sale may potentially conflict with the protections afforded under Section 44A of the Banking Act.
This Court reiterates the observations made in Kenya Hotels Ltd v Oriental Commercial Bank Ltd (Formerly Delphis Bank Ltd) [2019] eKLR:
“The in duplum rule is concerned with public interest and its key aim was to protect borrowers from exploitation by lenders who permit interest to accumulate to astronomical figures…”
g)
Although the facts are distinguishable, this Court notes that in Francis Mbaria Wambugu v Jijenge Credit Limited [2020] KEHC 2586 (KLR), the Court was inclined to restrain the exercise of a statutory power of sale where the circumstances justified equitable intervention.
The equity of redemption remains sacrosanct and ought not to be defeated merely through procedural reliance on the statutory power of sale. Section 44A(1) of the Banking Act limits the recoverable amount once a loan becomes non-performing.
The critical issue requiring determination at trial is whether the execution of fresh letters of offer constituted genuinely new loan facilities, notwithstanding that no fresh disbursements were allegedly made to the 1st Plaintiff.
h)
In the upshot, the application dated 19th December 2025 is hereby allowed. A temporary injunction is hereby issued restraining the Defendant, whether by itself, its servants, agents, auctioneers, or otherwise, howsoever, from advertising for sale, selling, transferring, alienating, disposing of, or in any other manner interfering with the Plaintiffs’ charged properties pending the hearing and determination of this suit.
For avoidance of doubt, the injunction shall apply to:
• L.R. No. MOMBASA/BLOCK XIII/134;
• L.R. No. MN/I/547; and
• L.R. No. KILIFI/KALIA NGOMBE/JIMBA/683.
The costs of the application shall abide in the cause
Further, given the nature of the dispute and the substantial amounts involved, this suit shall be expedited and is hereby fixed for mention on 17th June 2026 for purposes of pre-trial conference and further directions.
In the meantime, the parties are encouraged to settle this matter out of court. The dispute is really about the reconciliation of accounts, and the Plaintiffs are reminded that the only solution is to meet their obligations
8. It is so ordered.
DATED, SIGNED, AND DELIVERED AT MOMBASA THROUGH MICROSOFT TEAMS/OPEN COURT THIS ……13th… DAY OF ……May……… 2026.
HON. LADY JUSTICE W. K. MICHENI
JUDGE
In the presence of:
Mr. Kisinga for the Defendant
Ms. Wanjiru for the Applicant
Bebora – Court Assistant