1. Before the Court for determination are two applications. The first is the Notice of Motion dated 25th February 2025 by the Objector seeking,
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c. This Honourable court be pleased to order and direct the Respondent and Interested Party to forthwith release and return to the Applicant all the property belonging to the Applicant that the Respondent and/or the Interested Party taken from the Applicant’s premises in execution of the ruling and decree or otherwise.
d. This Honourable court be pleased to restrain the respondents and the Interested Party from attaching, advertising, selling, disposing by way of auction or private treaty or otherwise howsoever dealing and or interfering with any of the Applicant’s property whether in execution of the Ruling and/or the decree or otherwise.
e. This Honourable court be pleased to grant any such or further orders as it may deem just and expedient to grant.
f. The costs of this application be borne by the Respondent.
2. The application is supported by the affidavit of Oscar Obuna, the Head of Special Assets and Corporate Recoveries of the Objector, KCB Bank Kenya Limited. He depones that the Bank is a secured creditor of Proctor & Allan (E.A.) Limited by virtue of an All Assets Debenture dated 1st November 2013 and a Supplemental Debenture dated 28th October 2015, which charged the Company's undertaking, goodwill, assets, book debts and property, both present and future, as security for facilities amounting to Kshs. 80,450,000 and USD 28,913,000.
3. Mr. Obuna states that following the Company's default, the Bank exercised its rights under the debentures and appointed Joint Receivers and Managers on 24th February 2025. According to him, upon their appointment, control of the Company's assets vested in the Receivers and the assets became subject to the receivership process.
4. He further depones that notwithstanding the receivership, the Respondent, EPCO Builders Limited, having obtained a ruling on 3rd February 2025 and a decree on 14th February 2025, instructed Betabase Auctioneers to execute against the Company. The auctioneers allegedly entered the Company's premises on or about 17th February 2025, inventoried machinery, equipment, furniture and other movable assets, and intended to sell them in satisfaction of the decree.
5. The Objector contends that the execution is unlawful because the attached assets are subject to its debentures and therefore constitute secured assets over which it enjoys priority. It further argues that once the Company was placed under receivership, its assets became insulated from attachment and execution. The Court is therefore urged to restrain any further execution against the Company's assets pending determination of the objection proceedings.
6. The application is opposed through a Replying Affidavit sworn on 10th October 2025 by Ramji Devji Varsani, a director of the Respondent. He depones that the Respondent and Proctor & Allan (E.A.) Limited were parties to arbitration proceedings which culminated in a Final Award dated 11th September 2023 and an Additional Award on Costs dated 28th May 2024.
7. Following the awards, the Respondent moved the High Court on 18th June 2024 seeking recognition and enforcement of the arbitral awards. On 3rd February 2025, the Court allowed the application for enforcement and dismissed Proctor & Allan's application seeking to set aside the awards. A decree was subsequently extracted on 14th February 2025.
8. Mr. Varsani states that in execution of the decree, the Respondent instructed Betabase Auctioneers, who proceeded to inventory the Company's movable assets and issued a Proclamation of Attachment dated 20th February 2025. He further states that the execution process was stayed on 27th February 2025 after the Objector informed the Court of its debentures and the appointment of receivers on 24th February 2025.
9. The Respondent further avers that Proctor & Allan subsequently challenged the receivership in HCCCOMM/E133/2025, Proctor & Allan (E.A.) Limited v KCB Bank Kenya Limited & 2 Others, seeking, among other reliefs, orders restraining the appointment and actions of the receivers. Although interim orders were granted on 27th February 2025, the application was dismissed on 31st July 2025. According to the Respondent, the dismissal confirmed the validity of the receivers' appointment.
10. The Respondent disputes the allegation that its execution was unlawful and contends that the application is intended to delay enjoyment of the fruits of its judgment. It argues that the Objector's floating charge had not crystallised before the attachment and that, prior to the appointment of receivers, an execution creditor enjoys priority over the debenture holder. Consequently, the Respondent maintains that its execution lawfully took precedence over the Objector's security interest. It further contends that the Objector will suffer no prejudice if execution proceeds and urges the Court to dismiss the application.
11. The second application is the Notice of Motion dated 27th March 2025 by the Respondent seeking, the setting aside of the ex parte interim orders issued on 27th February 2025 staying execution of the decree in favour of the Respondent, together with costs of the application.
12. The application is supported by the affidavit of Ramji Devji Varsani, a director of the Respondent. He depones that the application was necessitated by the interim orders obtained by KCB Bank Kenya Limited on 27th February 2025 staying execution of the Respondent's decree. According to him, the stay was granted on the basis that KCB Bank held debentures over the assets of Proctor & Allan (E.A.) Limited and had placed the Company under receivership.
13. He acknowledges that the Company executed an All Assets Debenture dated 1st November 2013 and a Supplemental Debenture dated 28th October 2015 in favour of KCB Bank, pursuant to which the Bank appointed Joint Receivers and Managers on 24th February 2025. However, he states that shortly thereafter the Company challenged the receivership in Milimani HCCCOMM No. E133 of 2025, Proctor & Allan (E.A.) Limited v P.V.R. Rao & Another, seeking orders restraining enforcement of the debentures, suspension of the receivers' appointment, preservation of the status quo, and restoration of the directors' access to the Company's assets and operations. He further states that on 27th February 2025 the High Court certified the application as urgent and granted interim orders preserving the status quo.
14. The Respondent contends that the interim orders issued in HCCCOMM No. E133 of 2025 materially altered the circumstances upon which the stay of execution had been granted in the present proceedings. It is therefore argued that the stay orders should be discharged to enable the Respondent to execute its decree and enjoy the fruits of its judgment. The Respondent further contends that the Bank would suffer no prejudice if execution proceeded as its interests remained protected by the debentures.
15. The 2nd application is opposed through a replying affidavit sworn on 14th April 2025 on behalf of the Objector. The Objector states that between 2012 and 2022, KCB Bank advanced various financial facilities to Proctor & Allan (E.A.) Limited amounting to Kshs. 80,450,000 and USD 28,913,000. To secure those facilities, the Company executed the All Assets Debenture dated 1st November 2013 and the Supplemental Debenture dated 28th October 2015, charging its undertaking, goodwill, property, assets and book debts in favour of the Bank.
16. The Objector avers that the Company subsequently defaulted in servicing the facilities, prompting the Bank to issue a demand on 12th October 2023. The Bank thereafter engaged the Company in negotiations, including a proposed acquisition by Equatorial Nut Processors Limited. Those negotiations culminated in a Settlement Agreement dated 27th August 2024 under which the Company undertook to settle the outstanding indebtedness on agreed terms.
17. According to the Objector, the Company failed to comply with the Settlement Agreement, including failing to deposit the agreed amount into an escrow account by 31st January 2025. Consequently, the Bank treated the settlement as having failed and, on 21st February 2025, demanded payment of the outstanding debt, which stood at Kshs. 37,661,446.76 and USD 37,922,293.87. The Objector contends that upon the Company's default, the floating charge created under the debentures crystallized on 31st January 2025, thereby converting into a fixed charge over the Company's assets.
18. The Objector further states that following crystallization of the debentures, the Bank lawfully appointed Joint Receivers and Managers on 24th February 2025. It maintains that, as a consequence, the Bank acquired priority over the secured assets and that any attachment or execution against those assets was unlawful.
19. The Objector further avers that on 27th February 2025 this Court granted orders staying the attachment and sale of the Company's assets. While acknowledging that Proctor & Allan subsequently challenged the receivership in HCCCOMM No. E133 of 2025 and obtained interim orders preserving the status quo, the Objector contends that the legality of the receivership remained unresolved at the material time and was therefore still pending determination before another court.
20. The Objector argues that the interim orders issued in HCCCOMM No. E133 of 2025 neither extinguished nor suspended the Bank's proprietary rights under the debentures. It maintains that the proclaimed assets remained subject to crystallized security interests and that the Respondent, as an unsecured judgment creditor, could not acquire priority over the Bank's secured claim.
21. The Objector further contends that lifting the stay would occasion substantial prejudice to the Bank. It states that the Company's assets are valued at approximately Kshs. 1.6 billion while the outstanding indebtedness exceeds Kshs. 4.6 billion, leaving a significant shortfall even if all secured assets were realized. It therefore argues that allowing execution would erode the Bank's security and undermine its rights as a secured creditor.
22. The Objector consequently urges the Court to dismiss the Respondent's application and uphold the stay orders issued on 27th February 2025.
23. The applications were canvassed by way of written submissions as follows
Parties Submissions
Objector’s submissions
24. The Objector, KCB Bank submits that the Respondent’s application to vacate the stay orders issued on 27 February 2025 is devoid of merit because it fails to appreciate the legal consequences of the crystallization of the Bank’s debentures, the Bank’s status as a secured creditor, and the fact that execution against the Judgment Debtor’s assets had not been completed before the stay orders were granted.
25. The Objector contends that the dispute turns on two issues: first, when the Bank’s floating charge crystallized into a fixed charge, and second whether execution had been completed prior to such crystallization.
26. The Objector argues that Clause 40 of the Supplemental Debenture gives that instrument precedence over the earlier debenture. It further submits that Clauses 8 and 15 provide for automatic crystallization of the floating charge upon specified events of default, including non-payment and the commencement of execution proceedings. According to the Objector, the Judgment Debtor defaulted under the Settlement Agreement on 31 January 2025, thereby triggering crystallization under Clause 15. It further contends that the commencement of execution proceedings on 19 February 2025 constituted an independent crystallizing event under Clause 8. Consequently, by the time execution commenced, the Bank’s floating charge had already converted into a fixed charge over the company’s assets.
27. The Objector maintains that, upon crystallization, its rights as debenture holder took priority over those of all unsecured creditors. It relies on Clause 4 of the Supplemental Debenture, which created fixed and floating charges over the company’s undertaking, machinery, equipment, land, receivables and other assets. It therefore argues that all assets proclaimed by the auctioneer formed part of the charged assets over which the Bank had a superior proprietary interest.
28. On the issue of execution, the Objector submits that execution had not been completed because the assets had only been proclaimed and had not been sold. Relying on Mackenzie (Kenya) Ltd v Pharmico Ltd [1976] KEHC 7 (KLR), Menengai Rolling Mills Limited & Another v Blue Nile Wire Products Limited & Another [2019] KEHC 12328 (KLR), and Lochab Brothers v Kenya Furfural Co. Ltd [1983] eKLR, it argues that a crystallized debenture holder retains priority over an execution creditor until execution is completed by sale. Since no sale had occurred before the stay orders were granted, the Bank’s proprietary rights remained superior to those of the Respondent as decree holder.
29. The Objector further relies on Kenya National Capital Corporation Ltd v Albert Mario Cordeiro & Another [2014] KECA 775 (KLR), submitting that courts should not elevate unsecured creditors above secured creditors. It argues that lifting the stay orders would improperly subordinate the Bank’s crystallized security interests to the Respondent’s execution rights.
30. Regarding the interim orders issued in HCCCOMM No. E133 of 2025, the Objector submits that those orders merely suspended the actions of the Joint Receivers pending determination of the suit and did not invalidate the Bank’s proprietary rights under the debentures. It contends that the stay orders in the present proceedings were granted to protect assets subject to crystallized debentures and receivership, whereas the orders in HCCCOMM No. E133 of 2025 concerned the challenged receivership process.
31. The Objector also invokes the doctrine of lis pendens, relying on Dhanjal Investments Limited v Shabaha Investments Limited [2022] KECA 366 (KLR), and argues that the assets in question are the subject matter of pending proceedings and should therefore be preserved until that dispute is resolved.
32. Finally, the Objector submits that permitting execution would substantially prejudice the Bank. It states that the charged assets were valued at approximately Kshs. 1.62 billion as of 10 April 2023, while the secured indebtedness exceeded that value and continued to accrue interest. Relying on China Young Tai Engineering Company Limited v Ravasam Development Company Limited & Another [2016] KEHC 320 (KLR), it contends that execution would diminish the Bank’s already insufficient security for the benefit of an unsecured creditor. It therefore urges the Court to dismiss the Respondent’s application dated 27 March 2025 and maintain the stay orders issued on 27 February 2025.
Respondent’s Submissions
33. The Respondent opposes the Objector’s application dated 25 February 2025 and identifies two issues for determination: first, whether the Objector had a legal or equitable interest in the attached assets, and second, whether the floating charge had crystallized before execution commenced.
34. The Respondent relies on Order 22 Rule 51 of the Civil Procedure Rules and submits that an objector must demonstrate a legal or equitable interest in the attached property at the time of lodging the objection. It argues that, until crystallization occurs, a floating charge does not confer a present proprietary interest capable of supporting objection proceedings. According to the Respondent, the Judgment Debtor remained free to deal with its assets in the ordinary course of business, and therefore KCB Bank lacked the requisite interest when it filed the objection.
35. The Respondent’s principal contention is that the floating charge had not crystallized when the goods were proclaimed. Although it accepts that the Supplemental Debenture takes precedence over the earlier instrument, it argues that Clause 8 does not provide for automatic crystallization upon mere payment default. In its view, Clause 8 limits crystallization to specified events, including those identified under Clauses 15(c), (d), (e), (f) and (g), but not Clause 15(a). Consequently, the alleged default under the Settlement Agreement did not trigger crystallization.
36. The Respondent further argues that Clause 8 must be read together with Clause 15(d), which specifically addresses crystallization arising from distress, sequestration or execution proceedings. It submits that Clause 15(d) grants the company a fourteen-day period within which to remove or discharge execution before crystallization occurs. Since proclamation took place on 20 February 2025 and the objection was filed before expiry of the fourteen-day period, the charge had not crystallized. Relying on Pagnan SpA v Tradax Ocean Transportation SA [1987] 3 All ER 565, it contends that where a general provision conflicts with a specific one, the specific provision prevails.
37. The Respondent further submits that even if crystallization occurred upon the alleged default of 31 January 2025, the Bank failed to exercise the control over the assets that characterizes a true fixed charge. Citing Landmark Port Conveyors Limited v Buzeki Enterprises Limited & Another and Richard Dale Agnew & Another v Commissioner of Inland Revenue & Another, it argues that substance should prevail over form. The Judgment Debtor continued operating its business, dealing with assets freely, seeking investors and conducting transactions without restriction. According to the Respondent, these facts demonstrate that the charge remained, in substance, a floating charge.
38. The Respondent further submits that where a floating charge has not crystallized before attachment, the execution creditor obtains priority. It relies on Diversey Lever East Africa Ltd v Mohanson Foods Distributors Ltd & Another [2004] 1 EA 43 and argues that, because no receiver had been appointed and no proprietary interest had crystallized before attachment, the decree holder acquired priority over the Bank.
39. The Respondent distinguishes Lochab Brothers v Kenya Furfural Co. Ltd [1983] eKLR on the basis that, in that case, receivers had been appointed before execution was completed, thereby crystallizing the charge. It argues that, unlike the present case, KCB Bank had no legal or equitable interest at the time it commenced objection proceedings. Accordingly, the objection is said to be fatally defective under Order 22 Rule 51.
40. With respect to its application dated 27 March 2025 seeking to vacate the interim stay orders, the Respondent submits that the circumstances underlying those orders have materially changed. Relying on St. Patrick’s Hill School Ltd v Bank of Africa Kenya Ltd [2018] eKLR and Commissioner of Income Tax v Kencell Communications Ltd [2013] eKLR, it argues that interim orders may be discharged where subsequent events undermine the basis upon which they were granted.
41. The Respondent contends that the stay orders of 27 February 2025 were premised on the existence of a valid receivership and crystallized debentures. However, the interim orders issued in HCCCOMM No. E133 of 2025 suspended the receivership and restrained enforcement of the debentures pending determination of that suit. It therefore submits that the factual basis of the stay no longer exists and that maintaining it would be unjust.
42. Further, the Respondent argues that the present proceedings are independent of HCCCOMM No. E133 of 2025 and that no order has been issued staying these proceedings. It submits that the decree remains undisputed and that the decree holder should not be denied the fruits of its judgment because of a separate dispute between the Judgment Debtor and its secured creditor.
43. The Respondent also argues that the Bank will suffer no prejudice if execution proceeds because the debentures remain in existence notwithstanding the interim orders, and the security interests continue to attach to the company’s assets. Relying on James Kinene Murauri v Raffia Bags (East Africa) Limited & Diamond Trust Bank Kenya Limited [2022] eKLR and Kahiga v Kencity Clothing Ltd [1982] KLR 465, it submits that where execution commences before valid crystallization of a floating charge, the execution creditor acquires priority.
44. Finally, the Respondent notes that the Judgment Debtor has acknowledged indebtedness to the Bank of approximately Kshs. 1 billion, whereas the decretal sum in issue is about Kshs. 150 million. It argues that execution will not extinguish the Bank’s security interests and that the Bank cannot rely on an unperfected security interest to defeat a lawful decree. Invoking Sections 1A, 1B and 3A of the Civil Procedure Act and relying on Landmark Port Conveyors Limited v Buzeki Enterprises Limited & Another [2019] KEHC 570 (KLR), the Respondent urges the Court to vacate the stay orders issued on 27 February 2025 and allow execution to proceed, with costs.
Analysis and Determination
45. I have carefully considered both applications herein, the affidavits by parties and the rival submissions and it is my view that the dispute does not merely concern the propriety of the interim stay orders. The real controversy is the priority between a decree holder rights executing against a judgment debtor's assets and a secured creditor asserting rights under an all-assets debenture. The Respondent's application to vacate the interim orders is dependent upon the determination of that substantive question. Consequently, the issues for determination are;
a. Whether KCB Bank has established a legal or equitable interest in the attached assets capable of sustaining objection proceedings under Order 22 Rule 51 of the Civil Procedure Rules.
b. Whether the Bank's security under the All Assets Debenture and Supplemental Debenture had crystallized prior to the Respondent's execution, and if so, whether the Bank's interest takes priority over the Respondent's attachment.
c. Whether the interim orders granted on 27th February 2025 should be discharged or maintained.
Whether KCB Bank has established a legal or equitable interest in the attached assets capable of sustaining objection proceedings under Order 22 Rule 51 of the Civil Procedure Rules.
46. The present dispute falls within objection proceedings under Order 22 Rule 51 of the Civil Procedure Rules. The burden resting upon an objector in such proceedings is now well settled. An objector does not merely allege ownership of the attached property. Rather, it must demonstrate, on a balance of probabilities, that at the time of attachment it possessed a legal or equitable interest in the attached property sufficient to defeat execution. Order 22 Rule 51 (1) of the Civil Procedure Rules provides that;
“51. Objection to attachment [Order 22, rule 51]
(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.”
47. The operative words are "legal or equitable interest." The Rule does not restrict objection proceedings only to registered owners. A secured creditor may therefore invoke the procedure provided that it demonstrates that its proprietary interest had attached to the property before completion of execution.
48. The Respondent argues that KCB Bank lacked locus because a floating charge does not create an immediate proprietary interest. According to the Respondent, until crystallization occurs, the company remains free to deal with its assets in the ordinary course of business and therefore the Bank possessed nothing more than a future contingent interest. The Respondent submits that since crystallization had not occurred when proclamation took place, the Bank had no enforceable proprietary rights capable of supporting objection proceedings.
49. The Objector on the other hand, contends that this argument ignores the nature of a debenture. It submits that the Bank acquired both legal and equitable rights immediately upon execution of the debenture, although the floating component permitted the company to continue dealing with the charged assets until crystallization. It argues that once the contractual events specified in the Supplemental Debenture occurred, the floating charge automatically converted into a fixed charge, thereby conferring an immediate proprietary interest over the assets and entitling the Bank to invoke objection proceedings.
50. The starting point is therefore to ascertain the nature of the Bank's security. The evidence before Court demonstrates that Proctor & Allan executed an All Assets Debenture dated 1st November 2013 and a Supplemental Debenture dated 28th October 2015 securing substantial financial facilities advanced by KCB Bank. The debentures charged the Company's undertaking, goodwill, land, machinery, plant, equipment, receivables, book debts, future assets and all other property. The legal nature of such security is well settled.
51. In Lochab Brothers v Kenya Furfural Co Ltd [1983] KECA 51 (KLR) the Court of Appeal held that;
“At para 17/1/10 of the Supreme Court Practice (1982) it is stated as follows:
“A debenture usually creates a floating charge on a company’s assets, and only where the charge has been crystallised - eg by appointment of a receiver by seizure and sale do the rights of the debenture holder have priority over those of the execution creditor.”
Since in the present case the respondent’s goods had only been seized and were not yet sold execution was not complete. The appointment of the receivers crystallised the floating charge by making it a fixed charge which took priority over the execution creditors’ interest.”
52. More recently, in Menengai Rolling Mills Ltd & Another v Blue Nile Wire Products Ltd & Another [2019] KEHC 12328 (KLR), the High Court reaffirmed that whether a floating charge has crystallized depends primarily upon the terms of the debenture itself. The court observed that parties are at liberty to define by contract the events that automatically convert a floating charge into a fixed charge, and once those events occur, the court merely gives effect to the bargain.
53. From the foregoing, I am persuaded that although the chargor retains possession and use of the assets prior crystallization, a debenture holder nonetheless possesses a subsisting equitable security interest capable of becoming fixed upon the occurrence of the stipulated events. I therefore do not agree with the respondent’s broad proposition that, prior to crystallization, a debenture holder possesses no legal or equitable interest whatsoever.
54. A floating charge undoubtedly differs from a fixed charge in terms of enforceability and control over the charged assets. However, it is incorrect to suggest that the debenture holder lacks any recognizable proprietary interest before crystallization. A debenture creates an existing security interest from the moment of its execution. Crystallization does not create a new right; rather, it converts an existing floating security into an immediately enforceable fixed security attaching to the assets then comprised in the charge. Accordingly, the true inquiry is not whether the Bank possessed any interest under the debentures. It plainly did. The real question is whether, at the time the execution process commenced, that interest had matured into an enforceable proprietary interest capable of taking priority over the decree holder. That question falls to be determined under the second issue concerning crystallization and priority.
Whether the Bank's security under the All Assets Debenture and Supplemental Debenture had crystallized prior to the Respondent's execution, and if so, whether the Bank's interest takes priority over the Respondent's attachment.
55. This issue lies at the heart of both applications before this Court. The determination of the Objector's application hinges upon whether its floating charge had crystallized before the Respondent acquired priority through execution. Equally, the fate of the Respondent's application seeking to set aside the interim orders depends on the answer to the same question. If the Bank's security had crystallized before the execution process had been completed, then the Bank would enjoy priority as a secured creditor. Conversely, if the execution creditor had acquired priority before crystallization, then the objection proceedings would necessarily fail.
56. The parties adopt different opposed positions on this issue. The Objector contends that the floating charge crystallized automatically by operation of the Supplemental Debenture upon the occurrence of contractual events of default. It argues that the Judgment Debtor defaulted under the Settlement Agreement by failing to honour its obligations by 31st January 2025, thereby triggering automatic crystallization under Clause 15 of the Supplemental Debenture.
57. It further submits that the commencement of execution proceedings independently triggered crystallization under Clause 8 of the Supplemental Debenture. Consequently, by the time Betabase Auctioneers proclaimed the attached goods on 20th February 2025, the floating charge had already become a fixed charge. The subsequent appointment of Joint Receivers and Managers on 24th February 2025 merely constituted an enforcement mechanism and did not create the proprietary rights, which had already vested upon crystallization.
58. The Respondent position is that the Bank's interpretation of the Supplemental Debenture is inconsistent with the contractual language. According to the Respondent, Clause 8 cannot be read in isolat
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c. This Honourable court be pleased to order and direct the Respondent and Interested Party to forthwith release and return to the Applicant all the property belonging to the Applicant that the Respondent and/or the Interested Party taken from the Applicant’s premises in execution of the ruling and decree or otherwise.
d. This Honourable court be pleased to restrain the respondents and the Interested Party from attaching, advertising, selling, disposing by way of auction or private treaty or otherwise howsoever dealing and or interfering with any of the Applicant’s property whether in execution of the Ruling and/or the decree or otherwise.
e. This Honourable court be pleased to grant any such or further orders as it may deem just and expedient to grant.
f. The costs of this application be borne by the Respondent.
2. The application is supported by the affidavit of Oscar Obuna, the Head of Special Assets and Corporate Recoveries of the Objector, KCB Bank Kenya Limited. He depones that the Bank is a secured creditor of Proctor & Allan (E.A.) Limited by virtue of an All Assets Debenture dated 1st November 2013 and a Supplemental Debenture dated 28th October 2015, which charged the Company's undertaking, goodwill, assets, book debts and property, both present and future, as security for facilities amounting to Kshs. 80,450,000 and USD 28,913,000.
3. Mr. Obuna states that following the Company's default, the Bank exercised its rights under the debentures and appointed Joint Receivers and Managers on 24th February 2025. According to him, upon their appointment, control of the Company's assets vested in the Receivers and the assets became subject to the receivership process.
4. He further depones that notwithstanding the receivership, the Respondent, EPCO Builders Limited, having obtained a ruling on 3rd February 2025 and a decree on 14th February 2025, instructed Betabase Auctioneers to execute against the Company. The auctioneers allegedly entered the Company's premises on or about 17th February 2025, inventoried machinery, equipment, furniture and other movable assets, and intended to sell them in satisfaction of the decree.
5. The Objector contends that the execution is unlawful because the attached assets are subject to its debentures and therefore constitute secured assets over which it enjoys priority. It further argues that once the Company was placed under receivership, its assets became insulated from attachment and execution. The Court is therefore urged to restrain any further execution against the Company's assets pending determination of the objection proceedings.
6. The application is opposed through a Replying Affidavit sworn on 10th October 2025 by Ramji Devji Varsani, a director of the Respondent. He depones that the Respondent and Proctor & Allan (E.A.) Limited were parties to arbitration proceedings which culminated in a Final Award dated 11th September 2023 and an Additional Award on Costs dated 28th May 2024.
7. Following the awards, the Respondent moved the High Court on 18th June 2024 seeking recognition and enforcement of the arbitral awards. On 3rd February 2025, the Court allowed the application for enforcement and dismissed Proctor & Allan's application seeking to set aside the awards. A decree was subsequently extracted on 14th February 2025.
8. Mr. Varsani states that in execution of the decree, the Respondent instructed Betabase Auctioneers, who proceeded to inventory the Company's movable assets and issued a Proclamation of Attachment dated 20th February 2025. He further states that the execution process was stayed on 27th February 2025 after the Objector informed the Court of its debentures and the appointment of receivers on 24th February 2025.
9. The Respondent further avers that Proctor & Allan subsequently challenged the receivership in HCCCOMM/E133/2025, Proctor & Allan (E.A.) Limited v KCB Bank Kenya Limited & 2 Others, seeking, among other reliefs, orders restraining the appointment and actions of the receivers. Although interim orders were granted on 27th February 2025, the application was dismissed on 31st July 2025. According to the Respondent, the dismissal confirmed the validity of the receivers' appointment.
10. The Respondent disputes the allegation that its execution was unlawful and contends that the application is intended to delay enjoyment of the fruits of its judgment. It argues that the Objector's floating charge had not crystallised before the attachment and that, prior to the appointment of receivers, an execution creditor enjoys priority over the debenture holder. Consequently, the Respondent maintains that its execution lawfully took precedence over the Objector's security interest. It further contends that the Objector will suffer no prejudice if execution proceeds and urges the Court to dismiss the application.
11. The second application is the Notice of Motion dated 27th March 2025 by the Respondent seeking, the setting aside of the ex parte interim orders issued on 27th February 2025 staying execution of the decree in favour of the Respondent, together with costs of the application.
12. The application is supported by the affidavit of Ramji Devji Varsani, a director of the Respondent. He depones that the application was necessitated by the interim orders obtained by KCB Bank Kenya Limited on 27th February 2025 staying execution of the Respondent's decree. According to him, the stay was granted on the basis that KCB Bank held debentures over the assets of Proctor & Allan (E.A.) Limited and had placed the Company under receivership.
13. He acknowledges that the Company executed an All Assets Debenture dated 1st November 2013 and a Supplemental Debenture dated 28th October 2015 in favour of KCB Bank, pursuant to which the Bank appointed Joint Receivers and Managers on 24th February 2025. However, he states that shortly thereafter the Company challenged the receivership in Milimani HCCCOMM No. E133 of 2025, Proctor & Allan (E.A.) Limited v P.V.R. Rao & Another, seeking orders restraining enforcement of the debentures, suspension of the receivers' appointment, preservation of the status quo, and restoration of the directors' access to the Company's assets and operations. He further states that on 27th February 2025 the High Court certified the application as urgent and granted interim orders preserving the status quo.
14. The Respondent contends that the interim orders issued in HCCCOMM No. E133 of 2025 materially altered the circumstances upon which the stay of execution had been granted in the present proceedings. It is therefore argued that the stay orders should be discharged to enable the Respondent to execute its decree and enjoy the fruits of its judgment. The Respondent further contends that the Bank would suffer no prejudice if execution proceeded as its interests remained protected by the debentures.
15. The 2nd application is opposed through a replying affidavit sworn on 14th April 2025 on behalf of the Objector. The Objector states that between 2012 and 2022, KCB Bank advanced various financial facilities to Proctor & Allan (E.A.) Limited amounting to Kshs. 80,450,000 and USD 28,913,000. To secure those facilities, the Company executed the All Assets Debenture dated 1st November 2013 and the Supplemental Debenture dated 28th October 2015, charging its undertaking, goodwill, property, assets and book debts in favour of the Bank.
16. The Objector avers that the Company subsequently defaulted in servicing the facilities, prompting the Bank to issue a demand on 12th October 2023. The Bank thereafter engaged the Company in negotiations, including a proposed acquisition by Equatorial Nut Processors Limited. Those negotiations culminated in a Settlement Agreement dated 27th August 2024 under which the Company undertook to settle the outstanding indebtedness on agreed terms.
17. According to the Objector, the Company failed to comply with the Settlement Agreement, including failing to deposit the agreed amount into an escrow account by 31st January 2025. Consequently, the Bank treated the settlement as having failed and, on 21st February 2025, demanded payment of the outstanding debt, which stood at Kshs. 37,661,446.76 and USD 37,922,293.87. The Objector contends that upon the Company's default, the floating charge created under the debentures crystallized on 31st January 2025, thereby converting into a fixed charge over the Company's assets.
18. The Objector further states that following crystallization of the debentures, the Bank lawfully appointed Joint Receivers and Managers on 24th February 2025. It maintains that, as a consequence, the Bank acquired priority over the secured assets and that any attachment or execution against those assets was unlawful.
19. The Objector further avers that on 27th February 2025 this Court granted orders staying the attachment and sale of the Company's assets. While acknowledging that Proctor & Allan subsequently challenged the receivership in HCCCOMM No. E133 of 2025 and obtained interim orders preserving the status quo, the Objector contends that the legality of the receivership remained unresolved at the material time and was therefore still pending determination before another court.
20. The Objector argues that the interim orders issued in HCCCOMM No. E133 of 2025 neither extinguished nor suspended the Bank's proprietary rights under the debentures. It maintains that the proclaimed assets remained subject to crystallized security interests and that the Respondent, as an unsecured judgment creditor, could not acquire priority over the Bank's secured claim.
21. The Objector further contends that lifting the stay would occasion substantial prejudice to the Bank. It states that the Company's assets are valued at approximately Kshs. 1.6 billion while the outstanding indebtedness exceeds Kshs. 4.6 billion, leaving a significant shortfall even if all secured assets were realized. It therefore argues that allowing execution would erode the Bank's security and undermine its rights as a secured creditor.
22. The Objector consequently urges the Court to dismiss the Respondent's application and uphold the stay orders issued on 27th February 2025.
23. The applications were canvassed by way of written submissions as follows
Parties Submissions
Objector’s submissions
24. The Objector, KCB Bank submits that the Respondent’s application to vacate the stay orders issued on 27 February 2025 is devoid of merit because it fails to appreciate the legal consequences of the crystallization of the Bank’s debentures, the Bank’s status as a secured creditor, and the fact that execution against the Judgment Debtor’s assets had not been completed before the stay orders were granted.
25. The Objector contends that the dispute turns on two issues: first, when the Bank’s floating charge crystallized into a fixed charge, and second whether execution had been completed prior to such crystallization.
26. The Objector argues that Clause 40 of the Supplemental Debenture gives that instrument precedence over the earlier debenture. It further submits that Clauses 8 and 15 provide for automatic crystallization of the floating charge upon specified events of default, including non-payment and the commencement of execution proceedings. According to the Objector, the Judgment Debtor defaulted under the Settlement Agreement on 31 January 2025, thereby triggering crystallization under Clause 15. It further contends that the commencement of execution proceedings on 19 February 2025 constituted an independent crystallizing event under Clause 8. Consequently, by the time execution commenced, the Bank’s floating charge had already converted into a fixed charge over the company’s assets.
27. The Objector maintains that, upon crystallization, its rights as debenture holder took priority over those of all unsecured creditors. It relies on Clause 4 of the Supplemental Debenture, which created fixed and floating charges over the company’s undertaking, machinery, equipment, land, receivables and other assets. It therefore argues that all assets proclaimed by the auctioneer formed part of the charged assets over which the Bank had a superior proprietary interest.
28. On the issue of execution, the Objector submits that execution had not been completed because the assets had only been proclaimed and had not been sold. Relying on Mackenzie (Kenya) Ltd v Pharmico Ltd [1976] KEHC 7 (KLR), Menengai Rolling Mills Limited & Another v Blue Nile Wire Products Limited & Another [2019] KEHC 12328 (KLR), and Lochab Brothers v Kenya Furfural Co. Ltd [1983] eKLR, it argues that a crystallized debenture holder retains priority over an execution creditor until execution is completed by sale. Since no sale had occurred before the stay orders were granted, the Bank’s proprietary rights remained superior to those of the Respondent as decree holder.
29. The Objector further relies on Kenya National Capital Corporation Ltd v Albert Mario Cordeiro & Another [2014] KECA 775 (KLR), submitting that courts should not elevate unsecured creditors above secured creditors. It argues that lifting the stay orders would improperly subordinate the Bank’s crystallized security interests to the Respondent’s execution rights.
30. Regarding the interim orders issued in HCCCOMM No. E133 of 2025, the Objector submits that those orders merely suspended the actions of the Joint Receivers pending determination of the suit and did not invalidate the Bank’s proprietary rights under the debentures. It contends that the stay orders in the present proceedings were granted to protect assets subject to crystallized debentures and receivership, whereas the orders in HCCCOMM No. E133 of 2025 concerned the challenged receivership process.
31. The Objector also invokes the doctrine of lis pendens, relying on Dhanjal Investments Limited v Shabaha Investments Limited [2022] KECA 366 (KLR), and argues that the assets in question are the subject matter of pending proceedings and should therefore be preserved until that dispute is resolved.
32. Finally, the Objector submits that permitting execution would substantially prejudice the Bank. It states that the charged assets were valued at approximately Kshs. 1.62 billion as of 10 April 2023, while the secured indebtedness exceeded that value and continued to accrue interest. Relying on China Young Tai Engineering Company Limited v Ravasam Development Company Limited & Another [2016] KEHC 320 (KLR), it contends that execution would diminish the Bank’s already insufficient security for the benefit of an unsecured creditor. It therefore urges the Court to dismiss the Respondent’s application dated 27 March 2025 and maintain the stay orders issued on 27 February 2025.
Respondent’s Submissions
33. The Respondent opposes the Objector’s application dated 25 February 2025 and identifies two issues for determination: first, whether the Objector had a legal or equitable interest in the attached assets, and second, whether the floating charge had crystallized before execution commenced.
34. The Respondent relies on Order 22 Rule 51 of the Civil Procedure Rules and submits that an objector must demonstrate a legal or equitable interest in the attached property at the time of lodging the objection. It argues that, until crystallization occurs, a floating charge does not confer a present proprietary interest capable of supporting objection proceedings. According to the Respondent, the Judgment Debtor remained free to deal with its assets in the ordinary course of business, and therefore KCB Bank lacked the requisite interest when it filed the objection.
35. The Respondent’s principal contention is that the floating charge had not crystallized when the goods were proclaimed. Although it accepts that the Supplemental Debenture takes precedence over the earlier instrument, it argues that Clause 8 does not provide for automatic crystallization upon mere payment default. In its view, Clause 8 limits crystallization to specified events, including those identified under Clauses 15(c), (d), (e), (f) and (g), but not Clause 15(a). Consequently, the alleged default under the Settlement Agreement did not trigger crystallization.
36. The Respondent further argues that Clause 8 must be read together with Clause 15(d), which specifically addresses crystallization arising from distress, sequestration or execution proceedings. It submits that Clause 15(d) grants the company a fourteen-day period within which to remove or discharge execution before crystallization occurs. Since proclamation took place on 20 February 2025 and the objection was filed before expiry of the fourteen-day period, the charge had not crystallized. Relying on Pagnan SpA v Tradax Ocean Transportation SA [1987] 3 All ER 565, it contends that where a general provision conflicts with a specific one, the specific provision prevails.
37. The Respondent further submits that even if crystallization occurred upon the alleged default of 31 January 2025, the Bank failed to exercise the control over the assets that characterizes a true fixed charge. Citing Landmark Port Conveyors Limited v Buzeki Enterprises Limited & Another and Richard Dale Agnew & Another v Commissioner of Inland Revenue & Another, it argues that substance should prevail over form. The Judgment Debtor continued operating its business, dealing with assets freely, seeking investors and conducting transactions without restriction. According to the Respondent, these facts demonstrate that the charge remained, in substance, a floating charge.
38. The Respondent further submits that where a floating charge has not crystallized before attachment, the execution creditor obtains priority. It relies on Diversey Lever East Africa Ltd v Mohanson Foods Distributors Ltd & Another [2004] 1 EA 43 and argues that, because no receiver had been appointed and no proprietary interest had crystallized before attachment, the decree holder acquired priority over the Bank.
39. The Respondent distinguishes Lochab Brothers v Kenya Furfural Co. Ltd [1983] eKLR on the basis that, in that case, receivers had been appointed before execution was completed, thereby crystallizing the charge. It argues that, unlike the present case, KCB Bank had no legal or equitable interest at the time it commenced objection proceedings. Accordingly, the objection is said to be fatally defective under Order 22 Rule 51.
40. With respect to its application dated 27 March 2025 seeking to vacate the interim stay orders, the Respondent submits that the circumstances underlying those orders have materially changed. Relying on St. Patrick’s Hill School Ltd v Bank of Africa Kenya Ltd [2018] eKLR and Commissioner of Income Tax v Kencell Communications Ltd [2013] eKLR, it argues that interim orders may be discharged where subsequent events undermine the basis upon which they were granted.
41. The Respondent contends that the stay orders of 27 February 2025 were premised on the existence of a valid receivership and crystallized debentures. However, the interim orders issued in HCCCOMM No. E133 of 2025 suspended the receivership and restrained enforcement of the debentures pending determination of that suit. It therefore submits that the factual basis of the stay no longer exists and that maintaining it would be unjust.
42. Further, the Respondent argues that the present proceedings are independent of HCCCOMM No. E133 of 2025 and that no order has been issued staying these proceedings. It submits that the decree remains undisputed and that the decree holder should not be denied the fruits of its judgment because of a separate dispute between the Judgment Debtor and its secured creditor.
43. The Respondent also argues that the Bank will suffer no prejudice if execution proceeds because the debentures remain in existence notwithstanding the interim orders, and the security interests continue to attach to the company’s assets. Relying on James Kinene Murauri v Raffia Bags (East Africa) Limited & Diamond Trust Bank Kenya Limited [2022] eKLR and Kahiga v Kencity Clothing Ltd [1982] KLR 465, it submits that where execution commences before valid crystallization of a floating charge, the execution creditor acquires priority.
44. Finally, the Respondent notes that the Judgment Debtor has acknowledged indebtedness to the Bank of approximately Kshs. 1 billion, whereas the decretal sum in issue is about Kshs. 150 million. It argues that execution will not extinguish the Bank’s security interests and that the Bank cannot rely on an unperfected security interest to defeat a lawful decree. Invoking Sections 1A, 1B and 3A of the Civil Procedure Act and relying on Landmark Port Conveyors Limited v Buzeki Enterprises Limited & Another [2019] KEHC 570 (KLR), the Respondent urges the Court to vacate the stay orders issued on 27 February 2025 and allow execution to proceed, with costs.
Analysis and Determination
45. I have carefully considered both applications herein, the affidavits by parties and the rival submissions and it is my view that the dispute does not merely concern the propriety of the interim stay orders. The real controversy is the priority between a decree holder rights executing against a judgment debtor's assets and a secured creditor asserting rights under an all-assets debenture. The Respondent's application to vacate the interim orders is dependent upon the determination of that substantive question. Consequently, the issues for determination are;
a. Whether KCB Bank has established a legal or equitable interest in the attached assets capable of sustaining objection proceedings under Order 22 Rule 51 of the Civil Procedure Rules.
b. Whether the Bank's security under the All Assets Debenture and Supplemental Debenture had crystallized prior to the Respondent's execution, and if so, whether the Bank's interest takes priority over the Respondent's attachment.
c. Whether the interim orders granted on 27th February 2025 should be discharged or maintained.
Whether KCB Bank has established a legal or equitable interest in the attached assets capable of sustaining objection proceedings under Order 22 Rule 51 of the Civil Procedure Rules.
46. The present dispute falls within objection proceedings under Order 22 Rule 51 of the Civil Procedure Rules. The burden resting upon an objector in such proceedings is now well settled. An objector does not merely allege ownership of the attached property. Rather, it must demonstrate, on a balance of probabilities, that at the time of attachment it possessed a legal or equitable interest in the attached property sufficient to defeat execution. Order 22 Rule 51 (1) of the Civil Procedure Rules provides that;
“51. Objection to attachment [Order 22, rule 51]
(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.”
47. The operative words are "legal or equitable interest." The Rule does not restrict objection proceedings only to registered owners. A secured creditor may therefore invoke the procedure provided that it demonstrates that its proprietary interest had attached to the property before completion of execution.
48. The Respondent argues that KCB Bank lacked locus because a floating charge does not create an immediate proprietary interest. According to the Respondent, until crystallization occurs, the company remains free to deal with its assets in the ordinary course of business and therefore the Bank possessed nothing more than a future contingent interest. The Respondent submits that since crystallization had not occurred when proclamation took place, the Bank had no enforceable proprietary rights capable of supporting objection proceedings.
49. The Objector on the other hand, contends that this argument ignores the nature of a debenture. It submits that the Bank acquired both legal and equitable rights immediately upon execution of the debenture, although the floating component permitted the company to continue dealing with the charged assets until crystallization. It argues that once the contractual events specified in the Supplemental Debenture occurred, the floating charge automatically converted into a fixed charge, thereby conferring an immediate proprietary interest over the assets and entitling the Bank to invoke objection proceedings.
50. The starting point is therefore to ascertain the nature of the Bank's security. The evidence before Court demonstrates that Proctor & Allan executed an All Assets Debenture dated 1st November 2013 and a Supplemental Debenture dated 28th October 2015 securing substantial financial facilities advanced by KCB Bank. The debentures charged the Company's undertaking, goodwill, land, machinery, plant, equipment, receivables, book debts, future assets and all other property. The legal nature of such security is well settled.
51. In Lochab Brothers v Kenya Furfural Co Ltd [1983] KECA 51 (KLR) the Court of Appeal held that;
“At para 17/1/10 of the Supreme Court Practice (1982) it is stated as follows:
“A debenture usually creates a floating charge on a company’s assets, and only where the charge has been crystallised - eg by appointment of a receiver by seizure and sale do the rights of the debenture holder have priority over those of the execution creditor.”
Since in the present case the respondent’s goods had only been seized and were not yet sold execution was not complete. The appointment of the receivers crystallised the floating charge by making it a fixed charge which took priority over the execution creditors’ interest.”
52. More recently, in Menengai Rolling Mills Ltd & Another v Blue Nile Wire Products Ltd & Another [2019] KEHC 12328 (KLR), the High Court reaffirmed that whether a floating charge has crystallized depends primarily upon the terms of the debenture itself. The court observed that parties are at liberty to define by contract the events that automatically convert a floating charge into a fixed charge, and once those events occur, the court merely gives effect to the bargain.
53. From the foregoing, I am persuaded that although the chargor retains possession and use of the assets prior crystallization, a debenture holder nonetheless possesses a subsisting equitable security interest capable of becoming fixed upon the occurrence of the stipulated events. I therefore do not agree with the respondent’s broad proposition that, prior to crystallization, a debenture holder possesses no legal or equitable interest whatsoever.
54. A floating charge undoubtedly differs from a fixed charge in terms of enforceability and control over the charged assets. However, it is incorrect to suggest that the debenture holder lacks any recognizable proprietary interest before crystallization. A debenture creates an existing security interest from the moment of its execution. Crystallization does not create a new right; rather, it converts an existing floating security into an immediately enforceable fixed security attaching to the assets then comprised in the charge. Accordingly, the true inquiry is not whether the Bank possessed any interest under the debentures. It plainly did. The real question is whether, at the time the execution process commenced, that interest had matured into an enforceable proprietary interest capable of taking priority over the decree holder. That question falls to be determined under the second issue concerning crystallization and priority.
Whether the Bank's security under the All Assets Debenture and Supplemental Debenture had crystallized prior to the Respondent's execution, and if so, whether the Bank's interest takes priority over the Respondent's attachment.
55. This issue lies at the heart of both applications before this Court. The determination of the Objector's application hinges upon whether its floating charge had crystallized before the Respondent acquired priority through execution. Equally, the fate of the Respondent's application seeking to set aside the interim orders depends on the answer to the same question. If the Bank's security had crystallized before the execution process had been completed, then the Bank would enjoy priority as a secured creditor. Conversely, if the execution creditor had acquired priority before crystallization, then the objection proceedings would necessarily fail.
56. The parties adopt different opposed positions on this issue. The Objector contends that the floating charge crystallized automatically by operation of the Supplemental Debenture upon the occurrence of contractual events of default. It argues that the Judgment Debtor defaulted under the Settlement Agreement by failing to honour its obligations by 31st January 2025, thereby triggering automatic crystallization under Clause 15 of the Supplemental Debenture.
57. It further submits that the commencement of execution proceedings independently triggered crystallization under Clause 8 of the Supplemental Debenture. Consequently, by the time Betabase Auctioneers proclaimed the attached goods on 20th February 2025, the floating charge had already become a fixed charge. The subsequent appointment of Joint Receivers and Managers on 24th February 2025 merely constituted an enforcement mechanism and did not create the proprietary rights, which had already vested upon crystallization.
58. The Respondent position is that the Bank's interpretation of the Supplemental Debenture is inconsistent with the contractual language. According to the Respondent, Clause 8 cannot be read in isolat
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