Sidian Bank Ltd v Shah & 3 others [2025] KEHC 5858 (KLR)

Sidian Bank Ltd v Shah & 3 others (Commercial Appeal E112 of 2021) [2025] KEHC 5858 (KLR) (Commercial and Tax) (9 May 2025) (Ruling)

Neutral citation: [2025] KEHC 5858 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts)

Commercial and Tax

Commercial Appeal E112 of 2021

NW Sifuna, J

May 9, 2025

Between

Sidian Bank Ltd

Appellant

and

Nilan Gulabchand Shah

1st Respondent

Matra Getlink Ltd

2nd Respondent

Zachary Muthuri Kithaka Thambu

3rd Respondent

Thomas Mong'Are Ondieki

4th Respondent

Ruling

1. This Ruling determines three applications. Through the first application dated 26th November 2021, the appellant is seeking a stay of execution against the ruling and order of the Chief Magistrate’s Court in Milimani CMCC No. 2703 of 2021 pending appeal. The application is supported by the affidavit sworn by the appellant’s credit manager, Emma Ooro on 26th November 2021. The application is opposed through a replying affidavit sworn by the plaintiff on 14th December 2021.

2. Through the second and third applications dated 11th and 17th January 2022, the 1st Respondent seeks orders to preserve the subject matter and to cite the appellant for contempt of court. Opposing the applications, the Appellant filed a Replying Affidavit and Further Affidavit sworn by its senior legal officer, Stella Kendi on 25th February 2022.

3. The Appellant and the 1st respondent filed written submissions dated 11th March 2022 and 7th March 2022, respectively.

Analysis and Determination 4. I have considered all the pleadings, evidence and submissions. I will refer to them as necessary in the analysis. The Appellant seeks an order for stay of execution of the ruling and order of the Chief Magistrate’s Court in Milimani CMCC No. 2703 Of 2021, which order is reproduced in part herebelow:“…2. That the fixed deposit of Kshs. 2,200,000/= is frozen for a period of (3) three months from the date of this ruling as the defendants organize for an alternative security and upon lapse of the stated period the amount shall be available for the Plaintiff’s use.”

5. The Appellant contended that the orders issued discharged the 1st Respondent from a contract of guarantee through which the 1st Respondent had guaranteed a loan facility to the 2nd, 3rd and 4th Respondent. The amount guaranteed was Ksh 2,000,000=, whose collateral was a fixed deposit of Ksh 2,000,000=- in the 1st Respondent’s name in his account domiciled at the Appellant. According to the Appellant, the impugned order was issued despite the Appellant proving that the loan remained outstanding in the sum of Ksh 2,035,027/64 from the 2nd and 4th Respondent. Which the 1st Respondent had not paid despite the guarantee.

6. The Appellant submitted that it has met the threshold for an order for a stay as it has filed a Memorandum of Appeal within time. It also submitted that unless a stay is granted, the fixed deposit will dissipate upon demand by the 1st Respondent causing it substantial loss. It added that it has an arguable appeal and that it is willing to provide security as ordered by the court.

7. The 1st Respondent, contrarily, submitted that the Application for a stay has been overtaken by events. It again submitted that the application was filed before the Appellant complied with the orders of the trial court requiring it to first pursue the principal debtor as required by the law of guarantee.

8. The 1st Respondent highlighted that while the principal debtor had variously engaged the Appellant with the intention of complying with the orders of the court, the appellant has been solely interested in pursuing the 1st Respondent because the money is readily available and held by the bank.

9. Thus, the 1st Respondent contended that the Application was not filed in good faith and was only a ploy for the Appellant to utilize the money held in fixed deposit and to frustrate him. The Appellant submitted that it has met the threshold for the grant of a stay pending appeal. The 1st Respondent argued that the order is not capable of being stayed.

10. The Appellant further submitted that the Appeal has not been rendered nugatory as submitted by the 1st Respondent considering that he has not filed a Cross-Appeal in which he would feel prejudiced. It also submitted that the appeal is not hinged on the Application of the funds but rather on the need to correct the apparent error of the trial court.

11. Has the applications for stay and for preservation have been overtaken by events? My view is that, flowing from the above, the preliminary issue for determination is whether the two applications for stay and for preservation of the subject matter have been overtaken by events.

12. I note that the funds were utilized by the Appellant to offset the loan on 12th January 2022 at 12. 14PM. The reason being that the order of 16th December 2021 was an unconditional stay of execution order which had not been varied or set aside. The order of 16th December 2021 was to the effect that:“…an order of stay of execution be and is hereby issued staying the ruling and order of 29th October 2021 by the Chief Magistrate in Milimani CMCC 2703 of 2021, Nilan Gulabchand Shah v. Matra Getlink & others and Sidian Bank Limited up to 8th February 2022. ”

13. From my reading of the above vis a vis the order of 29th October 2021, I am of the view that the freezing order was meant to lapse within three months of the ruling. However, the court on 16th December 2021, the court granted a stay of the freezing order up to 8th February 2022. The appellant utilized the funds to offset the loan on 12th January 2022, before the stay orders lapsed on 8th February 2022.

14. Therefore, the applications dated 26th November 2021 and 11th January 2022 are overtaken by events.

15. On whether the 1st Respondent has met the threshold for orders to cite the Appellant for contempt, it is also apparent that the stay of the freezing order through the court orders of 16th December 2021 meant that by utilizing the funds to offset the loan, the 1st respondent was not in contempt of court. Thus, the Application dated 17th January 2022 lacks merit.

Final Disposal 16. For the reasons I have already stated in this ruling, I find no merit in the applications dated 26th November 2021 and the ones dated 1th and 17th January 2022. Hence hereby dismiss them accordingly. There shall be no order as to the costs of the Applications.

DATED AND DELIVERED AT NAIROBI ON THIS 9TH DAY OF MAY 2025. PROF (DR) NIXON SIFUNAJUDGE