The High Court has granted Kenya Power an additional 21 days to provide a bank guarantee in a $5.2 million (Sh672 million) legal dispute with Nucon Switchgears Pvt Limited.
A bank guarantee is a backstop offered by a financial institution promising to cover a financial obligation if one party in a transaction fails to hold up their end of a contract.
“Having considered the reasons advanced, I am satisfied that the defendant is a public entity. I take judicial notice of the bureaucratic processes attendant to such entities. That the amount involved is huge,” Justice Alfred Mabeya said in his February 18, 2025 decision.
“That the delay was not deliberate and/or of the Court order. There was no evidence that the delay had prejudiced the plaintiff in any way. Any prejudice can be atoned by an order for costs,” the Judge added.
The dispute arose from a judgment issued on May 23, 2023, in favour of Nucon Switchgears, awarding the transformers manufacturing company over $2.5 million (Sh323 million) against Kenya Power. Seeking to appeal the decision, the power utility company was granted a conditional stay of execution of the decision on January 30, 2024, and was required to furnish a bank guarantee for the full sum within 30 days.
However, as the deadline approached, Kenya Power failed to comply, relying on the substantial amount involved and the need for multiple approvals as a public entity. This led to a request for an extension of 21 days, which Nucon Switchgears strongly opposed.
Nucon argued that Kenya Power’s delay in providing the bank guarantee was an abuse of the court process. Nucon contended that Kenya Power had ample time to comply with the bank guarantee requirement but had failed to do so without a valid reason. The company insisted that the deadline for the stay of execution had already lapsed, meaning Kenya Power violated the court’s directive.
On the issue of the Notice of Appeal, Nucon told the court that Kenya Power’s failure to pay the necessary court fees at the time of filing rendered the notice invalid.
Nucon claimed that Kenya Power had only rushed to regularise its appeal after being served with Nucon’s application for review, proving its initial filing was defective.
On the other hand, Kenya Power urged the court to grant the extension, arguing that the delay was not intentional but was caused by bureaucratic processes within the company. It added that as a public entity, securing approvals for financial transactions of such magnitude required multiple layers of authorisation.
Regarding the Notice of Appeal, Kenya Power admitted that there had been an error in paying the filing fees but insisted that this was due to technological hitches. The company argued that the mistake was rectified as soon as it was discovered and had already filed a formal appeal before the Court of Appeal.
Justice Mabeya sided with Kenya Power, citing Section 96 of the Civil Procedure Act, which allows a court to accept payments after a pleading has been filed. He also emphasised the importance of ensuring that procedural technicalities do not unfairly bar a litigant from accessing justice.
In his ruling, Justice Mabeya acknowledged the bureaucratic hurdles Kenya Power faced and noted the challenges state corporations encounter when handling large financial commitments. He said the delay was not deliberate and had not caused irreparable harm to the plaintiff.
The court granted Kenya Power the 21-day extension but ordered that the guarantee amount be increased to Sh672 million upon renewal and remain valid for the duration of the appeal process.
