The High Court has declined to suspend its April 2025 ruling that deemed the 2019 stamp duty waiver on the NIC–CBA merger unconstitutional, denying NCBA Group a stay.
The decision clears the way for KRA to pursue Sh384.5 million in stamp duty while the bank lodges its appeal.
In a ruling delivered on Tuesday at the Milimani Law Courts, the court held that NCBA had failed to demonstrate it would suffer “substantial loss” or “irreparable harm” if the judgment was enforced while awaiting appeal.
The refusal clears the way for the Kenya Revenue Authority (KRA) and the Collector of Stamp Duty to enforce payment of more than Sh384.5 million in tax.
NCBA had sought orders restraining the respondents from demanding or initiating enforcement action to levying or collecting stamp duty on the instruments executed in relation to the merger,” arguing the waiver had formed a central part of the transaction’s financial structure.
The bank argued that immediate payment would force it to draw from customer deposits, with its counsel stating that the money held by the applicant at any time are deposits belonging to members of the public.
NCBA submitted that paying the Sh384.5 million could directly affect third parties who are not involved in the dispute, disrupt operations and undermine liquidity planning.
Its lawyers further argued that KRA may not be able to refund the money if the appeal succeeds, insisting there is no clear legal mechanism under the Stamp Duty Act through which a refund, may be processed.”
They said the financial implications were significant and immediate, warning of irreversible business consequences.
But the petitioner, Senator Okiya Omtatah, opposed the application, insisting the court was “functus officio” and that the judgment took effect immediately.
He argued that NCBA had not met the threshold for stay because KRA is able to refund any stamp duty paid should the appeal succeed.
Omtatah maintained that the appeal did not raise new constitutional questions, saying it seeks to relitigate issues already determined by the court.
In his view, public interest favoured immediate execution, as the waiver had violated section 106(1) of the Stamp Duty Act and Article 201 of the Constitution.
NCBA’s legal team relied on several precedents, urging the court to preserve the status quo and arguing that the merger between two major financial institutions involved public interest, market stability, investor confidence and economic growth.
They insisted that the balance of convenience tilts in the applicant’s favour.
However, the judge disagreed, finding NCBA had failed to prove that paying the tax now would render its appeal nugatory.
The court held that claims of constitutional complexity, financial disruption, or impact on shareholders did not amount to irreparable harm.
The judge also noted that NCBA had already filed Civil Appeal No. E41 of 2025, but this alone was not sufficient to justify suspending a judgment grounded in clear statutory interpretation.
With the stay denied, KRA is now free to pursue recovery of the disputed Sh384.5 million unless NCBA secures relief from the Court of Appeal.
The financial implications could be immediate, placing further pressure on the institution as its merger structure faces renewed legal scrutiny.
The ruling marks a significant victory for Okiya Omtatah, who maintained the 2019 stamp duty exemption, issued through Legal Notice No. 112, was unconstitutional and contrary to the principles of fair taxation.
