A commercial court sitting in Nairobi has lifted orders that had previously barred the Nairobi Hospital board from borrowing funds for capital expenditure.
The decision, made by Justice Peter Mulwa, followed a lawsuit filed by Samuel Muchiri, who had sought to prevent the board from accessing funds, citing concerns about the hospital’s financial prudence.
Muchiri had initially filed a case challenging the conduct of the Annual General Meeting (AGM) held on December 4,2024, which led to the election of a new board of directors.
He argued that the election process was flawed and that the newly elected board was not acting in the hospital’s best interest, especially regarding plans to borrow substantial sums for capital expenditures.
Specifically, Muchiri raised concerns over the proposed borrowing of Sh4.2 billion, which he claimed would be secured by the hospital’s assets, potentially putting the institution’s financial stability at risk.
Justice Mulwa, however, ruled that the issues raised by Muchiri were substantially similar to those in a related case already pending before the court.
“I also note that the issue of the Sh 4.2 billion borrowing, now raised by the Plaintiff herein, was a matter in issue in HCCOMM E233 of 2024, where the court (Dr Mugambi, J.) held that this issue would be best raised and addressed in HCCOMM E544 of 2024,” stated Justice Mulwa.
The judge cited the principle of “subjudice,” which prohibits the court from considering issues that are already under judicial review in another case involving the same parties.
According to the judge, it would not be prudent to adjudicate the same issues in multiple proceedings, as this could lead to conflicting rulings.
“It will be untidy for the court to consider the outcome of the AGM both in this suit and the earlier suit as there is a great risk of coordinated courts granting conflicting orders,” Justice Mulwa stated.
He further emphasized that the case at hand would be best addressed alongside the ongoing litigation, which had already raised similar concerns.
As a result, the judge reserved comments on the merits of the case and ordered that the matter be mentioned together with the initial case for a possible consolidation and expedited hearing.
With the lifting of the interim orders, the board is now free to proceed with its plans for capital expenditure, including borrowing for essential medical equipment replacement.
In its defense, the Nairobi Hospital argued that the proposed borrowing would primarily fund the replacement of outdated medical equipment, including a crucial linear accelerator used for cancer treatment.
The hospital revealed that the equipment, which was purchased in 2012, had reached its “End-of-life” and was no longer supported by the manufacturer.
The hospital emphasized that the new equipment would enhance patient care and ensure a solid return on investment.
The hospital’s lawuers further stressed that Muchiri’s opposition to the borrowing was based on a misunderstanding of the financial needs of the institution.
They pointed out that without the new equipment, the hospital would be unable to continue providing cutting-edge medical services, particularly in the area of oncology.
“The planned investment will address a critical gap in our medical services,” the hospital’s representatives argued in court.
“Without this equipment, we risk compromising the quality of care we provide to our patients, especially in life-saving treatments such as cancer therapy.”
While the court ruled in favor of lifting the borrowing restrictions, the hospital’s governance and financial decisions remain under scrutiny.
The Attorney General recently moved to initiate an independent investigation by the Directorate of Criminal Investigations (DCI) into the hospital’s operations and governance structures.
The investigation is expected to review the hospital’s financial management and corporate governance practices in light of recent legal challenges.
In response to the Attorney General’s decision, the Nairobi Hospital issued a statement welcoming the move, expressing its commitment to transparency and accountability.
“We believe that a thorough review of our operations will help clarify any concerns regarding our governance. We remain fully committed to complying with the investigation while ensuring uninterrupted care for our patients,” the statement read.
