REPUBLIC OF KENYA

IN THE COURT OF APPEAL

AT NAIROBI

(CORAM: WARSAME, M’NOTI & OMONDI, JJ.A)

CIVIL APPLICATION NO. E304 OF 2023

BETWEEN

CABINET SECRETARY FOR THE

NATIONAL TREASURY AND PLANNING…………….….........…1ST APPLICANT

THE HON. ATTORNEY GENERAL…………...………..…….…...2ND APPLICANT

AND
OKIYA OMTATAH OKOITI……………………………………........1ST RESPONDENT

ELIUD KARANJA MATINDI…………………………….…..........2ND RESPONDENT

MICHAEL KOJO OTIENO……………………………..…….….....3RD RESPONDENT

BENSON ODIWUOR OTIENO………………………..………....….4TH RESPONDENT

BLAIR ANGIMA OIGORO……………………………..……….......5TH RESPONDENT

VICTOR OKUNA…………………………………..………..............6TH RESPONDENT

FLORENCE KANYUA LICHORO………………….………….......7TH RESPONDENT

THE NATIONAL ASSEMBLY………………………..……………..8TH RESPONDENT

SPEAKER OF THE NATIONAL ASSEMBLY……………….......9TH RESPONDENT

KENYA REVENUE AUTHORITY………………….............…..10TH RESPONDENT

THE SENATE…………………………………………….....…….…11TH RESPONDENT

CONSUMER FEDERATION OF KENYA…………………….….12TH RESPONDENT

KENYA EXPORT FLORICULTURE

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HORTICULTURE AND ALLIED WORKERS
UNION…………………………………………………….……………13TH RESPONDENT
(Being an application for stay of conservatory orders pending from the ruling and
order of the High Court of Kenya at Nairobi (Thande, J.) dated 10th July, 2023
.
in

Nairobi High Court Petition E181 of 2023)

***************************

RULING OF THE COURT

1. The advent of the new Constitution of Kenya, 2010 ushered in a
new dawn in Kenya. The Constitution not only altered the structure
of government by affirming the place of independent offices and
institutions, but also enhanced accountability by expanding the
scope of the Bill of Rights including public participation and public
interest. The enactment of this Constitution by way of a referendum
followed a democratic and participatory process which
demonstrated the overwhelming resolve by the people of Kenya.

2. Despite the constitutional change, certain core principles of

democracy and governance remained unchanged. For instance, the
legislative power of the people still, resides in Parliament which now
has two chambers - the National Assembly and Senate. Similarly,
the budgets, spending and appropriation of public finances
continue on annual basis. Thus, under Article 221 of the
Constitution, the Cabinet Secretary in charge of Finance submits
to the National Assembly for approval, the estimates of revenue and
expenditure of the national government for the next financial year.
Upon approval, the estimates are included in an Appropriation Bill
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 which is then introduced into the National Assembly to authorize
the withdrawal from the Consolidated Fund of the money needed
for the expenditure and for the appropriation of that money. The
Public Finance Management (PFM) Act contains provisions that
operationalize the Constitutional provisions by setting out certain
timelines that culminate into the Appropriation Bill.

3. The annual budgeting cycle had, till now, not attracted so much
public attention. What started as a routine budgetary process
culminated into a full contest that has now found itself before the
courts. According to the 1st applicant, the Cabinet Secretary for the
National Treasury and Planning, at paragraph 13 of his affidavit in
support of the application before us, a total of nine petitions have
been filed challenging the constitutional validity of the Finance Act
2023 before the High Court.

4. The gravamen of those petitions is that the Finance Act 2023 is

unconstitutional for violating various provisions of the Constitution
and the PFM Act. Specifically, that it was not subjected to the
concurrence of the two Speakers under Article 110 of the
Constitution; that there were no revenue estimates in the
Appropriation Act as required under the PFM Act and Article 220
of the Constitution; that, the Finance Act was to be passed 90 days
after enactment but it was passed without estimates; that various
sections of the Act that were not in the Finance Bill were sneaked
into the Act without public participation; and that section 84 of the
Act on the Housing Levy cannot be included in the Act, as the

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 Finance Act must only contain measures to collect revenue to
finance budget expenditure estimates, yet there are no estimates to
be financed by the levy. The applicant in his supporting affidavit
lists the identified items of complainant as six captured aptly in
paragraph 6 of the affidavit.

5. With the petitions filed at different stages of the enactment of the

Finance Act, applications for conservatory orders were filed in the
High Court. The High Court was called upon to determine three
applications. The first application dated 26th June 2023 was filed
by the 1st to 7th respondents, as petitioners before the High Court,
seeking in effect, conservatory orders be issued suspending the
Finance Act 2023 and the clauses of the Act that were ‘sneaked’ in,
not having been in the Bill and those that required but did not
obtain input by the Senate. On 30th June 2023, Thande, J., issued
the conservatory orders. The second application was filed on 30th
June 2023 by the National Assembly and the Speaker of the
National Assembly seeking to suspend the orders made on 30th
June 2023 suspending the entire Finance Act. A third application
was made on 1st July 2023 by the applicants herein also seeking to
vary or set aside the orders issued on 30th June 2023 by Thande,
J.

6. The High Court summarized the issues arising out of the

applications into three – whether the orders of 30th June 2023
should be set aside, whether the test of conservatory orders had

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 been met and whether the matter should be certified as raising
substantial question of law under Article 165(4) of the Constitution.

7. On 10th July 2023, the High Court in its ruling, suspended the
implementation of the Finance Act 2023. On the first issue, the
court found that the petitioners had satisfied the tests for grant of
conservatory orders and that it was necessary to issue such orders
to preserve the substratum of the petition pending the hearing and
determination of the same. The court observed that it has a
constitutional mandate to protect the supremacy of the
Constitution by ensuring that all laws conform to the Constitution.
The Court was also satisfied of the existence of a prima facie case
with probability of success and imminent danger of rendering the
petition nugatory in the absence of the conservatory orders. This,
it observed, would militate against public interest as there was a
real risk of the public being subjected to unconstitutional law,
should the petition succeed. On the final issue, the judge certified
the matter as involving a substantial question of law and
transmitted the same to the Chief Justice to constitute a bench of
not less than three judges to determine the matter. In the end, the
application dated 26th June 2023 was allowed with the concurrent
dismissal of the applications dated 30th June 2023 and 1st July
2023.

8. On 11th July 2023, the applicants moved this Court under Rule
5(2)(b) of the Court of Appeal Rules in quest for stay of the
conservatory orders issued on 10th July 2023 pending the hearing
and determination of the application inter partes and the intended
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 appeal. The grounds in support of the application are that: there is
sufficient cause for the grant of stay as public interest would be
best served by allowing the prayer; the applicants have an arguable
appeal; the suspension of the Finance Act has the effect of halting
the core operations of the Government and the government stands
to suffer great financial loss in reduced revenue collection; the
suspension of the Finance Act will make the government incapable
of meeting its financial commitments and discharging its executive
authority; the revenue lost by the government is irrecoverable yet
the appeal has high probability of success; it will take weeks before
the Chief Justice constitutes a bench of not less than three judges
to the applicant’s detriment if the conservatory orders are still in
force; there is real risk of the appeal being rendered nugatory as
the effects of the suspension will be irreversible.

9. The application is further supported by the affidavit of the 1st

applicant which explains and elaborated the grounds set out on the
face of the application. The applicants also filed their submissions
dated 18th July 2023.

10. At the hearing of the application, the applicants were represented

by Prof Githu Muigai, SC, Kimani Kiragu, SC, Mahat Somane,
Advocate and Charles Mutinda, Advocate. Prof Muigai, SC
emphasized that there are two main grounds which the Court
needed to be persuaded on to issue the order of stay. First, that
the appeal is arguable and second, that the appeal will be rendered
nugatory. Counsel indicated that the applicants have a watertight
appeal and took issue with what he termed as judicial overreach in
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 the manner in which the orders were issued ex parte, yet the matter
was pending before another Judge and the applicants had not been
served. In summing up the narration of what transpired before the
conservatory orders were issued, Prof Muigai, SC submitted that
the basis of the appeal is the manner in which the matter was
conducted, with the petitions being determined in an interlocutory
manner. Further, that this amounted to an error of law and fact in
determining the scope of public interest.

11. Kiragu Kimani, SC, submitted that the learned Judge caused
confusion in considering the consequences of the conservatory
order in terms of tax collection. He pointed out the seven different
effects of the conservatory orders spelt out in paragraph 3 of the
supporting affidavit of the 1st applicant. These include loss of about
Shs. 211 Billion, the fact that the government has to borrow to
bridge the gap, that there are no saving provisions in the Finance
Act in total disregard to the annual budgets, and that the Finance
and Appropriation Acts are interdependent with one seeking to
raise revenue and the other providing the mode of expenditure
without recourse to earlier Acts. In essence, the government would
be unable to borrow, there is a likelihood of an increase in debt as
the revenue collection will be adversely affected, it being limited
because of debt ceiling. Counsel also pointed to the positive side of
the Act such as reduction in some taxes some of which kicked in
on 1st July 2023 and with no provision for refund, with for instance,
employers not being able to deduct taxes on the payroll. The gist of

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 his submission was that the consequences of the suspension of the
Finance Act were dire and irreversible.

12. In support of the application, Hon. Murugara Gitonga, Advocate for

the 8th and 9th respondents associated himself with the position
adopted by the applicants.

13. Mr. Muliro, Advocate for the 10th respondent also supported the
application. He submitted that the appeal raises an arguable point
on presumption of constitutionality of a statute, and faults the High
Court for suspending the entire Act. On the appeal being rendered
nugatory, he submitted that the Finance Act seeks to raise Shs.
211 Billion and a sum of Shs. 500 million was being lost per day
which sum is not recoverable with the loss now going beyond 20
days of the month. He pointed the Court to the provisions of section
47(a)(b) and 48 and Section 30 of the Value Added Tax whose
mechanisms can be employed to make refunds if necessary. He
added that it is in public interest to allow the application.

14. Mr. Miller for the 11th respondent relied on the submissions filed.
He highlighted two issues, being the role of the Senate in passing
legislation that is not a money Bill. He also reiterated the principle
of presumption of constitutionality of a statute and urged that an
Act is legal upon enactment and can be enforced unless declared
unconstitutional after a full hearing.

15. Mr. Omulama, counsel for the 13th respondent, also supported the
application.

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16. The application was opposed. Mr. Ometo, learned counsel for the
3rd respondent, who highlighted three issues. He set out the
position regarding the filing of applications by stating that on 31st
May 2023 when the petition was filed, the Finance Act had not been
enacted and the court did not pronounce itself on the orders
sought. Several preliminary objections were filed on the propriety
of the petitions. By 26th June 2023, the Bill had been enacted as
an Act and the Judge issued orders to amend the petition. Having
amended the petition, the Bill had become an Act and on 29th June
2023 they sought to suspend the Finance Act, which application
was certified urgent and heard by Thande, J.

17. On his second issue, Mr. Ometo addressed the principle of

presumption of constitutionality and argued that transformative
constitutionalism, as found in several commentaries favoured grant
of conservatory orders where there is manifest unconstitutionality.
To him, the Finance Act was prima facie illegal and the Court could
not turn away the petitioners. Lastly, on the refund of taxes, he
submitted that the suspension of the conservatory orders will lead
to accruals by the government as it is not possible to refund for
instance the increase in fuel price attributed to the Finance Act in
the event that the Act is found unconstitutional.

18. The 2nd respondent, appeared in person. He relied on his replying

affidavit and submissions filed in opposition to the application. On
the presumption of constitutionality of a statute, he argued that it
is a rebuttable presumption which would be based on the evidence
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 and material. He added that the applicants have not met the
requirements for the grant of the orders sought and the fact that a
different judge would have arrived at a different decision is not a
ground for setting aside a discretionary power exercised by a judge.
He faults the applicants for seeking to exclude the Finance Act 2023
from constitutional interpretation, submitting that his challenge on
the Act is both on the content and process. He submitted that if the
process is found to have been unconstitutional, the content will
also be nullified. Lastly, he contended that the Finance Act contains
Money Bills or sections that require deliberation and determination
by Senate. He concludes that the application does not meet the test
for grant of the orders sought, it is premature and that public
interest ought to be preserved because there will be nothing to
argue in petition, the affect of the orders sought being to dispose of
the petition.

19. The 4th respondent, Benson Otieno appeared in person. His

submissions were four-fold. First, that procedural justice is as
important as substantive justice and that the procedure in this
dispute was flawed. Secondly, that the biggest issue for
consideration is whether the government can or cannot function in
the current situation. Noting that the Finance Act has no deadline
as it repealed the earlier Act, he contended that the suspension of
the Act could potentially strain the government but not stop its
operations. The Act only brings a new revenue scheme. Thirdly, he
asserted that there is no arguable appeal as it relates to exercise of
discretion. His last argument is that the enactment of the Act was
marred by several procedural lapses and this question will be dealt
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 with by the bench to be constituted by the Chief Justice to
determine the matter in which there are pending prayers seeking
to cross-examine persons such as the Speaker of the National
Assembly. He concluded by arguing that the trial judge addressed
her mind to public interest in the grant of the conservatory orders,
and that there is neither an arguable appeal nor one that can be
rendered nugatory.

20. Mr. Angima the 5th respondent, argued that the application should
be dismissed as the substratum of the petitions were preserved and
there was no prima facie case before the Court.

21. Mr. Kimani for the 7th respondent faulted the applicants’ argument
that the trial judge overreached herself and submitted that the
judge was only protecting the supremacy of the Constitution. He
submitted that the Finance Act was enacted under Articles 109 and
110 and that the process followed in filing the petitions is
sanctioned by law, the Act going against the will of the people. He
prayed for the dismissal of the application.

22. Senator Okiya Omtata, the 1st respondent agreeed with his co-
petitioners and filed a replying affidavit and submissions in
opposition to the application. He started by averring that the
Attorney General had not filed a memorandum of appeal. He
proceeded to argue that the suspension of the Finance Act did not
vary the tax regime as the Act was an amendment Act to vary
existing laws. He reitered that the first two applications targeted
proceedings before parliament and that their petition targeted both
11
 the Bill and the Acts. He contended that the appeal is not arguable
and the figure of Shs. 211 Billion referred to by the applicants lacks
a legal basis as they are mere estimates founded under Article 220
of the Constitution without knowledge of how much will actually be
raised.

23. He further urged us to view the Appropriations Act in terms of what

affects Article 249(3) of the Constitution in which Parliament
should allocate funds for each office. He added that under Article
93(1) the Senate has the mandate to participate in the budget
making process. He did not consider the appeal to be arguable
because the issues set out are matters for trial while the
conservatory orders are only in the interim, and can be upset. He
submitted that nothing will be rendered nugatory because the
Finance Act does not allow the Government to collect money not
authorized in the Appropriation Act. In his view, public interest tilts
in favour of the respondents and therefore the conservatory orders
should not be lifted. He urged us to dismiss the application with
costs.

24. In reply, Kimani Kiragu SC appreciated the integral nature of the

court under the Constitution. He referred us the decision of the
Supreme Court in Communications Commission of Kenya v
Royal Media Services & 10 Others [2014] eKLR where the Court
lifted orders issued by this Court. On the draft memorandum of
appeal, which are clearly identified in the 1st applicant’s affidavit in
support of the application.

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25. On his part, Mahat Somane, Advocate argued that refunds can be
made and rebates allowed if the appeal does not succeed.. He raised
the contradiction by the 1st respondent in arguing that one the one
hand the Appropriation Act is unconstitutional, and on the other
hand that the same can be used. He referred us to the decision of
this Court in Itumbi v Law Society of Kenya & 55 others [2023]
KECA 593 (KLR) on ripeness under rule 5(2)(b) and submitted that
that decision was easily distinguishable from the present one.

26. Prof. Githu SC concluded the reply by submitting that there is a

strong arguable appeal and that the people of Kenya will be greatly
prejudiced if the conservatory orders continue in force. He
cautioned that this is a political dispute, and the courts have no
role entertaining a political battlefield.

27. Having extensively set out the background and the case by the
parties, the Court is being called upon to lift the conservatory
orders issued on 10th July 2023. This Court derives its appellate
jurisdiction from Article 164(3) of the Constitution and section
3(1) of the Appellate Jurisdiction Act to hear appeals from the High
Court and any other Court of Tribunal prescribed by an Act of
Parliament in cases in which the appeal lies to the Court of Appeal
under law.

28. Rule 5(2)(b) of the Court of Appeal Rules as invoked by the

applicants provides that:

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 “Subject to sub-rule (1), the institution of an appeal shall
not operate to suspend any sentence or to stay execution,
but the Court may –

(b) in any civil proceedings, where a notice of appeal

has been lodged in accordance with rule 75, order
a stay of execution, an injunction or a stay of any
further proceedings on such terms as the Court may
think just”

This is an original jurisdiction on this Court to preserve the

substratum of the appeal pending before it and is not necessarily
aimed at correcting exercise of discretion by the trial court.

29. At the onset, we wish to disabuse the submission by the 1st

respondent that an application of this nature is predicated upon
the filing of a memorandum of appeal. As expressly stated in the
said provision and as we have affirmed time and again, it is
sufficient for the applicant to only file a Notice of Appeal against the
impugned decision. It is uncontroverted that the applicants filed
their Notice of Appeal in this matter as contemplated under Rule
75 of the Court’s Rules. Having done so, the application is properly
before the Court for disposal. It is also evidently clear that for the
purposes of determining whether the intended appeal is arguable,
the grounds upon which the applicants impugn the orders and
ruling of the High Court are elaborately set out in the 1st applicant’s
affidavit in support of the application.

30. Turning to the nucleus of the application, it is common ground

amongst all the parties that the applicants must satisfy the twin
principles – the appeal should be arguable and not frivolous and
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 that if the stay is not granted, the appeal will be rendered nugatory.
The principles surrounding the Court’s jurisdiction under Rule
5(2)(b) of the Court of Appeal Rules are now settled. The jurisdiction
under Rule 5(2)(b) of this Court’s Rules is discretionary and guided
by the interests of justice. In considering the twin principles set out
above, we are cognizant that to benefit from the discretion of this
Court, both limbs must be demonstrated to the Court’s satisfaction.

31. On the first principle, as to whether or not the appeal is arguable,

we have to consider whether there is at least a single bona fide
arguable ground that has been raised by the applicants that is
worth of ventilation before this Court. In Stanley Kang’ethe
Kinyanjui v Tony Ketter & 5 Others [2013] eKLR this Court
described an arguable appeal as one which must not necessarily
succeed, but one which ought to be argued fully before the Court;
one which is not frivolous. In considering an application brought
under Rule 5 (2) (b) the court must not make definitive or final
findings of either fact or law at this stage because so may
embarrass the bench that ultimately hears the appeal. This is more
so, considering that the intended appeal arises out of a
conservatory order, with the substantive dispute still pending
before the High Court for hearing and determination

32. In Reliance Bank Limited v Norlake Investments Ltd [2002] 1

E.A. 227, we held that the term- ‘nugatory’ has to be given its
full meaning. It does not only mean worthless, futile or invalid.
It also means trifling.” Whether or not an appeal will be rendered

15
 nugatory depends on whether or not what is sought to be stayed or
injuncted, if allowed to happen, is reversible; or if it is not reversible
whether damages will reasonably compensate the party aggrieved.
See County Secretary of Kajiado & 47 others v Salaries &
Remuneration Commission & Another [2021] Eklr.

33. Turning to the first limb, is the appeal arguable? Arguments have
been proffered on both sides of the divide. The proponents of the
arguability argument have put forth several issues. Counsel for the
applicants indicated that their draft memorandum of appeal raised
six grounds of appeal. Key among them is whether an Act of
Parliament which is presumed to be constitutional, should be
suspended before the petition challenging its constitutionality has
been heard and the Act found to be actually unconstitutional.
Another issue raised is whether the impugned ruling violates the
doctrine of separation of powers, stopping the Executive from
discharging its executive authority under Article 129 of the
Constitution, and the legislature as well as the County Assemblies
from continuing to enact legislation that flows from the Act. The
applicants also fault the High Court for suspending the entire Act
when the amended petition upon which the application for
conservatory order was hinged only challenged certain provisions
of the Act. Counsel for the applicants also took issue with the
conduct of the proceedings culminating to the issuance of the
conservatory orders in what they termed as judicial overreach.

34. The opponents of the application were for the upholding of the
conservatory order. This is because to them, there was no exercise
16
 of judicial overreach as the Judge was merely acting in accordance
with the law. In addition, the presumption of constitutionality of
the statute is rebuttable especially in instances which, in their
perception, like the present case, there was what appeared as prima
facie illegality of the statute. They invoke public interest as
favouring the orders as issued by the High Court, adding that the
substantive dispute is pending determination and interrogation by
the High Court after which a final decision on the merits will be
taken.

35. It is worth noting that when the challenge at the High Court was
initiated, the Bill was yet to be enacted but at the time the
impugned ruling was made, the Bill had not only been enacted, but
had also been assented to by the President. From our consideration
of the competing positions, it is clear that there are many issues
that remain contested, which need serious evaluation and
determination, upon hearing the appeal.

36. The fact that we had at least five members of Parliament both in
National Assembly and at the Senate appearing and taking
divergent positions only shows the heat that the conservatory
orders have generated. This is because, the Members of Parliament
are the very ones involved in the legislative exercise, the result of
which is now before courts. For them not to agree and push their
disagreement before the courts, the courts in exercise of their
constitutional mandate to interpret and apply the constitution
must be allowed to play its role.

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37. The doctrine of presumption of constitutionality of a statute and
the limitations as they apply to the present scenario is something
that can only be ventilated in full at the opportune time. It is not
lost to us that a serious allegation on judicial overreach has been
raised and while we cannot make a definitive conclusion at this
point, this is one that must be argued in the appeal. This also
applies to the applicability of the doctrine of separation of powers.
Besides, the very nature of the petitions having been certified under
Article 165(4) of the Constitution and the public interest angle
raised by the parties, albeit diametrically opposed, we are
persuaded that indeed there exists arguable points in the intended
appeal. As earlier pointed out the existence of only one arguable
point is enough under this limb and the court cannot at this
moment interrogate the likelihood of success of each of the
grounds.

38. As for the second limb on the nugatory aspect, this is even more
contested. The applicants contend that we are in a unique situation
where the irreparable loss is continuous with effect from 1st July
2023 with the suspension of revenue collection under the Act. That
in addition, the government will be unable to implement its projects
and may resort to borrowing to bridge the deficit, which borrowing
may not be easily accessible in view of the prevailing economic
conditions and the national debt ceiling. They also argue that the
suspension of the Finance Act collaterally suspends the
Appropriation Act in both National and County governments. This
inhibits the 1st applicant from accessing the Consolidated Fund

18
 with a view to paying debts and remunerating members of
independent commissions which pursuant to Article 214(1) and
250 (7) of the Constitution are a first charge to the Consolidated
Fund.

39. Accordingly, the peculiar circumstances of the case are that there
will be serious irreversible economic consequences if the stay of the
conservatory orders is not granted and the intended appeal
succeeds. Award of damages would not compensate the applicants
and in any event, the respondents have not showed that they are
capable of paying damages.

40. The applicants’ version on nugatory aspect is countered by the

respondents who oppose the application. They disagree that the
suspension of the Act has a crippling effect on the government since
the existing revenue collection mechanism still operates, and that
the harm is more to the public, who cannot be refunded for tax
already paid once the Act is operationalized. They also argue that
lifting the suspension of the Act will also render the petition
pending before the High Court nugatory because they will lose their
substratum. Sight is not lost to the fact that the application relates
to conservatory orders issued by the High Court with the
substantive dispute yet to be heard.

41. One of the things that come out clearly is the place of public
interest. This matter has generated enormous interest. The litigants
hinge their respective positions on public interest making it a bone
of contention. In deciding whether the applicants have met the
19
 threshold on the nugatory aspect, we have to look at the context of
the dispute. This is the first time that the provisions of the Finance
Act have been challenged both in terms of the procedure of
enactment and in the contents. It is also the first time that orders
of these nature were issued suspending the Finance Act in its
entirety.

42. The Finance Act is a unique statute in the sense that it is enacted
annually in respect of the estimates for expenditure for the financial
year in which it relates to. Article 260 of the Constitution defines a
“financial year” to mean the period of twelve months ending on the
thirtieth day of June or other day prescribed by national legislation,
but the initial financial year of any entity is the period of time from
its coming into existence until the immediately following thirtieth
day of June, or other day prescribed by national legislation.

43. The enactment of the Finance Act as stated in the long title amends
the laws relating to various taxes and duties and for matters
incidental thereto. This means that its enactment automatically
repeals, varies and amends other provisions of the previous Act. By
its very nature, the Act has no transition or saving clause, and
arises out of the Budget Policy Statement of the national
government revenues and expenditure. It remains instrumental
into defining the government policy for the period in question as it
is used to raise revenue for the said period.

44. Section 35 of the PFM Act sets out the different stages in the budget
process as follows:
20
 (1) The budget process for the national government in any financial
year shall comprise the following stages—
a. integrated development planning process which shall
include both long term and medium term planning;
b. planning and determining financial and economic policies
and priorities at the national level over the medium term
c. preparing overall estimates in the form of the Budget Policy
Statement of national government revenues and
expenditures
d. adoption of Budget Policy Statement by Parliament as a
basis for future deliberations;
e. preparing budget estimates for the national government;
f. submitting those estimates to the National Assembly for
approval;
g. enacting the appropriation Bill and any other Bills required
to implement the National government’s budgetary
proposals;
h. implementing the approved budget.
These stages are carried out under timelines provided for under the
law on an annual basis. The present constitutional challenges
emanated between the third and fourth last stages which come at
the tail end of the process and remain critical for any government
operations.

45. The Finance Act has a life span of 90 days beyond which the next
budgetary cycle is set in motion. We have no doubt in our mind
that the Finance Act and the Appropriation Act are interdependent.
While the former provides for generation of the funds, the latter
21
 provides for the expenditure. There can be no expenditure where
the mode of generation of the funds has not been provided for. The
1st applicant estimated the generation of revenue in the tune of
Shs.211 Billion with an average daily rate of Shs.500 million.
Despite the actual figures being contested, it is certain that revenue
was to be collected with the operationalization of the Act.

46. A perusal of the Finance Act 2023 reveals that out of the 102
provisions in it, only 21 of them had a different commencement
date of 1st September 2023 and 1st January 2024. That means that
the bulk of the revenue collection measures contained in the Act
took effect on 1st July 2023, but for the conservatory orders issued
by the High Court. The Members of Parliament both Senators and
members of National Assembly who appeared before us did not
make it any easier as they took divergent views.

47. The applicants on one hand argue that the damage is irreversible if
the conservatory orders are not suspended giving an example of the
taxes that can be implemented for employees at the payroll while
the respondents in opposition argue that reimbursement of the tax
is impossible, giving an example of the fuel levy. This is not an easy
position to balance, with each side invoking public interest.

48. However, in exercising our discretion, we are mindful of certain

peculiar and unique circumstances of the Act. First, tax is a
continuous and annual mechanism and the members of the public
can get a rebate for overpaid taxes and levies when making
subsequent tax payments. Secondly, since the petitions challenge
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 both the entire Act and the specific provisions, the court can
consider suspending the specific provisions whose implementation
has an irreversible effect and cannot be refunded. This is in
contradistinction with a blanket suspension of the Act. Thirdly, the
Appropriation Act which was enacted on the backdrop of the
Finance Act is in place and is not under constitutional challenge.
Lastly, had the trial Judge considered the substantial and
irreversible public interest in this matter, the court would have
been hesitant to suspend the whole Act.

49. In conclusion, we are persuaded that the applicants have satisfied

the twin principles for the grant of the orders sought, and that,
public interest tilts in favour of setting aside the conservatory
orders by the trial Judge.

50. The upshot of our decision is that the application has merit and the
same is allowed as prayed with the effect that the order made on
10th July 2023 suspending the Finance Act 2023, and the order
prohibiting the implementation of the Finance Act 2023, be and is
hereby lifted pending the hearing and determination of the appeal.
Costs shall abide the outcome of the appeal.

51. The orders in this matter shall apply mutatis mutandis in Civil
Application No. E310/2023.

52. We further direct as follows:

1. We direct the applicants to file the appeals within the next
14 days.
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 2. That parties to file and serve their submissions within the
next 30 days.
3. Both appeals be heard and determined within 60 days from
the date of this Ruling.
Dated and delivered at Nairobi this 28th day of July, 2023.

M. WARSAME

………………………………
JUDGE OF APPEAL

KATHURIMA M’INOTI

……………………………….
JUDGE OF APPEAL

H. OMONDI

…………………………………
JUDGE OF APPEAL

I certify that this is a

true copy of the original
signed
DEPUTY REGISTRAR

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