The High Court has declined to issue interim orders stopping the arrest and prosecution of Flexitech Group Limited and its directors over allegations that the fintech company failed to remit more than Sh30 million collected from customers on behalf of Naivas Limited.
The court dismissed the company’s request for interim conservatory orders, ruling that fears of reputational damage and loss of business were not, on their own, sufficient grounds to halt criminal proceedings.
In its ruling, the court warned that stopping prosecutions merely to protect businesses and prominent individuals from reputational harm could undermine the administration of criminal justice.
“If courts were to stop criminal prosecutions in order to protect businesses and reputations, except where, on the face of it, the prosecution is a purely civil-commercial dispute being recognised, then no prosecution of prominent people would take place,” the judge said.
However, the judge directed that the application for conservatory orders be heard on its merits, noting that the court had not yet fully examined the legal basis of the intended prosecution.
The dispute stems from a service agreement signed between Naivas and Flexitech on February 10, 2021, under which the fintech firm facilitated customer purchases through its Flexpay platform, allowing shoppers to pay for goods in instalments.
Under the agreement, Flexitech was entitled to retain five per cent of each payment as commission and was required to remit the remaining 95 per cent to Naivas within 24 hours.
Customers who completed their instalment payments would then receive release codes enabling them to collect their goods from the retailer.
Court documents indicate that Flexitech initially remitted the collections as agreed before allegedly stopping the payments, prompting Naivas to demand the outstanding amounts.
The retailer first demanded Sh24.9 million before issuing a subsequent demand for Sh29.5 million in unremitted collections.
Naivas maintained that Flexitech had acknowledged the outstanding amount but failed to settle the debt despite further demands.
The retailer subsequently reported the matter to the police, leading to investigations by the Directorate of Criminal Investigations (DCI).
Following the investigations, the Director of Public Prosecutions (DPP) recommended that the directors be charged with stealing by agent in a decision communicated on August 11, 2026.
Flexitech and its directors moved to court, arguing that the dispute was essentially a commercial disagreement involving the reconciliation of accounts under their service agreement and a subsequent addendum.
They maintained that the contractual arrangement provided a dispute-resolution mechanism that should be exhausted before criminal proceedings could be pursued.
The petitioners further alleged that the criminal process was being used to pressure the company into settling a disputed civil debt and interfere with its contractual relationship with Naivas.
They also claimed that Naivas intended to replace Flexitech with an in-house platform allegedly copied from the Flexpay model.
The directors argued that their business depended heavily on their reputation and that the planned criminal charges would cause irreparable damage to their commercial interests.
They consequently sought orders restraining state agencies from arresting, detaining, charging or prosecuting them over transactions arising from the 2021 agreement and related contractual documents.
According to their application, some directors had already been arrested and released on police bond, while another remained at risk of arrest.
The petitioners also told the court that they were expected to appear in court on October 12, 2026, and urged the judge to intervene before the charges were formally brought.
Naivas opposed the application, denying that it had instigated the criminal investigations as a means of recovering a disputed civil debt.
The retailer maintained that the evidence disclosed a straightforward case of stealing by agent and that the directors should be arraigned and prosecuted.
The respondents and Naivas also argued that the court needed to hear both sides before issuing interim orders that could interfere with the criminal justice process.
In declining to grant the requested relief, the judge cautioned against determining the substantive issues in the petition before hearing the parties on the application.
The court observed that the petitioners’ principal argument at that stage centred on the potential damage to their reputation and business.
The judge found that such concerns, without additional legal grounds, were insufficient to justify an interim order stopping the criminal process.
The High Court directed that the application for conservatory orders be fast-tracked, leaving the door open for the petitioners to obtain relief if they establish a sufficient legal basis.
The judge noted that the court could still grant conservatory orders if the petitioners satisfied the applicable legal principles, including those set out in the Gatirau Peter Munya case.
The latest ruling does not finally determine whether the planned prosecution should proceed.
The court is yet to hear and determine the application on its merits, leaving the dispute over the alleged unremitted collections and the legality of the intended criminal proceedings unresolved.
