[2021] KECPT 285 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO.272 OF 2020

ANTHONY NDUATI NYAMBURA............................................................... CLAIMANT

VERSUS

INAGI TRAVELLERS SACCO LIMITED.......................................1ST RESPONDENT

CO-OPERATIVE BANK LIMITED....................................................2ND RESPONDENT

RULING

1. The matter has 2 Applications for determination dated 2. 9.2020 and 14. 1. 2021.

There is a Preliminary Objection dated 28. 1.2021 which also seeks determination against the Claimant’s Application.

We shall start with determining the Preliminary Objection dated 28. 1.2021 by the 2nd Respondent towards the Claimant’s Application dated 2. 9.2020.

The Application dated 2. 9.2020 is brought under Rule 6 and II Co-operative Tribunal (Practice and Procedure ) Rules 2009, Section 1A, 1B,83A, 68 (e ) Civil Procedure Act Cap 21 and all other enabling provisions of the law.

The same seeks for Orders:

a.Spent

b.Spent

c.That an order be and is hereby issued restraining the Respondent’s herein whether by themselves, employees servants, agent, assigns, Remma Auctioneers and/or any other person whatsoever acting on their behalf and/or under their mandate or instructions from repossessing, advertising for sale, offering for sale, taking possession, transferring selling, disposing and/or in any other way dealing with the vehicle registration number KCH 241 U pending the hearing and determination of the main suit.

d.That the OCS Kiambu police station and/or the National Transport and Safety Authority to ensure strict adherence with the orders of this Honorable court.

e.Any other or further orders and/or directions as this Honorable court deems just and expedient.

f.That the costs of this application be provided for.

2. The Application is supported by the grounds on the face of the Application and Affidavit in support of Antony Nduati Nyambura sworn on 2. 9.2020 to which he avers he purchased Motor Vehicle Registration No. KCH 241U on 13. 7.2016 for Kshs.2. 5 Million.

That Clyde Motors enters into a Sale Agreement with him dated 13. 7.2016. He was to pay a deposit of Kshs.460, 000/= and balance of purchase price paid by 1st Respondent through a loan facility from 2nd Respondent. As a result of the Agreement the motor vehicle was registered in the name of 1st and 2nd Respondent.

The 1st Respondent and Claimant then entered into an Agreement which Claimant was obligated to repay the balance of the purchase price Kshs.2,052,722/=. The Claimant avers he was to pay monthly installments of Kshs. 71,773/- for a period of 36 months loss of his motor vehicle.

He seeks for the Claimant’s protection that the 2nd Respondent be barred from repossessing his motor vehicle.

The 1st Respondent is at fault and did not fulfil its loan obligations with the 2nd Respondent despite him having paid the whole amount.

3. The 1st Respondent filed a response in opposition to the Application and filed a replying Affidavit sworn by Charles Njenga dated 5. 10. 2020 and filed on 14. 10. 2020. He stated he is the chairman of the 1st Respondent and stated the claimant is misleading the Tribunal with falsehoods and failure to disclose material facts.

That the loan facility was negotiated on behalf of the group of the 1st Respondent members and not individuals. Thus the loan was a group loan and Applicant therefore lacks locus standi to act on his own behalf.

4. He avers that he paid all the installment when they were due and gave a schedule of the payments. He attached the account statements marked ANN-4.

On clearing the loan due he wrote to the 1st Respondent seeking for discharge of his motor vehicle registration No. KCH 241 U that was used as security.

The 1st Respondent responded vide a letter dated 25. 8.2020 stating they were liaising the 2nd Respondent to have the motor vehicle discharged.

On 25. 8.2020 he received a letter from 1st Respondent when he had visited their offices drawn by 2nd Respondent instructing Remma Auctioneers to repossess his vehicle for an unpaid loan of Kshs.5,709,377. 43/= the letter is annexed as ANN-7.

From the foregoing it was clear the 1st Respondent failed to remit his monthly loan repayment as agreed thus exposing him to grave risk and potential.

The request was declined vide letter dated 24. 9.2019.

The 1st Respondent therefore find it unfair for the Applicant to accuse it of failing to remit loan repayments given the difficult financial environment it is operating in.

The outstanding loan of Kshs. 5,709,377. 43/= is a group loan and not belonging to the Applicant only. The 1st Respondent has tried to renegotiate repayments terms of the subject loan including the 2nd respondent to have the loan restructured.

The Applicant has had other disputes with 1st Respondent and thus the motivates behind the Applicant’s suit against the 1st Respondent before exhausting the laid down procedures.

5. That the Applicant’s decision to institute suit is counter productive as it will jeopardize efforts by 1st Respondent to have an amicable repayment structure.

That the Applicant has not exhausted the internal channels available within the 1st Respondent before this suit as provided in clause 93 of the 1st Respondent by laws under the sub-head ‘disputes’ which requires the member to refer any dispute for settlement by the Management Committee or the General Meeting.

That the applicant therefore ought to have exhausted all internal mechanism for dispute resolution before instituting a suit against the 1st Respondent.

That the 1st Respondent has been operating in extremely difficult environment following the Covid- 19 outbreak which grounded its operations and is just regaining its foothold.

That even before Covid- 19 the Applicant wrote to the 1st Respondent pleading for restructure of payment agreement vide letter dated 18. 9.2019 and 19. 11. 2019 marked CN3.

6. The 2nd Respondent filed their Preliminary Objection dated 28. 1.2021 and stated under Section 76 Co-operative Societies Act (490).

(i) Tribunal lacks jurisdiction to hear and determine the Claimant’s Application and claim to the extent that it relates to on is against the 2nd Respondent.

(ii) The 2nd Respondent is therefore improperly joined to the claimant’s Application and claim.

The 2nd Respondent thus pray that the claim be dismissed or struck out with costs to the 2nd Respondent to that extent. The 2nd Respondent further filed a Replying Affidavit sworn by Mary Kalekye the Legal Officer of Co-operation Business on 28. 1.2021 filed on 29. 2.2021 in which the 2nd Respondent averred assuming the Tribunal has jurisdiction over the Bank vide a letter of offer dated 30. 10. 2015 the 1st Respondent entered into an asset finance loan Agreement of Kshs.20,000,000/=. The terms of Agreement were set out in the Bank ‘s letter of offer dated 30. 10. 2015 and the Bank’s General Terms and conditions which the 1st Respondent authorized.

Paragraph 9 of the letter of offer stated the facility would be secured by joint registration of each motor vehicle purchased by 1st Respondent using the credit line.

That paragraph 10 of the letter of offer provided that the loan facility was to be in trenches and each loan disbursement would run for a term of 36 months respectively.

Condition No. 13 1 (a) and ( c) of the Bank’s General terms and conditions provides that failure by 1st Respondent to make repayment of principal or interest the same was default and would amount to 2nd Respondent would to a demand in writing and after the 2nd Respondent would by notice to the 1st Respondent declare the security has become enforceable where upon the Bank shall be entitled to exercise its rights under the security.

7. Amongst the motor vehicles purchased from the loan facility is the subject motor vehicle KCH 241U .

The 1st Respondent defaulted and failed to make repayments in accordance with the terms of the loan facility.

On various occasions between 12. 1.2018 and 20. 3.2019 the bank sent out several demand letters to the 1st Respondent.

The 1st Respondent did not honor the demand which prompted the Bank to exercise its right and thus instructed Remma Auctioneers to realize the security. Thus the bank was within its rights under the Agreement and the loan facility to seek to realize its security as it did.

Despite the loan restructure the 1st Respondent has defaulted and failed to make payments in accordance to the restructured facility.

8. Further to that the Bank is not privy to any agreement or arrangements entered into between the Claimant and 1st Respondent on motor vehicle KCH 241U.

The Claimant is not a party or privy to any Agreements or arrangements entered into between the Bank and the 1st Respondent.

The Claimant is thus a stranger to the Bank in so-far-as the Agreement between the Bank and 1st Respondent.

Thus orders sought against the bank are not merited and the Claimant’s Application ought to be dismissed with costs to the Bank.

The parties were directed to file written submissions to dispose off the Application and 2nd Respondent filed their written submissions dated 28. 1.2021 on 29. 1.2021.

The Claimant’s filed their written submissions dated filed on 1. 2.2021 and another set dated 9. 4.2021 filed on 12. 4.2021 and did yet another set on the 2nd Respondent Preliminary Objection written submissions dated 29. 3.2021 filed on 12. 4.2021.

Having considered and analyzed all the above the issues are:

Issue one

Whether the Tribunal has jurisdiction to determine the claim as against the 2nd Respondent?

Issue two

Whether the Claimant should to be granted the orders sought.

9. Issue one

Whether the Tribunal has jurisdiction to determine the claim

Jurisdiction

The case of Owners of the Motor Vessel “lilian S” – vs- Caltex Oil (Kenya) Limited [1989]KLR 1where Justice Nyangi of the Court of Appeal held as follows:

“ I think it is reasonably plain that a question of jurisdiction ought to be raised at the earliest opportunity ….the court seized of the month is then obliged to decide the issue right away on the material before it. Jurisdiction is everything.

Without it, a court has no power to make one more step. Where a court had no jurisdiction, there would be no basis for a continuation of proceedings pending other evidence. A court of law downs tools in respect of the matter before it the moment it holds the opinion that it is without jurisdictions..”

The 2nd Respondent have cited Section 76 Co-operative Societies Act and the same provides for :

“ Disputes concerning the business of a Co-operative Society shall be referred to the Tribunal,

However, not all disputes shall be referred to the Tribunal, Section 76 (1) of the Act limits it to disputes between or among the following:

a. Among members, past members and persons claiming through past members or deceased members; or

b. Between members, past members or deceased members and the Society, its committee or any other officer of the Society; or

c. Between the society and any other Co-operative Society”

The 2nd Respondent clearly does not fall in the ambit of those mentioned in the Section above.

Despite the fact that there is a nexus related to the motor vehicle in question there is nothing binding the 2nd Respondent to the Claimant if at all to this extent without much further a do the Preliminary Objection is successful to the extent of the 2nd Respondent.

10. Issue two

Whether the Claimant should be granted the Orders sought.

The Claimant’s/Applicant seeks for restraining orders against 1st and 2nd Respondent from advertising for sale, offering for sale, taking possession, transferring selling, disposing and/or in any other way dealing with the vehicle registration number KCH 241 U pending the hearing and determination of the main suit.

The 2nd Respondent not being party to the suit as per the averments the same cannot be issued.

The 2nd Respondent have exercised their rights over motor vehicle KCH 241U which unfortunately beneficially belonged to the Applicant. The party at fault if at all is the 1st Respondent for failure to remit the payments.

We note the 1st Respondent has not denied the Applicant cleared his debt.

It would be an academic exercise on our part to go into the nitty gritty of Giella – vs- Cassman Brown on the ingredients necessary for an injunction to be ordered.

The only recourse the Applicant has it against the 1st Respondent unfortunately the 1st and 2nd Respondent had an agreement and the 2nd Respondent can exercise its authority over the subject motor vehicle.. we cannot issue orders in vain.

To this end the Application dated 2. 9.2020 fails.

11. The Application dated 14. 1.2021 was also for determination. The same was brought under Section 1A, 1B,3A and 63 Civil Procedure Act Cap 21, Order 51 (1) Civil Procedure Rules 2010, Section 30 Contempt of Court Act and all other enabling provisions of the law.

The said Application seeks for orders:

a. That this Application be certified urgent and heard ex- parte in the first instance and service of the same be dispensed with.

b. That pending the hearing and determination of the Application and/or proceedings herein, this Honorable Tribunal be pleased to issue an order directing the 1st Respondent, its Chairman, officials, agents, employees and/or whosoever from unduly interfering in any manner whatsoever with the operations of the Applicant’s motor vehicle registration No. KCH 241U at the 1st Respondent’s Sacco on account of the proceedings and/or orders obtained herein.

c. That a Notice to Show Cause does issue against the Chairman of the 1st Respondent – Gabriel Ndichu Gathogo and all Officials of the 1st Respondent to show cause why they should not be punished for contempt of court and/or blatant disobedience, disregard and/or ridicule of this Honorable tribunal’s process and orders issued by Hon. B. Kimemia on 7th September, 2020.

d. That this Honorable Tribunal be pleased to find upon hearing of the Notice to show cause that the Chairman of the 1st Respondent – Gabriel Ndichu Gathogo and all officials of the 1st Respondent are in contempt of court and/or have blatantly disobeyed, disregarded and/or ridiculed this Honorable Tribunal’s processes and orders issued by Hon. B. Kimemia on 7th September, 2020.

e. That this Honorable tribunal be pleased to punish the chairman of the 1st Respondent – Gabriel Ndichu Gathogo and all Officials of the 1st Respondent for contempt, blatant disregard and/or ridicule of this Honorable Tribunal’s process and orders issued by Hon. B. Kimemia on 7th September 2020.

f. Any other or further orders of the court geared towards protecting the dignity and authority of the court .

g. Costs of this Application be provided for.

12. The Application is premised on the grounds on the face of the Application and annexed Affidavit of Antony Nduati Nyamburasworn on 14. 1.2021 he stated that on 7. 9.2020 the Chair of the Honorable Tribunal Hon. B . Kimemia issued orders in the nature pending the hearing and determination of his Application.

The said orders were served on the 1st Respondent on 11. 9.2020.

On 18. 12. 2020 during the pendency of the orders the 1st Respondent wrote a letter dated 18. 12. 2020 suspending his (Applicant) membership and further directing him to desist from operating the suit motor vehicle in the 1st Respondent Sacco. The 1st Respondent directed the Applicant to surrender the TLB license issued in favour of the 1st Respondent on the basis the Applicant had instituted suit against them that cannot be a member of the Sacco.

The 1st Respondent agents and or employees violently and unlawfully removed all stickers and labels that contained the 1st Respondent name and matter was reported at Githunguri Police station order OB No. 31/30/12/2020.

13. The same was done in contempt of the courts orders and the same is disobedience and process of the Hon. Tribunal which amounts to grave travesty to justice. ..

That it is in the interest of justice that the Application be heard and orders issued as prayed.

The 1st Respondent did not respond to the Application for contempt and thus the same can be deemed to be unopposed.

The law relating to contempt of court is well found in the Contempt of Court Act Cap 2016. Section 3 states the objectives of the Act include upholding the dignity and authority of the court, ensuring the observance and respect of the due process of law and preserving an effective and impartial system of justice.

The issue if at all despite no response would have been whether there was service of the court order.

The fact that the 1st Respondent knew about it and the Applicant’s suspension was pegged on the case is also sufficient for the Tribunal to hold the 1st Respondent knew of the orders given.

In recent cases :

Kenya Tea Growers Association - vs- Francis Atwoli and 5 others Petition No. 64 of 2010 it was opined :

“ In the case before me, I am more than satisfied that even at higher level of beyond reasonable doubt, when an individual has been served with and/or has knowledge of a court order but not only ignores it but in fact incited others to do the same, the threshold for contempt has been met. Francis Atwoli in fact went further to arrogate himself the decision to determine when the strike should end despite the fact that the court order had stopped it….. His contempt was obvious and his conduct and words can attract no other findings”

The letter dated 10. 12. 2020 annexed in the Applicant’s Notice of Motion dated 14. 1.2021 as a ANNI is a clear indication of the aforementioned quote.

The 1st Respondent clearly had knowledge of the court order.

We tend to stand with the school of thought that knowledge is higher than personal service.

A court order must be obeyed whether one agrees with it or not.

To this end the Application is found to be with merit and thus a Notice to Show Cause is hereby issued against the Chairman of the 1st Respondent – Gabriel Ndichu Gathogo and all Officials of the 1st Respondent to show cause why they should not be punished for contempt of court and/or blatant disobedience, disregard and/or ridicule of this Honorable Tribunal’s process and orders issued by Hon. B. Kimemia on 7th September, 2020.

In summary:

1. The Preliminary Objection dated 28. 1.2021 has merits and the same is accordingly upheld.

2. In effect therefore the Application dated 2. 9.2020has no merits and is therefore dismissed with costs.

3. Application dated 14. 1.2021 is allowed, the Chairman (Charles Njenga) of 1st Respondent(Inagi Travellers Sacco Limited) to show cause why he should not be punished for contempt of orders of 7. 9.2020.

4. Mention on5. 10. 2021.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 19TH DAY OF AUGUST, 2021.

Hon. B. Kimemia Chairperson Signed 19. 8.2021

Hon. J. Mwatsama Deputy Chairperson Signed 19. 8.2021

Mr. Gitonga Kamiti Member Signed 19. 8.2021

Tribunal Clerk R. Leweri

Malonza advocate for 2nd Respondent:

Miss Wangu Advocate holding brief for Kango for Claimant: Present

No appearance for 1st Respondent

Notice to issue to 1st Respondent.

Hon. B. Kimemia Chairperson Signed 19. 8.2021