https://new.kenyalaw.org/akn/ke/judgment/kecopt/2026/315

**REPUBLIC OF KENYA** **IN THE CO-OPERATIVE TRIBUNAL AT ELDORET** **TRIBUNAL CASE NO. E002 OF 2025** **(Coram: Hon. J. Mwatsama- Chairperson, Hon. B. Sawe- Member, Hon. F. Lotuiya- Member, Hon. M. Chesikaw- Member and Hon. P. Aol- Member.)** **CLINTON WAMBUA** **CHARLES MBONDO** **CAREN MIUTUA** **COSMAS KALOKI .........................………..................APPELLANTS** **VERSUS** **COMMISSIONER FOR CO-OPERATIVE** **DEVELOPMENT ………………………………………... RESPONDENT** **JUDGEMENT** The Appellants filed a Memorandum of Appeal dated 12th March, 2025 appealing against surcharge orders issued on 7th Nov., 2022 where the Appellants were surcharged the sums of Kshs. 4,482,357.50, 4,869,237.50, 2,533,357.50, and 1,172,357.50 respectively. According to the Appellants, the surcharge was illegal as the Commissioner based his decision to surcharge the Appellants on an illegal inquiry report, and an illegal resolution arising from an illegally convened meeting of 3rd July, 2021which adopted the said report. According to the Appellants, the purported surcharge was based or premised on a report which was never adopted by the society as envisaged by the law. That the Magistrates Court at Milimani Commercial Courts in Civil Case No. E915 of 2021 issued injunctive status quo orders on 2nd July 2021 restricting the holding of the 1st Defendant’s Special General Meeting on 3rd July 2021. That on being served with the Court order barring the society from conducting a Special General Meeting of the Sacco, the Appellants opted not to attend the said meeting, as doing so would be in contempt of the Court Order in place. That due to the absence of the Appellants in the said Special General Meeting, they were not able to make submissions objecting to the said Inquiry Report in the Meeting, and as such they were condemned unheard thus denying them a fair hearing. That also the Commissioner disregarded their submissions and never involved them in the inspection process leading up to the adoption of the Inquiry Report. It was also their position that the Commissioner exercised the power to surcharge based on unreasonable and irrational considerations such as blaming the executive committee for loans disbursed on authorization by the credit committee, the fact that the inquiry team ignored the fact that there was existence of a loan policy that was followed in the awarding of the loans, or the fact that the inquiry team failed to disclose that some of the defaulters are also the current sitting executive committee members. To the Appellants, the power to surcharge was being exercised in a biased and impartial manner as only four members out of nine member management committee were investigated and implicated, yet the remaining five members are serving in the current management committee. As such, it was the Appellants prayer: 1. THAT the Appeal be allowed. 2. THAT the surcharge orders dated 7th November 2022 be set aside all together, annulled and or declared null and void. 3. THAT findings and recommendations of the Inquiry Report adopted at the illegal Special General Meeting held on 3rd July 2021 be quashed, set aside, and be declared null and void. 4. Such other further orders as this Honorable Court may deem appropriate. The Appellants also filed the following documents: 1. Affidavit sworn by CPA MOSES M. OBUSUBIRI of Obusubiri and Associates, sworn on 1st April 2025 sating among others that they examined the books of account, supporting documentation, and internal controls, and did not find any evidence of misappropriation or loss of funds during the period under review, and that the individuals who undertook the inquiry were not qualified auditors, and thus, their inquiry report did not meet the threshold of a professional audit, as it was not conducted in accordance with recognized audit standards. 2. Affidavit sworn by JOSEPH KITHEKA sworn on 1st April 2025 stating among others that he was also a member of the Society and a committee member during the Appellants' tenure in office and therefore had a clear understanding of the financial operations of the Sacco at the time, as well as the environment under which they served, and that during his tenure as a committee member and later as the Chairperson, he had the opportunity to review the financial records, audit reports, and internal documentation of the Sacco, and he confirmed that no money was lost under the Applicants' leadership. It was also his position that the allegations that formed the basis of the surcharge orders against the Applicants were not grounded in fact, but were rather politically instigated and driven by internal rivalry to ensure the Applicants had no opportunity to return to leadership in the SACCO, thus amounting to an abuse of the law. 3. Affidavit sworn by GIDEON MUMO MWALUKU sworn on 1st April 2025 stating among others that he served as a member of the Finance Sub-Committee and also held the position of Chairperson of the Credit Sub-Committee of the Society during the tenure of the Appellants, and that as Chairperson of the Credit Sub-Committee, he oversaw the approval and disbursement of loans, monitored loan performance, and ensured compliance with the Society’s credit policies, and that from his consistent participation in these committees before, during, and after the Applicants' tenure, he was fully aware that there was no misappropriation of funds attributable to their leadership and that all transactions and disbursements were duly authorized and properly documented. It was his considered view that the allegations leveled against the Applicants concerning misappropriation of funds were not only false and baseless, but also stemmed from internal political rivalry within the Society. The accusations were driven by ulterior motives aimed at tarnishing the Appellant’s reputation and frustrating their continued involvement in the Society’s leadership. This Honourable Tribunal on 26th July, 2025 gave directions for the appeal to be canvassed by way of written submissions after being satisfied that proper service was done with no response received from the Commissioner or Interested Parties. **Written Submissions** The Appellants filed their written submissions dated 12th December, 2025 stating among others: 1. That the decision to surcharge was tainted with illegality, having been founded on an Inquiry Report adopted in an unlawful Special General Meeting convened and held in defiance of a subsisting Court Order expressly barring the holding of the said meeting. 2. That the introduction of the Inquiry Report states that the inspectors authorized to carry out the inspection vide Kenya Gazette No.1680 issued on 19th February 2021. The said Gazette Notice is non-existent. The said Kenya Gazette No.1680 is a Notice to show cause why several companies should not be struck off the register of companies at the end of three (3) months after the dissolution notice. 3. That the decision to surcharge them was made in flagrant breach of the principles of natural justice, as they were condemned unheard. 4. That the inquiry report informing the surcharge orders was marred with irrationality and unreasonableness, and that the same should not be left to stand. 5. That the Inquiry Report at page 19 states that the Commissioner for Cooperative Development amended the Sacco’s by-laws on 10th May 2017 after recommendations to that effect were made by an Inquiry Team in 2017. That this was a mistake of fact as no inquiry was conducted in the affairs of the Sacco at the behest of the Commissioner prior to September 2017. 6. That the Inquiry Team ignored the fact that there was in existence a credit committee, which was in charge of loans appraisal, and that the executive's role was limited to signing cheques for approved disbursements by the said credit committee which was made up of Gideon Mwaluku as the Chairman, Joseph Kithekwa as the Secretary, and Bonface Mburu. 7. That the decision to surcharge them was tainted by bias and want of impartiality, the same having been founded on an Inquiry Report that was itself biased and lacking in objectivity. 8. That the Inquiry Team were biased against the former committee members in favour of the current committee members, and in so doing, orchestrated an injustice against the Appellants. 9. That it was unreasonable for the Commissioner to surcharge the Appellants, basing on a forensic audit carried out by individuals who are not certified public accountants. That the unqualified individuals ignored all the Forensic reports which were done and certified by the Sacco Auditor, which speaks to the bias and determination to recommend the surcharging of the Appellants. **Analysis and Determination** We have carefully considered the Application and the submissions in the matter, and first note that the Cooperative Societies Act at Section 58 provides for the procedure of Inquiry and Inspection, with Section 73 giving the Commissioner the power to surcharge after Inquiry and Inspection, and Section 74 providing for the process of appealing against surcharge. Numerous Court decisions have dealt extensively with how to go about Inquiry and Inspection in Societies, how to challenge the Inquiry and Inspection done, or how and where to appeal a surcharge. In **Republic vs Commissioner for Cooperative Development & 3 others ex-parte Elisha Otieno and 22 others [2016] eKLR,** the High Court was clear that the process of Inquiry and Inspection must be done in strict adherence and in conformity with Article 47 of the Constitution, which requires the officers involved in the Inspection or Inquiry to adopt an open, fair, objective and transparent procedure. In this particular appeal, from the Inquiry Report attached, as a Tribunal we are able to summarize the following: 1. The Inquiry was initiated by the Commissioner on his own accord after receiving complaints by members of the society, and he authorized Mr.Joel K. Barbengi (Principal Cooperative Auditor from the State Department of Cooperatives) and Mr. Nicholas Muchoki (Cooperative Officer Embu County) to perform the Inquiry. 2. The Terms of Reference of the Inquiry included looking into the financial controls and financial management of the society among many others. 3. The management committee of the society of that time availed the required documents for Inspection and Inquiry. 4. That the records examined included bank statements, minutes, cheque counterfoils, payment vouchers and by-laws among many other things. 5. That the third management committee was a team of 9 members. 6. Findings included the management committee failing in terms of proper management, with the supervisory committee being ineffective and failing to exercise its role among many other findings. We have considered the issues raised relating to the conduct of the Inquiry and the tabling of the Inquiry Report, and our position as a Tribunal as guided by Section 74 of the Co-operative Societies Act,is that the issues raised relating to procedural bias, legal question of adopting the Inquiry Report when there was a Court Order stopping the Special General Meeting, and the constitutional questions raised relating to fair hearing, are issues of judicial review to be addressed by the High Court and not this Tribunal. Issues of judicial review in Kenya should be addressed primarily in the **High Court**, which holds supervisory jurisdiction and exclusive authority under statute and the Constitution to issue prerogative orders.In **Dande & 3 others v Inspector General, National Police Service & 5 others [2023] KESC 40 (KLR**), the Supreme Court said of Judicial Review: *“Judicial review was introduced to Kenya from England in 1956 through sections 8 and 9 of the*[*Law Reform Act*](https://new.kenyalaw.org/akn/ke/act/1956/48)*, Cap 26. The jurisdiction to hear and determine judicial review was then vested in the High Court. Under that system, the High Court could issue orders of mandamus, prohibition, and certiorari. The grounds for the issuance of such orders were borrowed from common law. Prior to the promulgation of*[*the Constitution*](https://new.kenyalaw.org/akn/ke/act/2010/constitution)*of Kenya, 2010, there were two legal foundations for the exercise of the judicial review jurisdiction by the Kenyan courts found in sections 8 and 9 which constituted the substantive basis for judicial review of administrative actions on the one hand, and, order 53 of the Civil Procedure Rules which was the procedural basis of judicial review of administrative actions, on the other hand.* *The entrenchment of judicial review under*[*the Constitution*](https://new.kenyalaw.org/akn/ke/act/2010/constitution)*of Kenya, 2010 elevated it to a substantive and justiciable right under*[*the Constitution*](https://new.kenyalaw.org/akn/ke/act/2010/constitution)*. Accordingly, judicial review was no longer a strict administrative law remedy but also a constitutional fundamental right enshrined in*[*the Constitution*](https://new.kenyalaw.org/akn/ke/act/2010/constitution)*. Thus, Article 47 of*[*the Constitution*](https://new.kenyalaw.org/akn/ke/act/2010/constitution)*provided that every person had a right to an administrative action that was expeditious, efficient, lawful, reasonable and procedurally fair.* *The entrenchment of judicial review in*[*the Constitution*](https://new.kenyalaw.org/akn/ke/act/2010/constitution)*had led to the emergence of divergent views on the scope of judicial review. The first group postulated that judicial review was concerned with the process a statutory body employed to reach its decision and not the merits of the decision itself while the second group opined that under the current constitutional dispensation, courts could delve into both procedural and merit review in resolving disputes."* As such, this HonourableTribunal does not have jurisdiction to address the judicial review questions it is being invited to address concerning the mandate of the Commissioner for Cooperative Development in the Inquiry and Inspection process, and as such it declines the invitation - the Appellants are free to pursue the judicial review issues they have raised at the High Court. **Final Orders** The Memorandum of Appeal dated 12th March, 2025 is dismissed with no orders as to costs. Ruling signed, dated and delivered *virtually* at **Nairobi** this **5th** day of **August, 2026.** **Hon. J. Mwatsama Chairperson Signed** **5.8.2026** **Hon. Beatrice Sawe Member Signed 5.8.2026** **Hon. Fridah Lotuiya Member Signed 5.8.2026** **Hon. Paul Aol Member Signed 5.8.2026** **Hon. Michael Chesikaw Member Signed 5.8.2026** **Tribunal Clerk Jemimah** Aringa advocate h/b Nyangesi for the Appellants. Commissioner for Cooperative Development – No appearance. **ARINGA:** We seek leave to appeal. **TRIBUNAL ORDER**: Leave granted to appeal within 30 days. **Hon. J. Mwatsama Chairperson Signed 5.8.2026**