[2021] KECPT 604 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL APPEAL NO. 05 OF 2020

EMMANUEL KAYALA MATE................................................APPELLANT

VERSUS

WEVARSITY SAVINGS AND CREDIT

CO-OPERATIVE SOCIETY LIMITED...........................RESPONDENT

JUDGMENT

1. The matter for determination is an Appeal filed by Appellant vide on Appeal dated 14th September 2020on the grounds that

I. The Commissioner erred in Law and fact in issuing surcharge order against the appellant when it was within the Commissioner`s knowledge that this matter has been fully adjudged and determined by competent superior Court.

II. This is Res-judicata by virtue of having been determined vide Kisumu E&LRC Cause No.373 of 2015 in Judgment delivered on 4. 10. 2018 and no appeal has ever been preferred.

III. The Commissioner herein therefore is in abuse of the court process and this Tribunal has no Jurisdiction to adjudicate on this matter already decided by superior court.

Parties filed their written submissions and documents. The Appellant filed their written submissions on 9/2/2021 and the be filed written submission on 9/3/2021.

2. The Appellant’s submitted that the preferred the appeal against an inquiry report of the Respondent and the surcharge order dated 26/2/2021 made by commissioner of co-operative.

That the court vide Kisumu ELRC 373 of 2015 seeking declaration for wrongly termination and award of general and Exemplary damages against Respondent.

That in the same matter the Respondent raised a counter claim in the respect to a claim of Kshs. 1,307,880. 50/= that the matter was substantially more than heard and determined.

That both claim and counter claim were dismissed.

3. That the Respondent file the case seeking repayment of the orders surcharged. That Kisumu ELRC cause 373 of 2015 and CTC 355 of 2019 arose from the same facts. Leaving with separate issues, which issues were determined by court of competent jurisdiction.

That CTC 355 of 2019 was withdrawn by consent of both parties and said surcharge orders was never presented for adoption by the courts.

That with the said consent adopted the Appellant believed the matter was well adjudicated upon as per orders of 9. 12. 2020. They cited Henderson Vs. Henderson 1943 67ER 313

That this Appeal is well merited with line with provisions of 74(1) of Co-operative Society Act hence should be allowed and ELRC 373 of 2015 having been determined the surcharge orders should be res judicata and set aside with costs.

The Respondent submitted that the Appellant has wrongly filed his appeal before this Tribunal due to the fact that the Commissioner is an administrative body thus the Surcharge Orders ought to have been discharged. Vide Judicial Review in High Court and not Appeal before the Tribunal.

Richard Olendo and 2 others Vs. Commissioner of Co-operatives 2020 eKLR.

4. That on the issue of res judicata the main issue determined in ELRC case was needful termination and not surcharge order.

As per the Record of Appeal the ground of Res judicata is in alterable of one the prerequisites has not been satisfied that is, matter directly and substantially in issue in the Appeal is not the same substantially in issue in the former suit. They relied on

Musa Hassan Vs. Eastern & Southern African Trade and Development Bank[2004]eKLR in the High court of Kenya Civil Suit No. 555 of 2001 before M.K.Ibrahim Judge where the court addressed itself on the issue of res judicata as follows:

“.... light of the foregoing, I am of the view that aside from the question of parties which could possibly have determined this application, the causes of action in the two suits herein are different and poles apart....HCC.NO.555 of 2001 is one for compensation or damages for repudiation and rescission ..on the other hand, HCCC.NO.1361 of 1999 relates to receivership of African Airlines and whether the dispute should be referred to arbitration. The issues it follows are distinctly separate and different.”

That the surcharge issued by the commissioner for all intent and purposes was for recovery of cash shortages. That the Appellant Memorandum of Appeal is self-defeating since it contends the Tribunal’s jurisdiction that it has lodged the Memorandum of Appeal for the same Tribunal.

The Respondent therefore set for the Surcharge Order as properly issued:

5. ISSUES ONE

i. Res judicata

Section 7 Civil Procedure Act provides a suit will be Res Judicata if “….the matter has been directly and substantially in issue in a favour suit , between the same parties or parties under ….they or any of the claim, litigating under the same …….”

Competent to try such subsequent suit or the suit in which has been subsequently raised, and has been heard and finally decided by such court.

6. 1. What were the issues in the ELRC

The Appellant has awaited certified proceedings and a copy of the judgment in the said judgment dated 24/10/2018 the issues for determination were:

i. Whether the Claimant employment was terminated or he voluntary resigned from employment.

ii. Whether the claimant is entitled to the relief sought.

The parties were Emmanuel Kayala Mate -Vs- Wevarsity Savings and Credit Cooperative Society Ltd .

In the Appeal the grounds of Appeal are:

(i) That the commissioner erred in law and facts in issuing surcharge order against the Appellant.

7. That this matter is Res Judicata

(ii) That the commissioner is in abuse of the court process and this Tribunal has no jurisdiction to adjudicate in this matter.

It is clear from the above that the issues for determination before the ELRC court were different from the issues raised before this Tribunal.

(iii) Jurisdiction

The Employment and Labour Relations Courts is a court specialized to determine Employment and Labour relations. This Tribunal deals with matters of Co-operative Societies.

Question was the ELRC a competent jurisdiction for resolving Co-operative Society matters .

From the onset the Appellant contends that the Respondent issue of repayment of the sum Kshs. 1,307,880. 50 was raised in the counterclaim and it was substantial heard and determined . So the cause of action in the counterclaim was not specifically availed to the Tribunal in form of pleadings therein to enable us understand the clear wording of the prayers therein.

We note that the Appeal herein is in regard to the orders of surcharge by the Commissioner for Co-operative Development after an inquiry, which order was issued on 28. 2.20 and this was after the dismissal of the counterclaim for repayment and withdrawal of the suit for repayment.

9. The process of a surcharge order is a process provided for under Section 58 Co-operative Societies Act which provides that:

(i) The Commissioner may of his own accords shall on direction of Minister as the case be hold an inquiry or direct any person authorized by him in meriting to hold an inquiry into the by-laws, working and financial conditions of any Co-operative society.

(ii) The commissioner shall report findings of his inquiry at the General Meeting and shall give directions for the implementation of the recommendations of inquiry report.

Section 73 Co-operative Society Act provides that where it appears that any person.. the Commissioner may on his own accord or on the Application of the liquidator or of any creditor or member inquire into the conduct of such person....

Upon inquiry under sub Section 1 the Commissioner may if he considers it appropriate make an order to repay or restore the money or property ..as the Commissioner deems just.

10. The Commissioner therefore is an administrative body which carries out its function as mandated under the Co-operative society Act. Ruling the process of inquiry, leading to surcharge order the affected parties are notified of the process and accordingly invited to challenge the process. Indeed after an inquiry report is completed it is presented to the General meeting of members for discussion, nothing prevented the appellant from raising any issue/objection in regard to the inquiry report at that stage.

Indeed the extension of the inquiry report was extended to 28. 2.2015 as per the notice issued by the Commissioner on 15. 12. 2014 and on 13. 7.15 the Respondent wrote to the Appellant demanding for payment of the lost money and he was granted 14 days to do so.

After the adoption of the inquiry report in the General meeting a notice of intention to surcharge under section 58 and 73 Co-operative Societies Act was issued to the Claimant and six others vide Notice of intention dated 25. 1.2016

11. The Appellant was granted the opportunity to show cause why he should not be surcharged as per the unanimously adopted findings and recommendations of the inquiry report.

No such cause was shown within the 14 days window a Surcharge Order was therefore issued on 26. 2.2020. The Process taken or carried out by the Commissioner is and administrative process which parties are granted audience to air or challenge the process and if the parties are not satisfied with the administrative process they have a right to file a Judicial Review in the High Court under the Administrative Action Act.

Once the Surcharge Order is issued then the party is required under Section 74 (1) Co-operative Societies Act to appear against the said order within 30 days to the Tribunal.

The only avenue after the surcharge order was issued was an appeal against the Surcharge Order under Section 74 (1) Co-operative Societies Act.

12. we note that the judgment dismissing the counter- claim dated 4. 10. 2018 and was during the period of inquiry process and the surcharge order was issued after that is 26. 2.20. This clearly indicates that the matters directly and substantially in issue before the ELRC Court are not the same matters. Directly and substantially in issue before the Tribunal.

The commissioner for Co-operative Development being an administration body is neither a court nor a Tribunal as enumerated in the Res judicata principle. Indeed nothing prevented the appellant from challenging the inquiry proceedings inquiry report, the recommendations of Inquiry Report and presentation of the same during the General Meeting. The intention to surcharge when he had the opportunity to present the sentiments of “Determination of the issues” in the ELRC.

13. Indeed the jurisdiction of the Tribunal as aforesaid only begins after a surcharge order is issued therefore the ELRC in our view had no jurisdiction to entertain issues reached by the Respondent against its member.

The issues determined in the ELRC were only two in regard to (a) employment and (b) Labour relations.

The surcharge order was a new issue that came up after the determination in the ELRC. We therefore find that the Surcharge Order being an issue that arose after the judgment of the ELRC was not an issue directly and substantially an issue before the ELRC court.

Indeed the Appellant if aggrieved by the procedure culminating to the surcharge order should have filed for Judicial Review in the High Court against the administrative process of the Commissioner for Co-operative Development.

14. Issue two:

MERIT OF THE APPEAL

Section 58 and 74 Co-operative Societies Act as aforesaid provides for the issuance of inquiry and Surcharge Orders.

The procedure for filing an Appeal in the Co-operative Tribunal is provided for under Rule 8 Co-operative Tribunal Rules 2009 sub rule 2.

The mandatory documents to be filed with Memorandum of Appeal are :

a. Memorandum of Appeal

b. Inquiry order

c. Inquiry/inspection order

d. Minutes of General Meeting

e. Notice of intention to surcharge

f. Surcharge order

g. Any other relevant document.

These provisions are in regard to Appeals against surcharge orders as enumerated under Section 74 Co-operative Societies Act which is the mandate of the Co-operative Tribunal.

On the merits of the Appeal as discussed earlier we note that Res judicata principle is not applicable in the instant suit as earlier discussed herein above.

15. In this matter the Appellant has challenged the process culminating into the surcharge order dated 26. 2.2020. The Appellants have submitted that the said orders should not have been issued as it was res judicata.

In our understanding the Appellant challenges the decision and powers of the commissioner to issue a surcharge order.

We find that this mandate against the Administration Action of the Commissioner in issuing a surcharge order is not within the purview of the jurisdiction of the Co-operative Tribunal as provided for in Section 74 (1) Co-operative Societies Act.

16. In totality we find the Appeal filed has no merit and uphold the surcharge order dated 26. 2.2020 as properly issued.

Costs follow the cause and we order costs of Respondents to be paid by the Appellant.

JUDGMENT SIGNED, DATED AND DELIVERED VIRTUALLY THIS 27TH DAY OF MAY, 2021.

Hon. B. Kimemia Chairperson Signed 27. 5.2021

Hon. J. Mwatsama Deputy Chairperson Signed 27. 5.2021

Mr. P. Gichuki Member Signed 27. 5.2021

Tribunal Clerk R. Leweri

Getanda Advocate for Appellant: Present

Abok Advocate for Respondent: Present

Hon. B. Kimemia Chairperson Signed 27. 5.2021