[2021] KECPT 504 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL

AT NAIROBI

TRIBUNAL CASE NO.35 OF 2017

JAMES MUHINDI MACHIRA & 2955 OTHERS......................................................CLAIMANT

VERSUS

RELISA HOUSING CO-OPERATIVE SOCIETY LIMITED.............................RESPONDENT

RULING

What is before us for consideration and determination is the Respondent’s Notice of Preliminary Objection raised orally on 22. 9.2020. Vide the said objection, the Respondent contend that the Tribunal does not have jurisdiction to entertain and/or grant the Orders sought in the amended statement of claim dated 7. 8.2019. When this became the case, we directed parties to file written submissions in regards to the objection. The Respondent did so on 23. 9.2020 while the Claimants filed theirs on 14. 11. 2020.

Respondent’s Case

The Respondent has articulated the Preliminary Objection vide its submissions dated 23. 9.2020 as follows:

Audit of the Respondent and taking of Accounts.

This is prayer (a) of the prayers in the amended statement of claim dated 7. 8.2019. The Respondents borne of contention as regards this prayer is that by dint of Section 25 of the Co-operative Societies Act (Cap 490) Laws of Kenya, the office of the Commissioner of Co-operative is vested with the requisite jurisdiction to handle matters regarding the filing and consequences of failing to prepare and file audited accounts.

Dissolution of the Respondent

As regards the prayer for an Order directing the Commissioner of Co-operatives to dissolve the Respondent, the Respondent contend that the said power and procedure is clearly provided for under section 61 of the Act and that the Tribunal does nto have the requisite mandate to hear and determine a claim regarding dissolution of the society.

Sale of Assets and distribution of proceeds

As regards this prayer, the Respondent submits that the sale and distribution of the Assets of a Co-operative Society can only be done within the ambit of the provision of Section 66 (L) of the Act and thus the Tribunal lacks the requisite jurisdiction to entertain a prayer of that kind.

Claimant’s Case

The Claimants have opposed the preliminary objection vide their written submissions dated 23. 11. 2020. According to them, the Tribunal has jurisdiction to entertain the claim by dint of section 76 of the Act. That the gist of the dispute in the present claim revolves around mismanagement of the Respondent and therefore falls within the ambit of the disputes contemplated in Section 76 of the Act. That to this end therefore, the Tribunal has jurisdiction to entertain the claim.

Issues for determination

We have framed the following issues for determination:

a. Whether the Tribunal has jurisdiction to entertain the claim;

b. Who should meet the costs of the Preliminary Objection.

Jurisdiction

Jurisdiction is everything and without it, the court downs its tool. This was the holding of the Court of Appeal in the case of Peter Gichuki King’aa vs IEBC & 2 others[Civil Appeal No. 23/13].

No doubt, the Respondents oral objection raised on 22. 9.2020 falls within the rubric of a Preliminary Objection so as to call for our determination. As was held by the court in the celebrated case of Mukisa Biscuit, Manufacturers Limited – vs- West End Distributors Limited [1969] EA C96.

“......a Preliminary Objection consists of a point of law which has been pleaded or which arises by clear implication out of pleading and which if argued as a preliminary objection, may dispose of the suit. “

With the foregoing legal background in mind, a question arises as to whether the Respondent’s Objection is merited and should therefore see the light of day. We look at it thematically as follows:

Audit and taking of Accounts

It is the Respondent’s case that the exercise of audit and taking of accounts and the attendant consequences of non-compliance with the requisite procedures lies with the office of the Commissioner of Co-operatives and not this Tribunal.

We have referred to the provisions of Section 25 of the Co-operative Societies Act. Section 25 (III) provides as follows as regards failure by a Co-operative Society to cause its accounts to be audited.

“....Where a Co-operative Society fails to cause its accounts to be audited within the prescribed period in respect of its business, for the previous financial year, members of the committee shall automatically lose their positions at the next general meeting and shall not be eligible for re-election for three years unless the Commissioner is satisfied that failure was due to circumstances beyond their control.

Section 26 provides:

(I) Any officer, agent, servant or member of a Co-operative Society who is required by a Commissioner or by a person authorized in writing by him to do so shall, at such place and time as the Commissioner may direct produce all monies, securities, books, accounts and documents belonging to or relating to the affairs of such society which are in the custody of such officer, agent, servant or member...”

Clearly therefore, it is apparent that the powers and/or jurisdiction to compel officials of a Co-operative Society to produce books of accounts or to account for the affairs of the society squarely lies in the office of the Commissioner of Co-operatives. We thus agree with the Respondent that we do not have jurisdiction to compel the Respondent to produce books of accounts or even take the said accounts.

Dissolution of the Respondent

The Claimant has also asked us to compel the Commissioner of Co-operative to dissolve the Respondent. The Respondent, vide the instant Preliminary Objection contend that we do not have such powers.

As submitted by the Respondent, the procedure for dissolving a Co-operative Society is clearly delineated in section 61 of the Act. We cite the Section as follows:

“ 61 (I) if the Commissioner, after holding an inquiry under Section 58, or making an inspection under section 59 of this Act, or receiving an Application made by atleast three fourths of the members of the Co-operative Society, is of the opinion that the society ought to be dissolved , he may, in writing, order the dissolution of the society and subsequently cancellation of registration. ..”

Clearly, it is manifest that the power to dissolve a Co-operative Society is the sole preserve of the Commissioner of Co-operatives. Whilst discharging the said mandate, he is under no control or direction of anybody including the Tribunal. We thus uphold the Respondent’s objection in this regard.

Sale of Assets

As rightly submitted by the Respondent, the sale and distribution of the Assets of a Co-operative Society is the sole preserve of a liquidator appointed in terms of Section 66 of the Act. The Tribunal does not have jurisdiction to direct the manner in which the process of liquidation is undertaken. To this and we also uphold the Respondent’s objection in that regard.

Conclusion

The upshot of the foregoing is that we find merit in the Respondent’s Preliminary Objection raised orally on 22. 9.2020 and find that we do not have jurisdiction to entertain the prayers contained in the Claimant’s amended statement of claim dated 7. 8.2019 and hereby proceed to strike the claim off with costs to the Respondent.

Ruling signed, dated and delivered virtually this 28th day of January, 2021.

Hon. B. Kimemia Chairperson Signed 28. 1.2021

Mr. B. Akusala Member Signed 28. 1.2021

Mr. R. Mwambura Member Signed 28. 1.2021

No Appearance for parties

Hon. B. Kimemia Chairperson Signed 28. 1.2021