https://new.kenyalaw.org/akn/ke/judgment/kecopt/2026/290

Kavulu & another (Suing on Their Own Behalf and on Behalf of the other Members of the Society) v Datum Builders Ltd & 6 others (Tribunal Case 422 of 2026) [2026] KECOPT 290 (KLR) (9 July 2026) (Ruling) Neutral citation: [2026] KECOPT 290 (KLR) Republic of Kenya In the Cooperative Tribunal Tribunal Case 422 of 2026 J Mwatsama, B Sawe, F Lotuiya, M Chesikaw & PO Aol, Members July 9, 2026 Between Tabitha Kavulu 1st Claimant Mary Mwendwa 2nd Claimant Suing on Their Own Behalf and on Behalf of the other Members of the Society and Datum Builders Limited 1st Respondent Phyllis Tabitha Mutua 2nd Respondent Anna Ndunge Wambu 3rd Respondent Felisters Mutheu Musyoka 4th Respondent Alice Katunge Nzangi 5th Respondent Josphine Mbesa Mbithi 6th Respondent Janet Katule Mutuku 7th Respondent Ruling 1.The Amended Notice of Preliminary Objection dated 8th June, 2026 was filed by the 2nd to 7th Respondents on the grounds that:1.The Honourable Tribunal lacks jurisdiction to hear and determine the dispute because the 1st Respondent is neither a Co-operative Society nor a member nor a past member or a person claiming through members of the Makueni County AKA Housing Co-operative Society Limited.2.The Honourable Tribunal lacks jurisdiction to hear and determine the dispute because it does not relate to a debt or demand due from either the Claimants or the Respondents.3.In so far as the suit alleges irregularity and illegality in the procurement process and invokes the provisions of the Public Procurement and Asset Disposal Act, the Honourable Tribunal lacks jurisdiction to hear and determine the matter.4.Further and in the alternative to Ground three (3) above, the suit is incompetent and misconceived because Makueni County AKA Housing Co-operative Society Limited is not a public entity. Accordingly, no cause of action can properly arise under the Public Procurement and Asset Disposal Act.5.The suit offends the doctrine of exhaustion. Rule 82 of the By-Laws of Makueni County AKA Housing Co-operative Society Limited, provides an internal dispute resolution mechanism through the Management Committee and or the General Meeting, which mechanism has not been exhausted.6.The suit is statute-barred under the Provisions Limitation of Actions Act. 2.The Tribunal then gave directions for the Application to be served and be canvassed by way of Written Submissions. Written Submissions 3.The 2nd to the 7th Respondents filed their written submissions stating among others:i.That jurisdiction is conferred by law not through pleadings and legal draftsmanship, and that it is both the substance of the claim and relief sought that determines the jurisdictional competence of a court.ii.That it is common ground that the 1st Respondent is neither a Co-operative Society nor a member of the co-operative society that is subject of the proceedings. That indeed, Paragraph 3 of the Statement of Claim expressly describes the 1st Respondent as "a limited liability company incorporated with the Republic of Kenya..."iii.That Section 10 of the Act requires every entity registered under the Act to bear the word "Co-operative" as part of its registered name. That the 1st Respondent's name contains no such designation, further confirming that it is not a co-operative society registered under the Act.iv.That the scope of the Tribunal's jurisdiction under Section 76 has consistently been interpreted by the Honourable Tribunal and the courts as being confined both to the categories of parties identified in subsection (1) and to disputes concerning the business of a co-operative society. That in Kamuma Sacco Limited v. Muna Supreme Shuttle; Nairobi County Government (Interested Party) [2021] eKLR, the Tribunal stated as follows: "While the first two are cooperative societies registered under the Cooperative Societies Act, the Nairobi County Government is not in the jurisdiction of this Tribunal... It is therefore clear that while the Tribunal has jurisdiction to deal with disputes concerning different cooperative societies, the jurisdiction is stolen away at the instance of introducing Nairobi County Government..."v.That striking out the 1st Respondent cannot cure jurisdictional defect as the gravamen of the claim is a challenge to the legality and validity of a contract between the Society and a third-party contractor that is neither a co-operative society nor a member contemplated under Section 76 of the Act, and the reliefs sought are directed substantially against that contractor and require determination of its contractual rights and liabilities. Such a dispute falls outside the jurisdiction conferred by Section 76.vi.That the claim properly construed falls under the Public Procurement and Asset Disposal Act as the cause of action is the lawfulness of the procurement process culminating in the award of the tender to the 1st Respondent.vii.That the suit is equally incompetent and premature for failure to exhaust the internal dispute resolution mechanism before approaching the Honourable Tribunal as provided for by Rule 82 of the By-Laws of Makueni County AKA Housing Cooperative Society Ltd. 4.The Claimants on their end filed Written Submissions dated 26th June, 2026 stating among others:1.That having been confronted by persistent demands from members to account for the impugned procurement and the proposed payment of Kshs. 50 million of the Society's funds to the 1st Respondent, the 2nd to 7th Respondents now seek refuge behind technical objections rather than provide answers to the very serious allegations levelled against them.2.That for close to two (2) years, the Applicants and other members have pursued every available avenue within the Society to obtain accountability. Through Annual General Meetings, the Society's official communication platforms and other internal engagements, members repeatedly sought explanations regarding the impugned procurement. That having refused to address those concerns, the 2nd to 7th Respondents have approached the Tribunal with the curious argument that the Applicants ought to return to the very internal mechanisms that have demonstrably failed to resolve the dispute.3.That even more perplexing is the 2nd to 7th Respondents' attempt to persuade this Tribunal that a dispute concerning the procurement and intended expenditure of Society funds somehow falls outside the jurisdiction expressly donated to it by Section 76 of the Co-operative Societies Act merely because, in conducting the procurement, the Society voluntarily elected to be guided by the principles of the Public Procurement and Asset Disposal Act. That if that argument were to be accepted, every co-operative society would be at liberty to contract itself out of the Tribunal's statutory jurisdiction simply by referencing another statute in its internal documents. Jurisdiction, however, is neither conferred nor taken away by the convenience of parties; it flows only from the Constitution and statute.4.That equally startling is the 2nd to 7th Respondents' proposition that allegations concerning the unlawful or fraudulent application of members' funds can simply be insulated from scrutiny by the passage of time. The law has never sanctioned such an outcome. To hold otherwise would be to permit those entrusted with managing members' resources to benefit from concealment, delay and inaction, while the very members whose interests they are duty-bound to protect are left without recourse.5.That the business of the society is not just about the internal affairs of management, but includes protection of the economic interests of its members, including their investments.6.That the jurisdictional section is Section 76(1) and not Section 76(2), and Section 76(2) simply tries to define the word dispute by giving examples of disputes and provides that a dispute "shall include" claims for debts or demands. That the use of the phrase "shall include" is a term of enlargement rather than limitation. It expands the category of disputes falling within Section 76 but does not exhaustively define them.7.That the present dispute cannot be divorced from the very purpose for which the Society exists. That the society was established by its members with the principal objective of advancing their social and economic welfare through collective savings, prudent investment and transparent governance.8.That this is not a procurement dispute brought under the PPADA, nor are the Claimants inviting the Honourable Tribunal to enforce the provisions of that Act. Rather, the present claim is founded upon the breach of fiduciary duties owed by the 2nd to 7th Respondents, as members of the Management Committee, to the Society and its members as per the Society's constitution and the Co-operative. 5.We have considered the amended Notice of Preliminary Objection and the Written Submissions filed, and the only question remaining for determination is as to whether the requirements of a valid preliminary objections have been met. 6.Has the requirements of a valid Preliminary Objections have been met? 7.The locus classicus on the law on Preliminary Objections in Kenya is the decision in Mukisa Biscuit Manufacturing Co. Ltd v West End Distributors Ltd [1969] EA 696, where Sir Charles Newbold, P., with crystal clarity, pronounced in Paragraph 701 of the decision that:“A preliminary objection is in the nature of what used to be a demurrer. It raises a pure point of law which is argued on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion. The improper raising of preliminary objections does nothing but unnecessarily increase costs and on occasion, confuse the issue, and this improper practice should stop." 8.The tests to determine whether a matter raises a true Preliminary Objection was summarized in the case of David Karobia Kiiru v Charles Nderitu Gitoi & Another [2008] eKLR as follows: -“For a Preliminary Objection to succeed the following tests ought to be satisfied: Firstly, it should raise a pure point of law; secondly, it is argued on the assumption that all the facts pleaded by the other side are correct; and finally, it cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion. A valid Preliminary Objection should, if successful, dispose of the suit." 9.The High Court has faithfully upheld the principle in a constellation of decisions, including Oraro v Mbaja [2005] eKLR, where the Court emphasized:“It is to be recalled, however, that learned counsel for the Applicant did retreat into some fallback position in which he presented his client's gravamen as a fundamental issue of proper conduct of litigation dependent on the Court's discretion exercised by virtue of Section 3A of the Civil Procedure Act (Cap. 21). The Court's discretion is never exercised just on the basis of propositions of law; there must be a factual situation of which the Court takes cognizance, and in relation to which its equitable conscience is exercised. If a matter comes before the Court dressed as a 'preliminary objection', it will not come to co-exist with such factual scenarios as may lead the Court to exercise its discretion by virtue of Section 3A of the Civil Procedure Act. More importantly, it has to be appreciated that the Court's discretion exercised by virtue of Section 3A aforesaid is always for the purpose of upholding the law and so far, as possible; and this would require preserving the claims of parties so that they may be heard and determined according to law. By contrast, the Applicant's plea is that the Respondent's pleadings be terminated in limine. There is no consistency between such a prayer, which belongs to the normal practice attending preliminary objections (matters of law), on the one hand, and the case for ensuring fair trial which the Applicant has also urged, on the other hand." 10.Also, in Attorney General & Another v Andrew Mwaura Githinji & Another [2016] eKLR, the High Court was explicit on the scope, nature and meaning of a Preliminary Objection in the following terms: -i.A Preliminary Objection raises a pure point of law which is argued on the assumptions that all facts pleaded by other side are correct.ii.A Preliminary Objection cannot be raised if any fact held to be ascertained or if what is sought is the exercise of judicial discretion; andiii.The improper raise of points by way of preliminary objection does nothing but unnecessary increase of costs and on occasion confuse issues in dispute. 11.In this particular case, a few issues have been proffered as pure points of law, and they include;I.Whether the 1st Respondent (a limited liability company registered under the Companies Act) can be sued at the Tribunal?II.Whether the Tribunal has jurisdiction in a suit that alleges irregularity and illegality in the procurement process and invokes the provisions of the Public Procurement and Asset Disposal Act, andIII.That the suit is statute-barred under the Provisions Limitation of Actions Act. 12.We have considered the three issues and we are persuaded that this Tribunal is not the first point of call on issues of mismanagement or disputes relating to procurement. Numerous court cases define the first point of call-in dispute resolution as the first forum with legal authority to listen to witnesses, review evidence and make the first ruling. 13.The issues raised by the Claimants appear to this Tribunal as issues that fall within the ambit of Section 58 of the Cooperatives Societies Act that may first need to be handled by other forums as points of call before the same are tabled at the Tribunal. As such, we are persuaded that as a Tribunal we are still not yet seized with jurisdiction at this very moment to intervene and as such, we refuse the invitation to intervene at this moment. Final OrdersThe Amended Notice of Preliminary Objection dated 8th June, 2026 succeeds and the whole suit is struck off with no orders as to costs. RULING DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 9TH DAY OF JULY, 2026.HON. J. MWATSAMACHAIRPERSON SIGNED 9/7/2026HON. B. SAWEMEMBER SIGNED 9/7/2026HON. FRIDAH LOTUIYAMEMBER SIGNED 9/7/2026HON. M. CHESIKAWMEMBER SIGNED 9/7/2026HON. P. AOLMEMBER SIGNED 9/7/2026Court Assistant – MutaiOmeto advocate for the ClaimantMr. Kyalo advocate holding brief for Mutua advocate for 2nd to 7th Respondent