https://new.kenyalaw.org/akn/ke/judgment/kecopt/2026/314

**REPUBLIC OF KENYA** **IN THE COOPERATIVE TRIBUNAL AT NAIROBI** **CTC NO.E 002 OF 2026** **(Coram: Hon. J. Mwatsama- Chairperson, Hon. B. Sawe- Member, Hon. F. Lotuiya- Member, Hon. M. Chesikaw- Member and Hon. P. Aol- Member.** **ANTONY OTANGA MAKANGA………………CLAIMANT/APPLICANT** **VERSUS** **STIMA DT SACCO SOCIETY LTD…………………………RESPONDENT** **RULING** 1. By a Notice of motion dated 2nd February 2026 filed under certificate of urgency and expressed to be brought under the provision of section 76 and 77 of the Cooperative Societies Act (Cap 490) , Rule 3 and 4 of the Cooperative Tribunal Rules 2004, Article 40,43 and 47 of the Constitution of Kenya 2010, and all enabling provisions of the law, the application herein seek for orders that: 2. ***Spent*** 3. **Pending the hearing and determination of this application inter-parties, the respondent, its servants, agents and /or officers be and hereby restrained by way of temporary injunction from effecting any further deduction from the claimant’s salary, allowances, shares, dividends or from the accounts of his guarantors in respect of loan account No.10384423.** 4. **The Respondent do forthwith unblock the claimant’s salary account and restore unrestricted access to the claimant’s wages allowances and other emoluments.** 5. **The Respondent do, within seven (7) days of the date of this order, furnish the claimant with a true and certified copy of comprehensive loan statement showing all recoveries made from the claimant, his shares and his guarantors since the inception of loan account No,10384423.** 6. **The cost of this application be provided for.** 7. The application is premised on the ground that the respondent blocked the claimant salary account without justification and continue to make unauthorized double deductions from his account and that of his guarantors. As a result, the claimant has been deprived access of his lawful earnings causing him to suffer irreparable harm. That unless an interim injunction is granted, he will continue to suffer. 8. In a sworn affidavit dated 17th June 2026, the respondent state that the claimant applied for a loan in March 2022 which was guaranteed by nine (9) guarantors. That initially the claimant repaid the loan as per agreement but somewhere along the line he started to default and continued persistently. This prompted the Respondent to enforce the recovery process of the defaulted amount of ksh2,569,141.17 as at 1st March 2024 by apportioning to the nine (9) guarantors whereby each one of them was to pay ksh.285,460.12. Finally, the respondent stated that following the transfer of the amounts and recovery from the guarantors, the loan account of the claimant showed a nil balance and that no further deductions was made towards the loan repayment after 1st March 2024. However, the respondent averred that any deductions which was made after the clearance of the loan from the claimant’s salary is meant to reimburse the guarantors. **Claimants written Submissions.** 1. The claimants filed his written submission dated 24/6/2026 as drawn by the law firm of Matete Mwelese & Co. Advocates and re- stated the averments contained in the statement of claim. Respondents Written submissions. 1. First the Respondents submissions dated 13th July 2026 pointed out that the claimant’s supplementary affidavit and submission both dated 24/6/2026 were drawn by an advocate who is not on record. Secondly, they argue that the prayer for temporary injunction has been overtaken by events and submit that the prayer for a mandatory order to compel the respondent to unblock his salary account and to give unrestricted access therein is unwarranted at this stage. The respondents submitted and cited several legal authorities to demonstrate why the prayers in the claimant’s application are not merited. **Issues for determination.** 1. We have considered and analysed the claimant’s application, his supporting affidavit and the accompanying annexures together with the Respondents replying affidavit, the Loan application form, the claimant’s account statement and the written submissions of both parties, two (2) issues emerge out for our determination. 2. Whether the claimant has met the legal threshold to warrant the granting of a temporary injunction. 3. Who will bear the cost of this application? **Analysis.** 1. First before the tribunal proceeds with the determination of the claimant’s application, it is important to rule on whether the supplementary affidavit and written submissions both dated 24th June 2026 are properly on record. It is not in doubt that these documents were drawn and filed by the law firm of Matete Mwelese & co advocates who did not enter appearance or seek leave from the tribunal to enter appearance for the claimant. It is further not in doubt that all along the claimant has been filling his documents in person. Yet all of a sudden, the two above referred to documents are drawn and filed by a law firm who is not on record. 2. Order 9 Rule 7 of the civil procedure rule 2010 provide that; **Where a party, after having sued or defended in person, appoints an advocate to act in the cause or matter on his behalf, he shall give notice of the appointment, and the provisions of this Order relating to a notice of change of advocate shall apply to a notice of appointment of an advocate with the necessary modifications.** Because the claimant did not file a notice of the appointment of Matete Mwelese & co Advocate to act for him, the tribunal agrees with the respondent’s submission that the supplementary affidavit and the written submissions that are drawn and filed by a law firm who is not on record, are procedurally defective and irregular. 1. The tribunal takes this position in line with the determination of court of appeal in the case of: ODM National Elections Board & another V. Gare & 2 others consolidated civil appeals 44 & 45 of 2022 where the court held: **“That the filling of pleadings or documents through or by an advocate or law firm not formally on record constitute a procedural irregularity rather than an incurable defect”.** 1. However, because the irregularity affects the form but not the substance, the tribunal will proceed to render its decision in accordance with Rule 4 of the cooperative tribunal (practice and procedure) rules 2009 which state that: **The tribunal shall have power and discretion to decide all matters before it with due speed and dispatch without undue regard to technicalities of procedure.** 1. Turning to the issue of whether the claimant has met the threshold to warrant to be granted a temporary injunction as per prayer 2 in the Notice of Motion dated 2nd February 2026, first, we start with the law that govern temporary injunctions. Order 40 (1) and (2) of the civil procedure rules 2010 provide: 1. **In any suit for restraining the defendant from committing a breach of contract or other injury of any kind, whether compensation is claimed in the suit or not, the plaintiff may, at any time after the commencement of the suit, and either before or after judgment, apply to the court for a temporary injunction to restrain the defendant from committing the breach of contract or injury complained of, or any injury of a like kind arising out of the same contract or relating to the same property or right. (2) The court may by order grant such injunction on such terms as to an inquiry as to damages, the duration of the injunction, keeping an account, giving security or otherwise, as the court deems fit.** 2. In tandem with clause (1) above, the claimant filled the instant application and prayed that a temporary injunction be issued to restrain the respondent from effecting further deductions from his salary, allowances, shares. Dividends or from the accounts of the guarantors in respect of the loan account No.10384423. 3. After a careful consideration of the statements, affidavits, evidence and the written submissions of the parties, we will not go into the merits and demerits of the legal threshold of the Notice of motion because this is a straight forward matter. 4. A quick read of the respondent’s response on this will give us the direction to take in the consideration of the claimant’s claim. First, under Paragraph 8 & 9 of the respondents replying affidavit swore by Masya Mwendwa dated 17th June 2026, the legal officer stated: **Para. 8) “That in strict enforcement of the repayment guarantee, and following the applicant’s persistent default, the outstanding obligation was transferred to the guarantors on 1st March2026. At the material time the applicant had a total outstanding balance of Ksh 2,569141.17. The said amount was apportioned amongst the nine (9) guarantors each being required to pay ksh 285, 460.12 pursuant to their contractual obligations”.** Then, Parag. 9) state: “That following the transfer, the applicant’s loan account reflected **a nil balance**. Consequently, no further deductions towards loan repayment were effected rom the applicants account after 1st March 2026” (Underline ours.) 1. More persuasively the respondents stated that after exhausting the recovery channels available, they enforced the clause on repayment guarantee as contained in the Personal Loan application and agreement Form dated 3rd March 2022. The clause state as follows: **“we the undersigned, hereby accept jointly and severally, liability for the repayment of this loan in the event of the borrower’s default. We understand that the amount in default may be recovered by an offset against our deposit or attachment of salary, deposits and other property owned by us. My current and future employer will deduct and directly remit the defaulted amount by the loanee as advised by the society”.** 1. Up to that point the respondents acted within their mandate and the tribunal sees no fault or mistake that is committed by the respondent. 2. Interestingly, paragraph 10 of the Respondents replying affidavit talks about deductions from the claimant’s salary after 1st March 2024 to reimburse guarantors. Specifically, it states: **“That any deductions made after 1st March 2024 from the applicant’s salary account were for purposes of reimbursing the guarantors upon monies being credited into the applicants account”** (emphasize ours) A literal interpretation of the above statement means that after 1st March 2024 the respondent continued to deduct the claimant’s salary this time, not for the repayment of the loan, but to reimburse the guarantors. This raises questions that begs answers such as: (i) since when did the respondent become a debt collector of guarantors? (ii) Is the new role of debt collection on behalf of guarantors which is assumed by the respondent in the instant case provided for in the by-laws or in the loan application and agreement form dated 3rd March 2022 signed by the claimant & the guarantors? (iii) How has the respondent treated other guarantors who have guaranteed loan defaulters in the past? 1. The normal practice in the Saccos sector is that, when a lender Sacco has transferred a defaulted loan for recovery from a claimant to the guarantors, the Sacco ceases to be involved in the tussle between the guarantors and the defaulter. This is because, the Sacco’s primary interest is to recover the loan amount owed by the claimant. On this, the tribunal’s position is that once repayment or attachment of the loan is made or transferred to the guarantors, a Sacco cannot make any other another claim against the borrower for the same loan. This position is buttressed by the decision of the high court in the case of Nicholas Macharia Maina V.Fridah Muguongo Kagendo E157 of 2023, where Justice H.M Nyaga stated; **“In view of the foregoing, I agree with the position of the lower court that the legal and financial ties binding the three parties namely the Sacco, the borrower and the guarantor dissolve once the loan obligation is fully settled. The only recourse available to the guarantor is to seek recovery of the paid sum through a legal action which can be instituted in any subordinate court”.** 1. With this in mind, it is the finding of the tribunal that the respondent should have stopped further deductions from the claimant’s salary, allowances, shares or dividend from 1st March 2026 because they have attached the total loan repayment to the guarantors. It is therefore procedurally wrong and unlawful to subject the claimant’s salary to deductions for a liability which has been transferred to his guarantors. For this reason, we order that any money deducted from the claimant’s salary, allowances, shares or dividends after 1st March 2024 in relation to loan account No.10384423 should be refunded to the claimant in full. 2. Flowing from the above and the fact that the respondent has transferred the recovery of the defaulted loan to the guarantors, we don’t perceive any risk that the claimant pose in the recovery process which has been completed. Accordingly, we order that the respondent unblocks the claimant’s salary account and grant him access to his money. 3. Regarding the request by the claimant to be furnished with a comprehensive loan statement, we think that it is fair and just for the respondent to prepare and forward the loan statement from the date when the loan was disbursed, with a separate tabulation showing how much money was deducted from the claimants salary or allowances from the beginning to 1st March 2024, how much of his shares was deducted towards the recovery of the defaulted loan and finally how much was attached to each guarantor. **UPSHOT** 1. Drawing from the foregoing, it is our finding that the Claimants Notice of Motion dated 2nd February is found to have merit and is hereby allowed as follows: 2. The Claimant’s Salary Account be unblocked and access is granted to the Claimant. 3. The Respondent do within seven (7) days of the date of this order, furnish the Claimant with a true and certified copy of a comprehensive loan statement showing all recoveries made from the Claimant, his shares and his guarantors since the inception of Loan Account No. L0384423. 4. Cost be in the cause. Mention to confirm compliance and Pretrial Directions on 8.10.2026 before the Assistant Deputy Registrar. Ruling dated and delivered *virtually* at **Nairobi** this **30th** day of **July, 2026.** **Hon. J. Mwatsama Chairperson****signed 30.7.2026** **Hon. Beatrice Sawe Member signed 30.7.2026** **Hon. Fridah Lotuiya Member signed 30.7.2026** **Hon. Michael Chesikaw Member signed 30.7.2026** **Hon. P. Aol Member signed 30.7.2026** **Tribunal Clerk Jemimah** Ms. Wangui h/b for Kiragu Wathuta advocate for the Respondent. Antony Makanga – No appearance. **Hon. J. Mwatsama Chairperson signed 30.7.2026**