[2023] KECPT 446 (KLR)

Maseno University Sacco Society Limited v Olendo (Tribunal Case 269 of 2019) [2023] KECPT 446 (KLR) (27 April 2023) (Ruling)

Neutral citation: [2023] KECPT 446 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 269 of 2019

BM Kimemia, Chair, J. Mwatsama, Vice Chair, B Sawe, F Lotuiya, P. Gichuki, M Chesikaw & PO Aol, Members

April 27, 2023

Between

Maseno University Sacco Society Limited

Claimant

and

Richard Olendo

Respondent

Ruling

1. The matter for determination are 2 Notice of Motion Applications dated August 24, 2021 and January 25, 2021.

2. The Application dated August 24, 2021 seeks the following Orders:a.That the Respondent’s Statement of Defence dated June 5, 2019 be struck out.b.That this Honourable court be pleased to enter Summary Judgment for the Claimant/Applicant against the Respondent herein as prayed in the Statement of Claim plus costs and interest thereof.c.That the Defendant/Respondent do pay the costs of this Application.d.That this Honourable court be pleased to issue any other relief that it may deem fit.Based on the grounds on the face of the Application and the Supporting Affidavit of Professor Andrew Oduor.The Respondent filed their Replying Affidavit deponed by Richard Olendo on October 8, 2021.

3. The Respondents also filed their Application under Certificate of Urgency dated September 25, 2021 seeking the following prayers.a.That this application be certified as urgent and heard ex parte in the first instance.b.That there be stay of further proceedings in this case pending the hearing and determination of this Application.c.That there be stay of further proceeding in this case pending the hearing and determination of the Applicant’s Appeal at the High Court being HCCA E303 of 2021 between Richard Olendo, Dr Constantine Wasonga, Loi Muhonja Kirui and Commissioner for Cooperative Development, Ministry of Industry, Trade and Cooperatives, Maseno University Sacco Society Limited.d.That the costs of this Application be provided for.It is based on the grounds on the face of the record and supported by the Affidavit of Richard Olendo.The Application is opposed vide the Replying Affidavit of Professor Andrew Oduor deponed on November 8, 2021.

4. The 2 Applications were directed to be heard simultaneously and parties were ordered to file written submissions for both Applications. The Claimant filed 2 sets of written submissions in regard to each Application dated September 8, 2022 whereas the Respondent filed written submission dated January 14, 2022.

A. In regard to the Application dated September 25, 2021. 5. The Applicant/Respondent seeks for stay of further proceedings in this case pending hearing and determination of the Appeal HCCA E 303/2021. That the Respondents were surcharged. That they appealed in the Tribunal CTA 2/2019 and the same was heard and determined and dismissed. That the Respondent appealed against the decision of the Tribunal in the High Court and the same is pending.

6. The Applicant/Respondent have submitted that they are entitled to an order of stay of proceedings Appeal, and that the same is discretionary and that may be issued in the interest of justice as held in Christopher Mutuku & another v CFC Stanbic Bank Limited [2015] eKLR. That the orders should be granted as sought.

7. That the Appeal in the High Court raises triable issues on the procedural and substantive legality of the Surcharge from which the proceedings herein arise and the said Appeal will be rendered nugatory if a stay of proceedings is not granted as held in Benson Khwatenge Wafula versus DPP [2020]eKLR.

8. That if the Appeal succeeds, the proceedings of the Tribunal may be rendered nugatory as held in Michael Njai – vs- Juan Torres and Another[2015]eKLR.

9. That no prejudice will be suffered by the Claimant if an order of stay is granted as they will still oppose their case at the Appellate Court.

10. The Claimant submitted that the Applicants have not given any weighty issues that would warrant a stay of proceedings as held in Kenya Wildlife Service – vs- James Mutembei [2019]eKLR.

11. That the Applicant appealed in the Tribunal CTA 2/2019 which was heard and dismissed. That by dint of the dismissal, Section 75 Cooperative Societies Act automatically came into operation. That the Tribunal had already pronounced itself that it had no merit and it became functus oficio. That the tribunal has already rendered its decision with regard to the surcharge hence it cannot sit on the same matter in the name of staying proceedings. That this position was fortified in Alfayo Nyairo v Nyabomite Farmers Cooperative Sacco Limited [2021]eKLR. That the Application should therefore be dismissed.

Decision on Application dated 25/9/2021. 12. We have considered the submissions of the parties, and note the authorities cited in the application. We note that we heard the Appeal of the Respondent in the matter and dismissed the same, and the Respondent appealed to the High Court. In the circumstances, by dint of Section 73, when the Appeal is dismissed, the Tribunal has pronounced itself on the Appeal and considers itself functus officio as held in the Nyabomite case(supra). The dismissal of the Appeal brings into functions the operations of Section 75 (1) Cooperative Societies Act.

13. Nothing prevents the Tribunal from proceedings in its matter, owing to the fact that there has been no stay of proceedings from a Higher Court and specifically in HCCA.303/2021.

14. We note that the Tribunal is functus officio in terms of rendering a decision in the Appeal on the Surcharge. We note that there will be no prejudice suffered by the Respondent if the proceedings are not stayed. We therefore find that the Application dated September 25, 2021 has no merits, the same is dismissed with costs.

B. In regard to the Application dated August 24, 2021. 15. The Application seeks for the Statement of Defence to be struck out and a Summary Judgment be entered in favour of the Claimant.

16. The summary of the matter is that the Commissioner for Cooperative Developments issued a Surcharge Order dated February 5, 2019 of Kshs 4,877,200/=. The Respondent being dissatisfied filed an Appeal CTA 2/19 which was dismissed and thereafter the Respondent filed an Appeal to the High Court HCCA.303/21. During the pendency of the High Court Appeal, the Claimant filed this matter seeking for the surcharged amount to which the respondent filed a Defence dated 5. 6.2019. The Claimant sought for the Defence be struck out vide the Application dated 24. 8.2021.

Claimant’s Written Submissions 17. The Claimant submitted that the Inquiry was conducted under section 58 R/W Section 73 Cooperative Societies Act. That the Inquiry was presented to the Annual General Meeting on December 14, 2018 when it was adopted as the resolution for implementation. The Commissioner for Cooperative Development therefore issued a Notice to Show Cause why they should not be surcharged. That the Respondent did not show cause hence a Surcharge Order was issued.

18. That the Cooperative Societies Act is very clear on matters of Inquiry and Surcharge. That the Respondent appealed and the Appeal was not successful. That therefore the Claimant under section 75 Cooperative Societies Act which is clear that the Surcharge is a debt recoverable summarily as a civil debt.

19. That the Respondent’s Appeal was heard and determined/dismissed hence the reason why the Claimant filed this claim.

20. The Respondent submitted that under order 2 Rule 15, that pleadings may be struck at any stage if they disclose no reasonable cause of action or Defence in law. However, that their Defence raises triable issues on the procedural and substantive grounds giving rise to the Surcharge hence cannot be struck out and they should be heard on merit.

21. The parties have both cited various authorities in their written submissions.

Decision on Application dated August 24, 2021. 22. We have considered the written submissions of both parties. We note the provisions of the Cooperative Societies Act. The Commissioner for Cooperative Development in pursuant of the mandate under Section 68 Cooperative Societies Act, called out the inquiry, presented the Inquiry Report to the Annual General Meeting which was adopted as a resolution, the implementation of the Inquiry Report.

23. Surcharge Orders were issued, the Respondent appealed, the same was dismissed and the Respondent appealed in the High Court.

24. Section 75 Cooperative Societies Act provides:“(1)Subject to section 74, an order made pursuant to section 73 for any moneys to be repaid or contributed to a co-operative society shall be filed with the Tribunal and shall, without prejudice to any other mode of recovery, be a civil debt recoverable summarily.(2)Without prejudice to the powers by the Committee of a society to take action for recovery of the sum surcharged under section 73, the Commissioner may, on behalf of the society, institute such action.”Section 75 provides as above, that a claim Shall be filed and Shall Be recoverable as a civil debt.

25. The Defence raised herein therefore would not have any triable issues owing to the provisions of Section 73 Cooperative Societies Act. The Tribunal can only interfere with the surcharge during the Appeal. However, once the Appeal is determined, then it is the duty of the Tribunal to exercise its mandate under Section 75 Cooperative Societies Act.The Tribunal exercises both Appellate and original jurisdiction, however, the roles played in both instances are different.

26. We find that in a suit for recovery of a Surcharge Order, there can be no Defence. It is only in an Appeal where the amount surcharged and the procedure used by the Commissioner can be questioned and set aside.

27. We therefore find that the Defence raises no triable issues and cannot stand, it is therefore struck out.

28. The application dated August 24, 2021 is hereby allowed and judgment is accordingly entered in favour of the Claimant against the Respondent for Kshs 4,877,200/= plus costs and interest in the claim.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 27TH DAY OF APRIL, 2023. HON. BEATRICE KIMEMIA CHAIRPERSON, SIGNED APRIL 27, 2023HON. J. MWATSAMA DEPUTY CHAIRPERSON, SIGNED APRIL 27, 2023HON. BEATRICE SAWE MEMBER, SIGNED APRIL 27, 2023HON. FRIDAH LOTUIYA MEMBER, SIGNED APRIL 27, 2023HON. PHILIP GICHUKI MEMBER, SIGNED APRIL 27, 2023HON. MICHAEL CHESIKAW MEMBER, SIGNED APRIL 27, 2023HON. PAUL AOL MEMBER, SIGNED APRIL 27, 2023Tribunal Clerk Jemimah/Jonah