[2024] KECPT 1396 (KLR)
The Tribunal found that the 1st Respondent erred in law and fact by deducting the Claimant's shares without first exhausting all available remedies against the 2nd Respondent, the principal borrower. The evidence showed that the 1st Respondent failed to demonstrate any effort to pursue the 2nd Respondent for loan...
Source-derived case information.
- Citation
- [2024] KECPT 1396 (KLR)
- Parties
- Applicant: Peter Muchiri Njoroge; Respondent: Mhasibu Sacco Society Limited; Respondent: Geoffrey Wamwea Ngure
- Court
- Cooperative Tribunal
- Jurisdiction
- Kenya
- Case Number
- Tribunal Case 665 (E749) of 2022
- Procedural Posture
- Tribunal Claim / Final Judgment
- Outcome
- Judgment for the Claimant against the 2nd Respondent; 1st Respondent discharged with no order as to costs.
- Judges
- BM Kimemia, J. Mwatsama, B Sawe, F Lotuiya, P. Gichuki, M Chesikaw, PO Aol
- Legal Topics
- Loan Guarantees, Guarantor Liability, Cooperative Societies, Share Deductions
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Peter Muchiri Njoroge
Applicant
Mhasibu Sacco Society Limited
Respondent
Geoffrey Wamwea Ngure
Respondent
Procedural Posture
Tribunal Claim / Final Judgment
Legal Issues
- 1 Whether the 1st Respondent was justified in deducting the Claimant's shares without exhausting remedies against the 2nd Respondent.
- 2 Who is ultimately responsible for repayment of the defaulted loan guaranteed by the Claimant.
Ratio Decidendi
The Tribunal found that the 1st Respondent erred in law and fact by deducting the Claimant's shares without first exhausting all available remedies against the 2nd Respondent, the principal borrower. The evidence showed that the 1st Respondent failed to demonstrate any effort to pursue the 2nd Respondent for loan recovery before resorting to the Claimant's funds. The Tribunal reaffirmed that cooperative societies must not rush to deduct guarantors' savings or shares without first attempting to recover from the loanee. However, since the deduction had already occurred and the 2nd Respondent had defaulted without taking responsibility, the Tribunal held the 2nd Respondent ultimately liable...
Court Disposition
Judgment for the Claimant against the 2nd Respondent; 1st Respondent discharged with no order as to costs.
Orders
- Judgment entered in favour of the Claimant against the 2nd Respondent for Kshs 141,913.57 plus costs and interest.
- 1st Respondent is discharged with no orders as to costs.
Full Case Text
Judgment text and source record
28 paragraphs
Njoroge v Mhasibu Sacco Society Limited & another (Tribunal Case 665 (E749) of 2022) [2024] KECPT 1396 (KLR) (29 August 2024) (Judgment)
Neutral citation: [2024] KECPT 1396 (KLR)
Republic of Kenya
In the Cooperative Tribunal
Tribunal Case 665 (E749) of 2022
BM Kimemia, Chair, J. Mwatsama, Vice Chair, B Sawe, F Lotuiya, P. Gichuki, M Chesikaw & PO Aol, Members
August 29, 2024
Between
Peter Muchiri Njoroge
Claimant
and
Mhasibu Sacco Society Limited
1st Respondent
Geoffrey Wamwea Ngure
2nd Respondent
Judgment
1. This judgment is premised on a claim made by the Claimant against the 1st Respondent who deducted his shares without notifying him when the 2nd Respondent defaulted to repay the loan that had guaranteed. The 2nd Respondent is enjoined in matter because of his acts.To move the tribunal the Claimants filed a statement of claim dated 5th August seeking for the following ordersa.A declarations that the 1st Respondent violated its own by-law by unlawfully deduction the Claimants shares amounting to Kshs 141,913. 57/= and that the refunded to the Claimantb.In the alternative the 2nd Respondent pays Kshs 141,913. 57c.Cost of suit to be borne by the Respondentsd.Any Respondents relief as the tribunal may deem fit to grantIn support the claim, the Claimants filed on 23/8/20222 a Witness Statement, a Verifying Affidavit, List of Documents and List of Witness both dated 5/8/2022 together.
2. The 1st Respondent filed its appearance dated 6/9/2022 undated Statement of Defence on 9th September 2022 and denied the Claims.
3. The attached Witness Statement dated 6/9/2022 of Josephine Mumbe Maingi the loan Recovery Manager List of Witness, List of Documents which include the Loan Application Form, Loan Guarantors Report and Members Account Statement.
4. The 2nd Respondent did not enter appearance and failed to file a Defence despite being served with summons to appear as per the Affidavit of Service dated 15th September, 2022 under Order 10 Rule 6 of the civil Procedure Rules the Claimants requested for judgment against the 2nd Respondent
5. On 25/10/2022 the tribunal entered an interlocutory judgment in favor of the Claimant against the 2nd Respondent. Up to the date of writing the judgment which in one year 11 months the 2nd Respondent has filed to make an application to set the interlocutory judgment aside and seek for leave file a Defence.
6. As regards the 1st Respondent, the matter proceeded to hearing where the Claimants adopted his Witness Statement as his Evidence -in -Chief and produced 5 documents as exhibits. IIt was the Claimant’s testimony that the 1st Respondent failed to follow the conditions of communication to defaulters provided in the Loan Application Form.He concluded by stating that he enjoined the 2nd Respondent in this case because he guaranteed him for a loan which he defaulted to repay the 1st Respondent.
7. The 1st Respondent on their part confirmed that they debited the Claimants member account with Kshs 141,913. 57/= to satisfy the defaulted Loan by the 2nd Respondent.The Loans recovery Manager testified that the guarantors were informed by the 1st Respondent but she confessed that she did not have the documents/emails
8. Having examined the evidence we note that for determination is one namely:a.Who is responsible to pay the Claimant among the Respondent?
Analysis And DeterminationIt is not in dispute that the Claimant guaranteed the 2nd Respondent to take a loan the 1st Respondent to take a loan from the 1st Respondent. Similarly, it is not in dispute that 1st Respondent erred in fact and law that they defaulted Loan from guarantors without any step against the 2nd Respondent 9. This Tribunal has on several occasions pronounced itself to effect that guarantors shared/deposits/Savings should not be deducted from their accounts before exhausting all available avenues to recover the loan from the loanee .In this case, we fault the 1st Respondent for choosing an easy route to deduct money from the guarantors and did not show any effort to pursue the loanee.Respectively, we continue to advice Saccos not to Rush to deduct guarantor’s savings/shares or deposit before they attempt to sue for recovery the loanee.
10. However, now that the horse has bolted out of the stable and deductions have been done, by the 1st Respondent yet the 2nd Respondent is quietly enjoying the guarantors sweat, this Tribunal will not allow this to happen. The 2nd Respondent must remain responsible for his actions.
11. Upshoti.The Statement of Claim dated 5. 8.2022 is found to be with merit and thus we enter judgment in favour of Claimant against 2nd Respondent plus costs and interest.ii.1st Respondent is discharged with no orders as to costs.
JUDGMENT SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 29TH DAY OF AUGUST, 2024. HON. B. KIMEMIA CHAIRPERSON SIGNED 29. 8.2024HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 29. 8.2024HON. BEATRICE SAWE MEMBER SIGNED 29. 8.2024HON. FRIDAH LOTUIYA MEMBER SIGNED 29. 8.2024HON. PHILIP GICHUKI MEMBER SIGNED 29. 8.2024HON. MICHAEL CHESIKAW MEMBER SIGNED 29. 8.2024HON. PAUL AOL MEMBER SIGNED 29. 8.2024TRIBUNAL CLERK JONAHMr. Kirwa advocate for the Claimant.Mr. Ogolla Okello advocate for Respondents- No appearanceHON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 29. 8.2024.