[2025] KECPT 205 (KLR)

Ondabu v Metropolitan National Sacco Limited (Tribunal Case 113/E152 of 2023) [2025] KECPT 205 (KLR) (27 March 2025) (Judgment)

Neutral citation: [2025] KECPT 205 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 113/E152 of 2023

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

March 27, 2025

Between

Mongare Ondabu

Claimant

and

Metropolitan National Sacco Limited

Respondent

Judgment

1. The Claimant was a member of the Respondent’s Sacco and it was provided for in the Rules and Regulations of the Respondent that upon resignation, the Respondent would pay the Claimant her deposits or shares within 60 days from the resignation date.

2. That on 8th February, 2022, the Claimant gave the Respondent 60-day notice to pay or refund her deposits and that at the time of the Claimant’s resignation as a member of the Respondent’s Society, the Claimant's cumulative share contribution with the Respondent were worth Kshs. 211,457. 13/=

3. That the Respondent received the resignation notice but failed, neglected and or refused to honor their obligations to refund the Claimant her share contribution in breach of the Respondent’s Rules and Regulations despite demand made of a notice of intention to sue, necessitating the filing of this Statement of Claim dated 20th February, 2023 for recovery of the sum of Kshs. 211,457. 13/= plus costs and interest at court’s rates from 27th February, 2023 until payment in full.

4. The Respondent filed their response dated 22nd March, 2023 stating among others that:i.The Claimant has been their member holding Membership No. 35993 and operating FOSA Account No. 0000526610 and was making monthly member deposit installmentsii.The Statement of Claim is replete with outright falsehoods, misrepresentation and concealment of material factsiii.As per its 2022 AGM resolutions, members resolved and agreed to schedule refunds on a first come first serve basis and consequently the Claimants refund was put on hold for 2 years until the liquidity challenges faced by the Respondent ceases and which the liquidity problems are facts which are well within the Claimant’s knowledgeiv.The respondent never received the Claimant’s notice of withdrawal and in fact a closer look at the Claimant’s letter attached, none of them are stamped, a clear indication that the same were never received by the Respondent.v.The Respondent only learnt of the Claimant’s intention to withdraw from the Respondent Sacco when the suit was filedvi.As per the 2022 AGM resolutions, which were adopted by the General Assembly and passed by the sacco, no further payments are to be made on any refunds for a period of two years due to the liquidity challenges facing the Respondent. This is to stop the run on deposits which might lead to collapse of the Sacco, and which means other members will lose their savingsvii.As per the 2022 AGM resolutions, members resolved and agreed to stop all further refunds as the same is unsuitable taking into account the large number of former members exiting the Sacco. This has been brought by the liquidity challenges facing the Respondent, a fact that is well known and within the Claimant’s knowledge

5. This Tribunal on 8th August 2024 gave directions for the Respondent to file and serve Statement of Accounts within seven days and for the parties to file their written submissions. The Claimant filed their written submissions dated 1st December, 2024 stating among others:a.That her total savings as at the time of withdrawing her membership amounted to Kshs. 211,457. 13/= and the same is reflected in her salary slip for February, 2022b.That the Respondent’s actions of failing to refund the Claimant contravenes the Co-operatives Societies Act, relevant by-laws and established legal principles hence unfair and immoralc.That the Respondent’s Defense does not deny owing the Claimant, it only states that the claimant has never served any notice of withdrawal and that the 2022 AGM did put a stop to all further refunds pending an end to the saccos liquidity challengesd.That the Claimant has proved service of notice of withdrawal of her membership and that is clear from her handwritten letter dated 8th February 2022e.That the Claimant’s withdrawal notice was before the AGM and as such, the AGM resolutions cannot apply retrospectively to affect vested interestsf.That the Respondent has failed to attach evidence supporting the AGM resolutions and liquidity challenges as they have not attached:i.Minutes of the alleged AGMii.Notice of the AGM to Membersiii.The specific resolutions barring refundsiv.Financial records to substantiate liquidity challenges

6. And that in the absence of the documents, the Respondent’s Defence is speculative and cannot justify its unlawful withholding of the Claimant’s deposits

7. As at the date of writing this judgment, the Respondent was yet to file a Statement of Account or their written submissions.

8. Has the Claimant sufficiently proved her claim on a balance of probabilities and is she entitled to a refund?

9. We note that the Claimant did properly withdraw from the Respondent by issuing a handwritten letter dated 8th February, 2022 for a refund of her savings formally, and the Respondent has not produced anything to show that there is a standard format for notice of withdrawal from the SACCO, and as such, the said letter by the Claimant constitutes a proper Notice of Withdrawal and request for refund.

10. The Respondent has not pleaded any liability on the part of the Claimant in terms of loans and guarantees to other members, and in as much as we sympathize with the Respondent’s financial situation, we are also alive to the fact that a member has a right to her deposits. The Co-operative Societies Act is clear on the concept of voluntary membership to a Co-operative Tribunal, and as long as a Co-operative society is in operation, it is expected to honor its obligations to its members. The Legal Notice No. 82 (The Sacco Societies Act) at Section 21 (6) is also clear to the effect that:“A non-deposit-taking Sacco society shall refund to a member the amount accumulated in the member's non-withdrawable account within sixty days of receiving the written notification of the member to withdraw from membership of the Sacco society.”

11. The Claimant produced her salary slip for February 2022, and the Respondent did not dispute the amounts owed, and this Tribunal is inclined to believe that the Respondent owes the Claimant Kshs. 211,457. 13/= in refunds.Final Ordersi.The Claimant’s Statement of Claim dated 20th February, 2023 succeedsii.Judgment is entered in favour of the Claimant for the sum of Kshs. 211,457. 13/= with costs and interest at Tribunal rates from the date of filing.

JUDGMENT SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 27TH DAY OF MARCH, 2025. HON. B. KIMEMIA - CHAIRPERSON SIGNED 27. 3.2025HON. J. MWATSAMA - DEPUTY CHAIRPERSON SIGNED 27. 3.2025HON. BEATRICE SAWE - MEMBER SIGNED 27. 3.2025HON. FRIDAH LOTUIYA - MEMBER SIGNED 27. 3.2025HON. PHILIP GICHUKI - MEMBER SIGNED 27. 3.2025HON. MICHAEL CHESIKAW - MEMBER SIGNED 27. 3.2025Tribunal Clerk JonahMuraya advocate holding brief for Keya advocate for the Claimant.HT& Associates advocate for Respondent – No appearance