[2020] KECPT 107 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL

AT NAIROBI

TRIBUNAL CASE NO. 449 OF 2019

OSERIAN SACCO SOCIETY LIMITED.......CLAIMANT

VERSUS

FREDRICK NYOLO.....................................RESPONDENT

RULING

What is before us for consideration and determination is the Claimant’s Application dated 3/10/2019. It seeks, in the main, for the following orders;-

a. That the Honourable Tribunal be pleased to strike out the Respondent’s statement of Response dated 23/8/2019;

b. That Summary Judgment be entered against the Respondent and in favour of the Claimant for the sum of Kshs. 4,706,326. 00; and

c. Costs.

The Application is supported by the grounds on its face and the Affidavit sworn by Evans Kenege on 3/10/2019.

The Respondent has opposed the Application by filing a Replying Affidavit sworn by himself on 14/11/2019.

Disposal of the Application

Vide the directions given by the Tribunal on 25/2/2020, the Application was canvassed by way of Written Submission. The Claimant filed its submissions on 13/3/2020 while the Respondent did so on even date (13/3/2020).

Claimant’s contention

Vide this Application, the Claimant prays that the Respondent’s Response to the claim be struck out on account that it does not disclose any reasonable defence in law. That the proceedings herein are for adoption of a surcharge order issued by the Commissioner for Co-operative Development on 23/1/2019. That upon the making of the said order, the Respondent did not Appeal against it thus implying that he accepted the surcharged amount. That it is on this basis that it prays for judgment to be entered against the Respondent for the surcharged amount.

Respondent’s Contention

Vide the Replying Affidavit sworn by himself on 14/11/2019, the Respondent contend that contrary to the contentions by the Claimant that he did not participate in the surcharge proceedings, he indeed made representations and that the inquiry team failed to take into consideration his responses. That he is desirous of contesting the claim as he has a counterclaim against the Claimant as it owes him shares of Kshs. 3,227,960. 00.

Written Submissions

Parties reiterated their above positions in their Written Submissions filed on 13/3/2020. In particular, the Claimant cited the law governing Appeals against surcharge Orders i.e Section 74of the Co-operative Societies Act (Cap 490) Laws of Kenya.

It also cited the case of Mek Sacco Society Ltd –vs- Samson Omundi Chilu & 6 others [2019] eKLR – where the Tribunal held thus:

“The Co-operative Society Act is clear on the issue of Surcharges and Under Section 73, the Commissioner ordered a surcharge against the Respondent after an inquiry. Section 74 is clear that any person aggrieved by an order of the Commissioner may, within 30 days, Appeal to the Tribunal. Any person aggrieved by the decision of the Tribunal may, within 30 days, Appeal to the High Court. Section 75 which provides that the Tribunal shall, without prejudice to any mode of recovery recover the same amount as ordered in the surcharge as Civil debt recoverable summarily..”

On its part, the Respondent relied on the Principles for striking out a Defence generally. It cited the case of Elijah Sikina & George perike Narok on behalf of the Misted Society of Human Rights Alliance –vs- Mara Conservancy & 5 Other. Civil Act No. 37 of 2013 [2014]eKLR.

Issues for determination

We have framed the following issues for determination

a. Whether the Respondent’s Response to the claim should be struck out and Summary Judgment be entered against him for Ksh. 4,706,326. 00; and

b. Who should bear the costs of the Application.

Adoption of Surcharge Orders

Section 73of the Co-operative Society’s Act provide for the power to surcharge Officers of Co-operative s Society. In terms of Section 73(1) the Commissioner for Co-operative Development is vested with the Power to inquire into the conduct of any person who is suspected to have embezzled and or mismanaged the funds of the Society.

Section 73(2) donates to the Commissioner, the power to make and/or issue surcharge orders.

Upon issuance of surcharge orders, any person aggrieved by the said orders has a period of 30 days to Appeal against the said orders to the Tribunal. This is provided for in Section 74(2), interm of this Section, any person aggrieved with the decision of the Tribunal has 30 days to Appeal to the High Court.

In terms of enforcement of surcharge orders, Section 75(1) of the Act provides thus:

“ Subject to Section 74, an Order made pursuant to Section 73 for any money, 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.”

From the foregoing, it is apparent that there exist an elaborate procedure for enforcing a surcharge order. The same is succinctory set out Under Section 75 of the Co-operative Society Act. Once a surcharge order is in place, and that the time limited for Appeal against it has lapsed, then the monies contained in the order becomes a civil debt recovered summarily. The role of the Tribunal at this juncture is merely to ascertain the validity and/or authenticity of the surcharge order and proceed to make appropriate orders. At this stage the Tribunal does not have the jurisdiction to re-open the surcharge proceedings with a view to arising at its findings.

The upshot of the foregoing as far as the current Application is concerned is that the Respondent’s opposition to the claim falls short of the Provision of Sections 73, 74 and 75 of the Act. Vide the said response, the Respondent wants to invite the Tribunal to re-open the surcharge proceedings. As stated above, we do not have the said luxury. In the circumstances, we find that the said response does not disclose a reasonable defence in law. Subsequently, we are satisfied that the Claimant has satisfied the conditions of Section 75of the Act.

Conclusion

The upshot of the foregoing is that we make the following orders:

a. The Respondent’s statement of response dated 23/8/2019 is hereby struck out; and

b. Summary Judgment is hereby entered against the Respondent and in favour of the Claimant for the sum of Ksh. 4,706,326. 00 plus interest and costs at court rates.

Ruling read, dated and delivered via email in accordance with the directions given by the Honourable , the Chief Justice on 15/3/2020, this 30th day of April, 2020.

Prepared by Hon. B. Kimemia – Chairman, Hon. F. Terer – Deputy Chairman and P. Gichuki – Member, with the consent of the parties.

The final orders to be delivered by email in accordance to the prevailing measures during the COVID-19.

Hon. B. Kimemia ………………….

Chairman

Hon. F. Terer …………………

Deputy Chairman

P. Gichuki …………………

Member