[2020] KECPT 69 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE MISC. NO. 36 OF 2020

PEGEON EXPRESS SAFARIS................................................CLAIMANT

VERSUS

MANAGEMENT BOARD SAVINGS CO-OPERATIVE

SACCO LTD.........................................................................RESPONDENT

RULING

What is before us for consideration and determination is the Misc. Application dated 18/6/2020. It has been brought by the Applicant, Pegeon Express Safari seeking for the following orders:

1. The application be certified as Urgent and be hard expeditiously;

2. That service of this application be dispensed with in the first instance;

3. That the Honourable Tribunal be pleased to direct the Respondent to immediately allow the applicant’s motor vehicle registration number KCY 349A to carry on with the passenger transport services pending hearing and determination of this application;

4. The Honourable Tribunal be pleased to direct the Respondent to allow the applicant’s motor vehicle registration number KCY 349A to operate on the route allocated to it pending hearing and determination of the main suit;

5. The Honourable Tribunal be pleased to direct the Respondent to stop interfering with the daily business operations of the applicant’s motor vehicle registration number KCY 349A until the loans taken by the Applicant are fully paid; and

6. Costs of this application be provided for.

The Application is supported by the grounds on its face and the following affidavits;

a. Supporting Affidavit sworn by Shem Atulo on even date (18/6/2020); and

b. Further Affidavit sworn by the said Shem Atulo on 3/7/2020.

The Respondent has opposed the Application by way of the following Affidavits;

a. A Replying Affidavit sworn by Stephen Momanyi Okerio on 24/6/2020; and

b. A Supplementary Affidavit sworn by the said Stephen Mumanyi Okerio on 15/7/2020.

Applicant’s Contention

Vide this Application, the Applicant contend that the Respondent has stopped his motor vehicle Reg. No. KCY 349A from carrying on the business of passenger transportation on account of the fact that its director, Shem Atulo Angaya has declined to transfer the same to himself.

That the said motor vehicle was purchased using loans granted by the Respondent and NCBA Bank Kenya PLC. That the said motor vehicle is registered in the joint names of the Applicant and NCBA Bank to secure repayment of the said loan. That the transfer of the said motor vehicle to the individual can only happen upon full repayment of the loan.

That the Applicant is a member of the Respondent. That by virtue of this membership, the Applicant applied and the Respondent approved the loan referred to above amounting to Kshs. 1000,000. 00. That the loan from the Respondent being inadequate the Applicant applied for a loan of Kshs. 3,844,094 from NCBA Bank.

That upon the said motor vehicle being handed over to the Applicant, the Respondent issued a Road Service License thus making the vehicles to be one of it feet’s.

That on 6/5/2020, the Respondent unreasonably wrote to Shem Atulo Angaya demanding that he transfers the said motor vehicle to himself. That when he responded to the said demand vide his letter dated 11/5/2020, the Respondent stopped his motor vehicle from carrying on business with it.

Respondents Case

The Respondent has opposed the Application as follows;

That it offers two forms of membership to persons wishing to join it as follows:

a. That one can take up corporate membership which majority revolves around Saccos or groups of more than two (2) individuals and an individual form of membership that allows one independent person to acquire membership;

b. That in case of corporate membership, the individuals forego their individual membership and are jointly covered within one membership;

c. That member are required to appoint one representatives to participate in AGM’s and other meetings organized by the Society.

That the Claimant took up corporate membership. That it consisted of three (3) directors as follows;

a. Shem Atulo Angaya - KBV 662A;

b. Regina Muthoni - KCA 679E; and

c. Juliet Nafula Nateh - KCG 805R and KCT 214A.

That vide a letter dated 24/9/2018, the Claimant appointed Shem Atulo Angaya to act as its representative during all meeting organized by the Respondents.

That the Claimant’s membership was dealt with as corporate until 12/3/2019 when its directors requested the Respondent to have their members reverted back to individual membership. That before establishment and issuance of the individual membership numbers, Shem Atulo applied for a loan of Kshs. 1,000,000. 00 for personal use (school fees) which was approved after shares were used as security for the loan. That on 15/11/2019, the Applicant directors were issued with new share certificate, under individual membership as follows;-

a. Regina Muhtoni - Certificate No. 67;

b. Juliet Nfula Nateh - Certificate No. 69; and

c. Shem Atulo Angaya - Certificate No. 71

That on 20/2/2020, Mr. Shem Atulo Angaya showed interest for his motor vehicle KCY 349A join the Respondent under Corporate membership.

That having presented the relevant documentation, it was issued with a Road Service License on 28/2/2020 and authorized to operate under Rembo Shuttle Sacco.

That on 6/5/2020, the Mr. Atulo was requested to regularize his TIMS account with NTSA to reflect his name instead of that of the Claimant which was no longer a member.

That the Respondent has not issued any document barring Motor vehicle Reg. No. KCY 349A from its daily operations under the name of Rembo Shuttle.

That in the circumstances, the instant suit has been brought in bad faith and in therefore ill advised.

Claimants further Affidavitsworn by Shem Atulo Angaya on 3/6/2020.

Vide this Affidavit the Claimant contend that it has not ceased membership with the Respondent that he letter addressed to the Respondent dated 12/3/2019 has not been responded to. That by issuing a road license as 28/2/2020, the Respondent acknowledged that the Claimant was still one of its members.

That as regards the loan of Kshs. 1,000,000, the Applicant was the Claimant and not Mr. Shem Atulo Angaya.

Respondents Supplementary Affidavit sworn on 15/7/2020.

Vide this Affidavit the Respondent contend that when it received the Applicant’s letter dated 12/3/2019, it proceeded to accept it and effected changes in the Respondent appropriately. That it is not priory to the loan arrangement between Shem Atulo and NCBA Bank. That based on the good relations and code of conduct between the Claimant and the Respondent, the director of the Claimant Shem Atulo Angaya was allowed to operate his motor vehicle Reg. No. KCY 349A under the Respondent.

That based on a gentleman’s agreement between Shem Atulo and the Chairman of the Respondent, the was issued with a Road license on 28/2/2020.

That the loan form for the Kshs. 1,000,000 loan clearly indicate that the owner of Motor vehicle KBV 162 was the one who was issued with the loan.

That there is no written authorization from the other two (2) directors of the Claimant as a resolution by the Chairman tasking the Shem Atulo to take the loan on behalf of the Claimant.

Disposal of the Application

Vide the directions made on 18/6/2020, the Application was canvassed by way of written submissions. That Claimant filed its submissions on 9/7/2020 while the Respondent did so on 22/7/2020. We will consider the said submissions. Whilst determining the issues in controversy in the matter.

Issues for determination

We have framed the following issues for determination

a. Whether the Claimant has established a proper basis to warrant the grant of the injunctive orders sought; and

b. Who should meet the costs of the Application.

Injunctive Orders

Vide the instant Application, the Claimant has moved the Tribunal seeking injunctive orders. It has founded the Application on the provisions of Sections 76(1) (b) and 78(2) of the Co-operative Societies Act cap (490) Laws of Kenya and Order 40 Rules 4 (e) and (2) and Order 51 Rule 1 of the Civil Procedure Rules.

The Law regarding temporary injunctions was settled in the celebrated case of Giella –vs- Cassman Brown & Co.Ltd (1973) EA360. Vide the said decision, a party can only succeed in an Application for temporary injunction of the following condition are available;

a. APrima Facie casewith a probability of sue;

b. Irreparable injury; and

c. Balance of Convenience

The Court in the case of Mrao ltd –vs- First American Bank of Kenya Ltd (2003) elKR defined a Prima Facie case in the following terms;

“..A Prima Facie case is more that an arguable case. It is not sufficient to raise issues. The evidence must show an infringement of a right and the probability of the Applicant’s case upon trial…It is a case which, on the material presented to the court, a Tribunal properly directing itself will conclude that there exists a right which has apparently been infringed by the opposite party as to call for an explanation from the latter..”

Based on the material before us, the question abound as to whether the Applicant has established a prima facie case with a probability of success. It is the Applicant’s case that Motor Vehicle Registration No. KCY 349A issuzu Coach/Bus is registered in the joint names of the Claimant and NCBA Bank. That vide a letter dated 6/5/2020, the Respondent wrote to one of its directors, Mr. Shem Atulo Angaya asking him to regularize his TIMS Account with NTSC by transferring ownership of the motor vehicle to himself. That the said directive is not tenable as the said motor vehicle is jointly registered in the name of NCBA and the Claimant. That until such time that he clears the loan with NCBA Bank, the said motor vehicle cannot be transferred into his individual name.

On its part, the Respondent contend that vide a letter dated 12/3/2019, the Applicant’s directors wrote to it expressing their desire to have their membership reverted to individual form from corporate form. That on the strength of this letter, it reverted the Claimant’s membership from corporate to individual. That pursuant to this it processed individual membership certificates for its directors. This was on 15/11/2019. That as a result, the Claimant has ceased to be a corporate member of the Respondent.

We have considered the material in support and against the Application. We note that on 12/3/2019, the directors of the Claimant wrote to the Respondent expressing their desire to revert back to individual membership as opposed to the corporate one. The reason for this is that all of them owned motor vehicle in their individual capacities. By this time, Shem Atulo Angaya owned Motor Vehicle Reg. No. KBV 162A.

Subsequent to this request, the Applicant applied and was granted a loan of Khs. 1, 000,000 by the Respondent. The beneficiary of this loan was Shem Atulo Angaya. The application was done on 5/10/2019. Part of the security for the loan was the shares held by the Claimant in with the Respondent amounting to Kshs. 2,000,000. The said loan was approved on 7/11/2019.

Whilst it is shown in the loan Application form that the purpose of the loan was school fees, the beneficiary of the loan, Shem Atulo Angaya, contend that the loan was applied toward purchase of motor vehicle KCY 349A . That once he obtained the loan from the Respondent, he applied and was granted another loan facility of Kshs. 3,844,094 by NCBA Bank. Because of this arrangement, the motor vehicle was jointly registered in the names of the Applicant and NCBA Bank. We have perused the logbook annexed to the Supporting Affidavit of Shem Atula sworn on 18/6/2020. It indeed confirms this fact.

Once the motor vehicle was purchased, the Respondent issued the Applicant a Road Service License on 28/2/2020. This is way long after the Respondent had allegedly reverted the Applicant’s membership to individual.

On 6/5/2020, the Respondent prevailed upon the beneficial owner of the said motor vehicle to regularize his TIMs account by transferring the said motor vehicle to his name. The said beneficiary contends that the same is not possible as the motor vehicle is jointly registered in his name and the of NCBA Bank. Whilst the Respondent has downplayed the existence of the said relationship, a perusal of the logbook of the said motor vehicle confirms this fact.

What is discernible from the foregoing therefore is as follows;

a. That the Claimant is still a member of the Respondent;

b. That the Claimant is one of the registered owners of motor vehicle Registration No. KCY 349A;

c. That the Respondent has allowed the said motor vehicle for trade living its name;

d. That it is not possible for the said motor vehicle to be transferred to the individual name of Shem Atulo Angaya as it is jointly registered in the name of the Applicant and NCBA Bank; and

e. That by issuing the Claimant with a Road Service License way after it allegedly issued its directors with individual membership numbers, the Respondent is estopped from denying existence of membership on the part of the Claimant.

The totally of the foregoing is that the Claimant has established a right which is at the brink of being infringed by the Respondent. In other words, the Applicant has established a Prima Facie Case with a probability of success.

Irreparable Harm

Based on the foregoing, it is apparent that if the orders sought are not granted, the Claimant will suffer irreparable harm as its motor vehicle Reg. No. KCY 349A will be deregistered by the Respondent, thus denying if the opportunity to confine plying the correct route. Further, the Claimant will went loss as the motor vehicle was bought by way of financing both, by the Respondent and NCBA Bank.

Balance of Convenience

From the foregoing, it is obvious that the balance of convenience will till is favour of granting the injunction sought.

Conclusion

The upshot of the foregoing is that we are satisfied that the Applicant has satisfied the conditions for the grant of the orders sought. We, however, note that the Applicant did not file the main claim upon which the prayers sought in the instant Application would be founded. Bearing this in mind, we determine this Application as follows;

a. That an order is hereby issued directing the Respondent to allow the Applicant’s Motor Vehicle Reg. No. KCY 349A to carry on with the passenger Transport Business on the route allocate pending the hearing and determination of the main claim;

b. The Applicant is directed to file and serve the main claim within a period of Three (3) months herein failure to which these orders above shall lapse automatically; and

c. Costs in the cause.

Ruling signed, read and delivered virtually this 27th day of August, 2020.

Hon. B. Kimemia..............................Chairman

Hon. F. Terer...................................Deputy Chairman

P. Gichuki ...........................................

Mr. Mwangi – Manager – Rembo Shuttle

Mr. Kibet - Applicant