[2022] KEHC 2516 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

JUDICIAL REVIEW DIVISION

JUDICIAL REVIEW APPLICATION NO. E052 OF 2021

REPUBLIC......................................................................................APPLICANT

VERSUS

COMMISSIONER OF COOPERATIVE DEVELOPMENT..RESPONDENT

TRANSLINE SAVINGS AND CREDIT COOPERATIVE

SOCIETY LIMITED......................................................INTERESTED PARTY

EX PARTE APPLICANTS;

1. PAUL MANWA

2. FRED NYACHAE

3. MILTON ONGORO

4. TRANSLINE GALAXY SACCO LIMITED

RULING

1. The Interested Party herein filed a Preliminary Objection dated 1st October,2021 opposing the Ex parte Applicant’s Chamber Summons dated 22nd April,2021 seeking for leave to apply for judicial review orders. The Preliminary Objection raises the following issues; -THAT;

i. The Chamber Summons are instituted contrary to the mandatory provisions of Section 62 (2) of the Cooperative Societies Act, Cap 490 Laws of Kenya which provides for Internal Dispute Mechanism.

ii. The Chamber Summons are fatally defective and should be struck out in limine.

2. In response to the Preliminary Objection the Ex parte Applicant herein filed a Replying Affidavit dated 1st November,2021 sworn by Fred Nyachae one of the Ex parte Applicants herein.

3. In the affidavit Mr. Nyachae deposed that the said cancellation of the 4th Ex parte Applicant’s registration as a co-operative society by the Respondent was not in compliance with the provisions of Section 62(1)(a) -(c) of the Co-operative Societies Act, Cap. 490 of the Laws of Kenya and that an appeal to the Minister within 30 days pursuant to subsection (2) would only be necessary if the Commissioner cancelled the registration based on the grounds provided for under subsection (1)

4. It was contended that an appeal to the Minister as stated under subsection (2) is conditional upon a cancellation of registration being based on the grounds stipulated in subsection (1) and that, the letter of cancellation by the Commissioner dated 12th April,2021 refers to reasons that are not provided for under the above provisions. This according to the deponent only means that the above provisions do not apply the Ex parte Applicants’ case.

5. The deponent averred that the Respondent could only cancel the registration of a co-operative society in line with the provisions of Section 62 of the Act and that the question of whether the cancellation of the 4th Ex parte Applicant as a co-operative society was in accordance with the above provisions is a matter of fact to be proven through evidence.

6. Further, that even assuming that the Respondent validly cancelled the registration of the 4th Ex parte Applicant, the Respondent still failed to order its dissolution as required under Section 62(1) and therefore, the decision to cancel the registration fails to comply with the provisions of the law, which is subject to proof by way of evidence.

SUBMISSIONS

7. The Interested Party herein (Transline Galaxy Sacco Limited) filed written submissions dated 1st November,2021 in support of its Preliminary Objection in which two issues are identified for determination.

8. The first issue is whether the court has jurisdiction to hear and determine the matter. On this, learned counsel submitted that it is trite that where the law provides for a dispute resolution mechanism the same must be complied with. Counsel went ahead to quote the provisions of Section 62 of the Cooperative Societies Act and Section 9 (2) of the Fair Administrative Act,2015.

9. The Supreme Court case of Samuel Kamau Macharia & Another v. Kenya Commercial Bank Limited & 2 Others [2012] eKLRwas also cited where the court extensively dealt with the issue of jurisdiction. It was contended that upon the cancellation the Ex parte Applicants had the option of appealing to the Minister within thirty days as is stipulated under the law but instead they decided to ignore the said provisions of the law. Learned counsel submitted that if the court herein hears and determines the matter filed before it, it will be usurping the powers granted to the Minister by statute.

10. To support this argument, counsel cited the case of MarketPlaza Limited v. Commissioner for Lands & 3 Others [2019] eKLR where the court held as follows;

“We agree with the learned Judge that orders for judicial review ought to be sought as a last resort and only where there are exceptional circumstances. This Court, in setting out the criteria for determining such exceptional circumstances in Republic vs. National Environmental Management Authority [2011] eKLRheld: -

“The principle running through these cases is where there was an alternative remedy and especially where Parliament had provided a statutory appeal procedure, it is only in exceptional circumstances that an order for judicial review would be granted, and that in determining whether an exception should be made and judicial review granted, it was necessary for the court to look carefully at the suitability of the statutory appeal in the context of the particular case and ask itself what in, the context of the statutory powers, was the real issue to be determined and whether the statutory appeal procedure was suitable to determine it..”

“We find that the circumstances of this case were not exceptional such as to render a finding that judicial review was the most efficacious remedy.”

11. Learned submitted that in the instant suit, Judicial Review ought to be sought as a last resort and that there existed no exceptional circumstances that would have led them to seek leave for judicial review orders.

12. The case of Republic v. Commissioner of Lands & 3 Others Ex parte Market Plaza Limited [2016] eKLRwas also cited where the court held as follows;

“Nevertheless, in this case even if I were to grant the orders sought herein, the issue of validity of the applicant’s title would remain unresolved. In my view, that issue ought to be determined before a proper forum in which viva voce evidence will be taken so that appropriate declaratory orders can be made and the matter brought to finality.”

13. It was submitted that ownership in use of a trade name is in dispute and that to resolve the matter before the court with finality, a proper forum which will require viva voce evidence must be approached. Learned counsel submitted that an alternative remedy would include approaching civil court to determine ownership of the trade name and that a judicial review forum is not the appropriate one to determine the same.

14. Further that, this court is not an alternative forum for dispute resolution and it can only assume jurisdiction where the internal mechanism has been exhausted or where by the conduct of the party it has become impossible to activate the mechanism or where the process has been extensively polluted that the rules of natural justice dictate that the internal mechanism has been exhausted. It was submitted that the matter should be dismissed with costs.

15. On the second issue, on who is entitled to costs, counsel submitted that the application is in great violation of the express mandatory statutory provisions and that this court ought to uphold the Interested Party’s Preliminary Objection and dismiss the Ex parte Applicant’s application with costs to the Transline Savings and Credit Cooperative Society Limited.

16. The Ex parte Applicants in their Supplementary Written Submissions dated 1st November,2021 while submitting on the issue of jurisdiction submitted that they were only required to appeal against the Commissioner’s decision to the Minister if the cancellation was in conformity with the provisions of the Act. It was contended that the letter of cancellation did not mention any of the grounds provided under in Section 62(1) as the reason for the cancellation, and as such subsection (2) cannot come into operation, as the Minister only has jurisdiction with respect to the cancellations based on the grounds in subsection (1).

17. Learned counsel also submitted that where the Commissioner issues an order for cancellation the same must also be accompanied by an order for dissolution and that one cannot issue in isolation of the other. Counsel contended that in the letter dated 12th April, 2021, the Commissioner issues an order for cancellation of registration, but fails to order the dissolution of the 4th Ex parte Applicant as a Sacco. The legal effect of this is that it continues to exist as a Sacco with the locus standi to approach this Court.

18. That aside, learned counsel submitted that the Ex parte Applicants herein have a right to approach this court under the provisions of Article 27(1), 47(1) and (2), 48 and 260 of the Constitution of Kenya,2010. It was submitted that the Ex parte Applicants constitutional rights to a fair hearing and due process during the purported investigations leading to the cancellation were violated. Counsel submitted that the Respondent also failed to afford the Ex parte Applicants reasonable and procedural fairness and adequate notice of the nature and reasons for the proposed administrative action yet it would adversely affect them.

19. In conclusion it was submitted that the Co-operative Societies Act does not provide for any other or alternative means of dispute resolution for decisions made beyond the statute and therefore this court having unlimited original jurisdiction is, therefore, the proper forum to deal with the matters herein.

DETERMINATION

20. Having considered the arguments adduced by Parties and the pleadings before this court, the issue for determination is whether this court has jurisdiction to hear and determine the chamber summons application filed by the Ex parte Applicants.

21. The Court of Appeal in the case of MukisaBiscuit Manufacturing Co. Ltd vs West End Distributors Ltd (1969) EA 696, had the following to say on circumstances when a Preliminary Objection may be raised.

“a Preliminary Objection is in the nature of what used to be a demurrer. It raises a pure point of law which is argued on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion.”

Am satisfied that the P.O. raised herein is legally sound.

22. In this case the Interested Party challenges this Court’s jurisdiction to hear the Ex parte Applicants judicial review application on grounds that the Court lacks the jurisdiction to hear and determine the matter as internal dispute resolution mechanisms as provided under section 62 (2) of the Co-operatives Societies Act have not been exhausted.

23. It is trite that the issue of jurisdiction is one that goes to the substratum of a case and as such must be determined before a court can take any further action in the matter. This court in JR1155 OF 2020, Republic v. Public Procurement Administrative Review Board & Another Ex parte Express Automation Limitedciting a decision of the Supreme Court stated;

“Jurisdiction is donated to a court by either constitution or legislation or both. The Supreme Court in Samuel Macharia & Another vs. Kenya Commercial Bank Ltd & 2 others [2012] eKLRhad this to say on jurisdiction of courts;

“68. A Court’s jurisdiction flows from either the Constitution or legislation or both. Thus, a Court of law can only exercise jurisdiction as conferred by the constitution or other written law. It cannot arrogate to itself jurisdiction exceeding that which is conferred upon it by law. We agree with counsel for the first and second respondents in his submission that the issue as to whether a Court of law has jurisdiction to entertain a matter before it, is not one of mere procedural technicality; it goes to the very heart of the matter, for without jurisdiction, the Court cannot entertain any proceedings. This Court dealt with the question of jurisdiction extensively in, In the Matter of the Interim Independent Electoral Commission(Applicant), Constitutional Application Number 2 of 2011. Where the Constitution exhaustively provides for the jurisdiction of a Court of law, the Court must operate within the constitutional limits. It cannot expand its jurisdiction through judicial craft or innovation. Nor can Parliament confer jurisdiction upon a Court of law beyond the scope defined by the Constitution. Where the Constitution confers power upon Parliament to set the jurisdiction of a Court of law or tribunal, the legislature would be within its authority to prescribe the jurisdiction of such a court or tribunal by statute law.”

24. Where a court has no jurisdiction, any act or decision made thereof is a nullity. I now proceed to examine whether the Chamber Summons filed herein is regularly filed and thus properly within the jurisdiction of the court.

25. I will begin by reproducing Section 62 of the Co-operative Societies Act which is at the center of the dispute before this Court. The section states as follows;

“Cancellation of registration

(1) Where a co-operative society has—

(a) less than the prescribed number of members; or

(b) failed to file returns with the Commissioner for a period of three years; or

(c) failed to achieve its objects, the Commissioner may, in writing, order the cancellation of its registration and dissolution of the society and the order shall take effect immediately.

(2) A person aggrieved by an order of the Commissioner under subsection (1) may appeal against such order to the Minister within thirty days of the order.”

26. It is contended that in its letter dated 12th April,2021, cancelling the registration of Transline Galaxy Savings and Credit Co-operative Society Ltd, the Respondent failed to give a valid reason for the cancellation as provided under section 62 (1) of the Act and as such subsection (2) cannot apply to the Ex parte Applicants.

27. In rejoinder, the 1st Interested Party contends that the issue that led to the cancellation of the 4th Ex parte Applicant’s registration as a Sacco was one that involved the ownership and use of a trade name and that in order to resolve the matter before the court with finality, a proper forum which will require viva voce evidence must be approached. Further, it was argued that an alternative remedy would include approaching a civil court to determine ownership of the trade name and that a judicial review forum is not the appropriate forum to determine such a matter.

28. It was argued that this Honourable court can only assume jurisdiction where internal mechanism has been exhausted or where by the conduct of the party it has become impossible to activate the mechanism or where the process has been extensively polluted that the rules of natural justice dictate that the internal mechanism has been exhausted.

29. Section 9 of the Fair Administrative Action Act makes provision giving right to an aggrieved party arising from an administrative action to apply for Judicial Review of such an administrative action. I reproduce the whole of Section 9 for its full import and meaning;

Section 9 of the Fair Administrative Actions Act provides;

9. Procedure for judicial review

(1) Subject to subsection (2), a person who is aggrieved by an administrative action may, without unreasonable delay, apply for judicial review of any administrative action to the High Court or to a subordinate court upon which original jurisdiction is conferred pursuant to Article 22(3) of the Constitution.

(2) The High Court or a subordinate court under subsection (1) shall not review an administrative action or decision under this Act unless the mechanisms including internal mechanisms for appeal or review and all remedies available under any other written law are first exhausted.

(3) The High Court or a subordinate Court shall, if it is not satisfied that the remedies referred to in subsection (2) have been exhausted, direct that applicant shall first exhaust such remedy before instituting proceedings under sub-section (1).

(4) Notwithstanding subsection (3), the High Court or a subordinate Court may, in exceptional circumstances and on application by the applicant, exempt such person from the obligation to exhaust any remedy if the court considers such exemption to be in the interest of justice.

(5) A person aggrieved by an order made in the exercise of the judicial review jurisdiction of the High Court may appeal to the Court of Appeal.

30. From a plain reading of Section 9 of the FAAA, where there is alternative mechanism of dispute resolution, a party ought to exhaust the same before seeking judicial review orders.

31. Apart from the powers and grounds under Section 62, the Cooperatives Societies Act donates other general powers to the Commissioner under Section 93A and a proper interpretation of the Act would show that, where in exercise of the powers under Section 93A (d), and where the decision culminates in cancellation of registration, a party ought to file an appeal before the minister in which appeal the question whether the grounds for cancellation raised are within the purview of the minister or not would be canvassed.

32. Should the Applicants have appealed to the minister before approaching this court? It is mandatory for a party to exhaust any alternative mechanism for dispute resolution before approaching the court. Section 9 of the FAAA is couched in mandatory terms. Majaja J in Misc. Civil App n.139 of 2014, Vania Investments Poollimited v Capital market Authority and Others (a decision upheld on appeal in Civil Appeal No. 92 of 2014) at para 37 stated;

‘’In my view, the Tribunal ought to have been the first port of call. The applicant argues that the Tribunal is not quorate but I think there is nothing that prevented it from filing his appeal within the time provided by the Act. In the event the matter could not be dealt with the applicant would be at liberty to seek appropriate relief from this Court. Permitting the matter to proceed to substantive hearing would be to impose on the Court the mandate of the Tribunal contrary to the general principle I have cited………….

33. I am in agreement with the Interested Party’s submission that where there is an internal dispute mechanisms provided, the Court ought to exercise its jurisdiction with utmost care so as to avoid usurping the powers of the body vested with that mandate.

34. In Mutanga Tea and Coffee Company Ltd vs Shikara Ltd and Another [2015]eKLR the court while addressing the question stated;

‘’ It is readily apparent that in the above cited cases the court was speaking on issues of the correct procedure rather than the correct forum for resolution of a dispute. However, we entertain no doubts in our minds that the reasoning of the court must apply with equal force to require an aggrieved party, where a specific dispute resolution mechanism is prescribed by the constitution or a statute, to resort to that mechanism first before purporting to invoke the inherent jurisdiction of the High Court.’’

35. Ex parte Applicants have not brought before this court any exceptional reasons or circumstances as to why they have failed to exhaust the internal mechanisms provided by statute. The Court of Appeal in the case of Geoffrey Muthinja & another v Samuel Muguna Henry & 1756 others [2015] eKLR held as follows;

“We see this as the crux of the matter in this and similar cases. It is imperative that where a dispute resolution mechanism exists outside courts, the same be exhausted before the jurisdiction of the courts is invoked. Courts ought to be the fora of last resort and not the first port of call the moment a storm brews within churches, as is bound to happen. The exhaustion doctrine is a sound one and serves the purpose of ensuring that there is a postponement of judicial consideration of matters to ensure that a party is first of all diligent in the protection of his own interest within the mechanisms in place for resolution outside of courts. This accords with Article 159 of the Constitution which commands Courts to encourage alternative means of dispute resolution.

“We find and hold that the exhaustion doctrine applies even where, as was argued by the appellants herein, what is sought to be challenged is the very authority of the organs before whom the dispute was to be placed. We think there were sufficient safeguards in place for a valid determination of the various plaintiffs’ disputes had they filed them within the church set up. And there was always the right, acknowledged by the learned Judge, of approaching the courts after exhaustion of the church mechanisms. By failing to do so, and quite apart from the force of their apprehensions, the appellants effectively failed to exhaust their remedies and essentially short-circuited the process by filing suits prematurely.

36. From the foregoing, it is clear that the application before court offends the provisions of Section 9 (2) of the FAAA. The ex parte applicants first port of call ought to have been before the minister. The application is thus irregularly before the court. With the result that the Interested Party’s Preliminary Objection dated 1st October, 2021 is merited. The same is allowed. The Ex parte Applicant’s Chamber Summons application dated 22nd April, 2021 is dismissed with no orders as to costs.

DATED, SIGNEDAND DELIVERED AT NAIROBI THIS 10TH DAY OF FEBRUARY, 2022

A. K. NDUNG'U

JUDGE