[2023] KECPT 1091 (KLR)

Smatron Limited v Urithi Housing Co-operative Society Limited (Tribunal Case 263 of 2019) [2023] KECPT 1091 (KLR) (Civ) (14 December 2023) (Judgment)

Neutral citation: [2023] KECPT 1091 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Civil

Tribunal Case 263 of 2019

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

December 14, 2023

Between

Smatron Limited

Claimant

and

Urithi Housing Co-operative Society Limited

Respondent

Judgment

1. The matter for determination is a Statement of Claim dated 16th May 2019 in which the Claimant claims that it was a registered member of the Respondent number 535. The Claimant avers that in the year 2018, he subscribed to the Respondent’s investment vehicle duped Mavuno Investment and invested a sum of Ksh 10,000,000/- which was an equivalent to 20 Dhahabu Shares. The Claimant claims that it was an agreement with the Respondent that the investment was to last for one year in which the Respondent was to repay the principal in full. The interest on the principal was to be 24%. The Claimant claims that they have never been refunded the principal sum. The Claimant therefore prays for :a.The principal sum of Kshs 10,000,000/=b.Interest on (a) at the rate of 24% per annum until payment in full.c.An order directed to the Respondent to issue the Claimant with withholding tax certificates for the period between August, 2018 until payment in full of the principal sum.d.Such other and further relief as this Honourable Tribunal may deem fit and just to grant.e.Costs of this suit and interest thereon.The Claim is accompanied by a Witness Statement, and documents in support of the claim.

2. The Respondent entered appearance and filed a Statement of Defence dated 27th May 2019. In their Defence, the Respondent’s do not dispute that the Claimant is its member. The Respondents do not dispute that the Claimant subscribed to a Mavuno Investment Plan. However, they contend that the investment was for a period of one year subject to a further extension to five years and the Claimant failed to give a 60-day Notice of Withdrawal to enable the Respondent reconcile the Claimant’s Account and facilitate the transfer. They pray this court to dismiss the Claimants claim.

3. During the hearing, the Director of the Claimant testified. The Respondent did not appear during the hearing. The Claimant adopted his Witness Statement, and produced his documents. The Claimant testified that the Respondents only paid interests in February and September up to 2019 but they have not paid since. The Claimant’s prayer is for the Principal sum together with interest since May 2019. During cross examination, the Claimant responded that in the times he was paid an interest, he was paid at the rate of 24%.

4. Both parties filed their submissions. In their submissions, the Claimants submitted that this was a case of breach of contract and that is clear that there was breach looking at the Investment Agreement signed by both parties. The Claimant also submitted that a failure by the Respondent to testify during the hearing, meant that the Claimant’s claim remained uncontroverted.

5. In their submissions, the Respondents submitted that the Claimant failed to give notice of withdrawal and that the Society’s by-laws do not provide for a refund of shares.

Analysis 6. The question before this Tribunal is whether the Claimant is entitled to the prayers sought in his Statement of Claim as against the Respondent. In answering this question, the Tribunal notes that it is not in dispute that the Claimant was a member of the Respondent. It is also not in dispute that the Respondent entered into an investment vehicle by the Respondent and deposited a sum of Ksh 10,000,000/- for the investment. What is in dispute is whether the Claimant indeed gave a notice of withdrawal of 60 days as alleged by the Respondent, and whether that notice was a requirement of the investment option. The other issue in dispute is in the interest rate to be applied in the investment.

7. To answer the above questions, this Tribunal now looks at the Investment Agreement Form. In the Application Form, it is clear that the Claimant subscribed to Urithi Dhahabu Invest (Monthly). From the Share Certificate issued, the validity period of the investment was from 19/03/2018 to 18/03/2019 and this indicates that the investment period was for one year. There is no provision on giving of notice before withdrawal of the investment amount, and there is no letter indicating that the Claimant extended his investment period to five years.

8. The Respondent failed to call a witness to testify during the hearing, and this leaves the Claimant’s evidence uncontroverted, save for facts that can be obtained from the Investment Agreement. As such we find that the Claimant invested in the Respondent for a period of one year and that Notice of Withdrawal was not required at the end of the one year.

9. On the issue of Withholding Tax Certificate, this is a Certificate that is issued by the Kenya Revenue Authority after an institution pays to them a tax that has been withheld when making a payment. The issue of withholding tax is also not provided on the Investment Agreement between the Claimants and the Respondents. This court cannot, therefore, order the Respondent to issue a Certificate when there is no evidence whether withholding tax was paid on behalf of the Claimant or not.

10. Flowing from above, we find merit in the Claimants Claim and order as follows:Judgment is entered in favour of Claimant against Respondent.a.A refund of the principal sum of Kshs 10,000,000/-b.Interest on Kshs 10,000,000/- at Tribunal rates.c.Costs of this suit and interestd.Prayer (c) fails

JUDGMENT SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 14TH DAY OF DECEMBER, 2023. HON. BEATRICE KIMEMIA CHAIRPERSON SIGNED 14. 12. 2023HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 14. 12. 2023HON. BEATRICE SAWE MEMBER SIGNED 14. 12. 2023HON. FRIDAH LOTUIYA MEMBER SIGNED 14. 12. 2023HON. PHILIP GICHUKI MEMBER SIGNED 14. 12. 2023HON. MICHAEL CHESIKAW MEMBER SIGNED 14. 12. 2023HON. PAUL AOL MEMBER SIGNED 14. 12. 2023Tribunal Clerk JonahKibara advocate for the ClaimantEchon advocate holding brief for Mr. Mwangi for the Respondent.Echon advocate – We pray for 30 days stay of executionKiibara advocate - We have no objectionTribunal orders:30 days stay of execution granted.HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 14. 12. 2023