[2025] KECPT 131 (KLR)

Soi v Moi University Sacco Ltd.; Moi University Sacco Ltd. (In Liquidation) (Objector) (Tribunal Case 169 of 2018) [2025] KECPT 131 (KLR) (30 January 2025) (Ruling)

Neutral citation: [2025] KECPT 131 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 169 of 2018

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

January 30, 2025

Between

Samwel K Soi

Claimant

and

Moi University Sacco Ltd.

Respondent

and

The Liquidator Of The Moi University Sacco Ltd. (In Liquidation)

Objector

Ruling

1. On 16/7/2024 this Tribunal ordered that a Garnishee Application dated 3/6/2024 filed by the Claimant be held in abeyance pending the determination of the Objectors/Interested Party Application dated 6/6/2024. The Objector/Interested Party moved this Tribunal by filling a Notice of Motion through a Certificate of Urgency and prayed for a stay of the execution of the Garnishee Order Nisi for attachment of the Liquidation KBC A/C No. 123XXXX706 at Eldoret West Branch to settle the Claimant sum owed.

2. It is noted that one Mr. Joel Kipsanai Barbengi (Liquidator) swore a detailed Supporting Affidavit dated 6/6//2024 and captured the historical chronology of 4,5,6,7,8,9, and 10. The same chronology is captured by the Claimant in Written submission dated 8/8/2024.

3. Having read through the documents and the evidence on record this Tribunal is called upon to determine whether the Claimant’s application dated 3/6/2024 seeking and attach the Respondents’ Bank Account number 123XXXX706 is possible or not.

4. It is not in doubt that the Commissioner of Co-operatives cancelled the registration of the Respondent via a cancellation/liquidation order dated 29/6/2018 and appointed liquidation according to the provisions of Section 65 which provide as follows: -“Where the registration of Co-operative Society is cancelled under Section 61 or 62, the Commissioner may appoint one or more persons to be liquidator or liquidators of that Society (herein referred to as the liquidator) and all the property of such society shall vest in the liquidator from the date upon which the order of cancellation takes effect. (emphasis ours)”

5. A plain interpretation of the above provision clearly means that from the time the Commissioner of Co-operative appointed liquidators to liquidate the Respondent, all the assets and liabilities of the Society are to be handled by the liquidators which include opening of a liquidation account pursuant to Section 67 of the Co-operative Societies Act and Rules 49 of the Co-operative Societies Rules 2004.

6. The issue of the money in the liquidation account is therefore under the management of the liquidators because the Respondent is non-existent. This explains the reason why the liquidator are worried when the attachment is sanctioned by the Tribunal.

7. The liquidators expressed their worries by expressing their views underground (ii from point No. (i) to ((iv) and state more specifically that the attachment will paralyses the liquidators’ management of the Respondent such as paying for water electricity, security services, generator taxes and other services for the building that is rented by the University of Eldoret Town Campus. In that regard it is not a secret therefore that the amount in that liquidators account is rental income that is generated from the building.

8. Section 66 of the Co-operative Societies Act Cap 490 provides for a raft of powers bestowed upon a liquidator amount which we dingle out first Sub-Section (f) which grants power to the liquidators “to investigate all claims against the society and subject to this Act, to decide questions of priority arising between Claimants”.The key word is this Sub Section is “priority” which means that one of the Responsibilities of the liquidators is to prioritize the payment of claims and as provided under Sub Section 66L of the same Section 66 which states”-“To arrange for the distribution of the assets of the Society is a convenient manner when a scheme of distribution has been approved by the Commissioner”.

9. Although the Objector/Interested Party did not table the scheme of distribution of assets and liabilities the liquidator confirmed under paragraph (f) of that the scheme was prepared and approved on 4/6/2019 and 5/6/2019 and tabled before the Tribunal on 7/10/2019. On the impact of the order if granted the supporting affidavit sworn by Mr. Joel Kipsanai Barbengi (liquidator) dated 6/6/2024 paragraph 11(g) provides a List of the challenges that will ground the liquidators’ operations as”-i.Creation of crisis and/or paralyze the operations of the liquidation.ii.Violation of the liquidation process/procedures of the Co-operative Societies Act and the insolvency Act.iii.Demonstration of a favour, award and preference to the decree holder as an individual a former member against the process of liquidation.iv.Against the equal treatment of creditors of the Respondent including the decree holder.

10. It is a fact that the Claimant was obtained the judgement was entered on 16/12/2022 against the Respondent which the Society’s registration had been cancelled on 29/6/2018 and the liquidators were already in place. That explains why the suit remained undefended that NOW that we have sighted the Kenya Gazette Notice No. 6971 dated 29/6/2018 that cancelled the registration of the Respondent which information, the Tribunal was not aware of, it is clear to us that the judgement in this matter was entered against a non-existent entity, therefore it is improper to execute it against the liquidator.

11. Given that the Claimant has a Judgment/Decree, he becomes one of the creditors who has to be paid from the liquidator’s account as provided under Rule 49 (3) (a) of the Co-operative Societies Rules 2004 which state that:-The following may be paid from the liquidation account;a.Claims, previously unpaid subject to the certification by the Commissioner or a person nominated by him for the purpose nominated by him for the purpose within a period of two (2) years from the date of the closure of the liquidation.

12. The Objector/Interested Party object to and oppose the execution of the Garnishee Orders because the Claimant is one among many members of the defunct MUSCO SACCO who wish to have their deposits/savings. Regarding this, the Tribunal agrees with the Objector/Interested Party that in Co-operative movement, all members have equal rights including the refund of deposits/savings. The liquidators have confirmed that they have a scheme of distribution which include the Claimant.

13. The decree holder seeks to attach the liquidation KCB account in Eldoret West Branch to satisfy the decretal amount of Kshs.2,895,407/=. Attaching a whose account will paralyze the entire operations of the Liquidator and it will affect many other parties as well as offend existing contracts.

14. Being aware that there are several pending issues regarding the liquidation of MUSCO allowing the attachment of the liquidator KCB account would flood, the Tribunal with many Applications from past members who want their refunds. Further the decision will create a precedent of promotion of inequality within the membership of Co-operative movement. Because of this the Tribunal decline to grant the orders of execution by the Claimant.

15. In conclusion having considered the objector/Interested Party Notice of Motion dated 6/6/2024 with the annexed documents and having read and considered the written submissions of both parties, it is our finding that the Notice of Motion is merited and we allow it.

Order 16. We order as follows: -The Notice of Motion Application dated 6/6/2024 is merited and it is hereby allowed.Ruling delivered.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 30TH DAY OF JANUARY, 2025. HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 30. 1.2025HON. BEATRICE SAWE MEMBER SIGNED 30. 1.2025HON. FRIDAH LOTUIYA MEMBER SIGNED 30. 1.2025HON. PHILIP GICHUKI MEMBER SIGNED 30. 1.2025HON. MICHAEL CHESIKAW MEMBER SIGNED 30. 1.2025HON. PAUL AOL MEMBER SIGNED 30. 1.2025Tribunal Clerk MutaiChepkwony advocate for Claimant/Decree holderCheptarus advocate for the Judgment DebtorHON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 30. 1.2025