https://new.kenyalaw.org/akn/ke/judgment/kecopt/2026/255

Theuri v New Milimani Sacco Ltd & another (Tribunal Case E264 of 2024) [2026] KECOPT 255 (KLR) (14 May 2026) (Judgment) Neutral citation: [2026] KECOPT 255 (KLR) Republic of Kenya In the Cooperative Tribunal Tribunal Case E264 of 2024 J Mwatsama, Ag Chair, B Sawe, F Lotuiya, M Chesikaw & PO Aol, Members May 14, 2026 Between Jonathan Kariuki Theuri Claimant and New Milimani Sacco Limited 1st Respondent Sanjomu Auctioneers 2nd Respondent Judgment 1.The matter for determination is Statement of Claim dated 12.4.2024 where the Claimant claims he is a registered member of the 1st Respondent Society. He states they were constructing a Community Church on his property and 1st Respondent Chairman gave a pledge of Kshs.2,000,000.00 interest free facility payable within 3 years. Claimant says he filled forms and only Kshs.1,141,750.00 was deposited to his account and Ksh.700,000.00 was his security as shares. He used the funds to construct the church and began making payment however the balance did not reduce as he was informed he was paying for penalty yet he had not defaulted. 2.Claimant states he received notification of Sale of his property Cismara/Ilmashariani Murijo 612 And Cis Mara/Ilmashiriani Mojiro/618 for a loan balance of Kshs.1,795,814.23.He states before receiving the Notice of Sale he did not receive any Notice for default from 1st Respondent and that he has never been issued with accurate and proper Statement of Account to know the status of his loan. The two (2) properties were in the hands of 1st Respondent as custodian and not as collateral neither were they charged. The property is in the name of the 1st Respondent. His prayers before the Tribunal are for:i.A Declaration that notice of sale is null and void.ii.A Declaration that power of sale by the 1st Defendant for the sale of Cis Mara/Ilmashiriani Mojiro/612 and Cis Mara/Ilmashiriani Mojiro/618 is illegal.iii.A Declaration that the title deed for Cis Mara/Ilmashiriani Mojiro/612 and Cis Mara/Ilmashiriani Mojiro/618 be registered in the Claimant’s names.iv.Costs of the suit and interest at court rates from the date of filing this suit. 3.To support his Claim the Claimant filed List of Documents dated 12.4.2024 file on 17.4.2024 and the same included:1.Copy of the Statement of Account as at 9th April, 2024.2.Copy of MPesa Statement of payments made to the 1st Defendant.3.Copy of Letter for Custodianship of Title deeds for Cis Mara/Ilmashiriani Mojiro/612 and Cis Mara/Ilmashiriani Mojiro/618 dated 27th July 2020.4.Copy of the Notification of Sale by the 2nd Defendant. 4.The Respondent did not file a statement of defence. They relied on their Replying Affidavit sworn by Huron Ayienda on 7/10/2024 filed in response to Notice of Motion dated 12/4/2024 as their defence. In paragraph 3 of the Affidavit, they deny all allegations in the Statement of Claim.The 1st Respondent aver they advanced a loan to the Claimant on 11/4/2022 and there was a security for the same. The Respondent aver the Claimant defaulted in his loan repayment.The 1st Respondent states at the time of applying for the loan facility the Claimant had no savings with 1st Respondent and as such the Claimant agreed to have the Kshs. 667,399/= of the amount borrowed be retained as his savings. 5.Claimant gave and agreed for 2 title deeds registered in 1st Respondent Society name to be used as security. They admit the Society was yet to transfer the title to the Claimants.The 1st Respondent state they do not give interest fee loans as Claimant signed a loan agreement form with a provision of 10% interest on principal amount borrowed. 1st Respondent Society aver Claimant has only made 8 instalments the last being March 2024.1st Respondent aver the Claimant owes them Kshs. 1,436,609.39/= as at 30/9/2024.1st Respondent filed Witness Statement dated 7/10/2024 and List of Documents dated 15/10/2024 which included:1.Loan Application and Agreement Form2.Title Deeds3.Current Loan Statement Supplementary List of Documents dated 18/3/2026. 6.Matter came for hearing and Claimant testified adopting his Witness Statement dated 12.4.2024 as his evidence in chief and List of Documents dated 18.3.2025. Documents produce as (EX1-5). He stated he did not know how much he was to pay the Respondents. During cross-examination he confirm he took a loan to purchase land and the two (2) Titles are a result of the said purchase.He completed the loan and in the year 2012 took out another loan facility which he states he just signed the forms and was unaware of the terms and conditions. He denied he gave the 2 titles as collateral for the loan. He confirmed that the loan was to be repaid in 36 months installments an he only had made 6 to 7 instalment repayment. In total he confirmed during cross-examination he had paid Kshs. 700,000.00 which loan amounts was for Kshs. 2,000,000.00. He confirmed receiving his Loan Account Statement and he is willing to make repayment. 7.The 1st Respondent Chief Executive Officer gave evidence, he adopted his Witness Statement dated 7.10.2024 as his evidence in chief and produced Documents in his List of Documents dated 7.10.2024 as REX1-3. Supplementary List of Documents dated 18.3.2026 REX4. On cross examination RW stated they advanced 1,200,000.00 to Claimant because it was a top up to his account to enable him be able to be advanced the loan. The top up in his account was done for Kshs.667,000.00. He confirmed the loan interest was 10% p.a for 3 years. RW1 confirmed he owed 1st Respondent Kshs.1,400,000.00 though Claimant had made lumpsum payment of Kshs.100,000.00. During clarification he confirmed the property Cismara/Ilmashariani Murijo 612 and Cis Mara/Ilmashiriani Mojiro/618 were not charged though used as collateral. 8.As at the date of writing this judgement none of the parties had filed Written Submissions. It is important to note as per the Tribunal’s direction the Claimant was to file evidence of repayment of Kshs.100,000.00 as alluded during trial to assist the Tribunal make a fair determination. This was done and from the Claimant Statement of Account the Kshs.100,000.00 was paid on 5.2.2024. Having considered the pleading and evidence adduced during trial the issues for determination are:Issue oneWhether the Claimant was advanced a loan of Kshs. 2,000,000.00.Issue twoWhether the property CISMARA/ILMASHARIANI MURIJO 612 and Cis Mara/Ilmashiriani Mojiro/618 can be sold by 1st Respondent to cover for the loan repayment. 9.Issue oneWhether the Claimant was advanced a loan of Kshs. 2,000,000.00.The Claimant does not deny receiving funds in terms of a loan facility form the 1st Respondent. His contention is that he applied for a Kshs.2,000,000.00 loan and only Kshs. 1,200,000.00 was deposited in his account. He states he did not receive the balance. The Respondent on the other hand states all the money is with the Claimant as he was to have saved to be eligible to apply for a loan therefore they advanced Kshs. 2,000,000.00 by topping his Account with Kshs. 667,000 and that is how he was able to secure the loan of Kshs. 2,000,000.00 as it is usually 2 times a person’s savings. Analyzing the Claim as it were, it is clear the Claimant did not have the financial muscle with the 1st Respondent Society to be issued with a loan. The arrangement, though peculiar by itself, found the Claimant being granted a loan, with part of the loan being utilized as his deposits to ensure he is eligible. We therefore find that indeed the Claimant loan was for Kshs. 2,000,000.00. 10.Issue TwoWhether the Loan Advanced Was Repaid?The Claimant during his evidence in chief admitted he owed the 1st Respondent and in cross-examination he confirmed he only made 6 or 7 installment repayments from what was expected of 36 months installments. There is an outright admission by the Claimant that he owes the 1st Respondent only that he did not know how much. We take this evidence with a pinch of salt as the Claimant in his List of Documents dated 12.4.2024 filed a Statement of Accounts as at 9.4.2024 which means he was well aware of his financial obligation. 11.Issue 3Whether the properties Cismara/Ilmashariani Murijo 612 and Cis Mara/Ilmashiriani Mojiro/618 can be sold to satisfy the Loan balance?The Claimant states they did not give the aforementioned property as security for the loan, and the 1st Respondent came into possession of the title as a result of the 1st Respondent Society having earlier advanced a loan to purchase land thus put it in their name until Claimant clears the loan.For the 2nd loan in question, the Respondent during clarification & cross-examination stated they did not charge the two titles of land that have now been put up for sale and are the subject matter of the case herein. 12.It was not clear from the evidence of parties whether the requisite notices were issued or not, as per Sections 90 and 96 of the Land Act. Section 90, Land Act provides,“…90(1) If a charger is in default of any obligation, fails to pay interest or any other periodic payments or any part thereof due under any charge, or in the performance or observance of any covenant, express or implied, in any charge, and continues to be in default for one month, the Chargee may serve on the Chargee a Notice, in writing, to pay the money owed or to perform and observe the agreement, as the case may be…” 13.Even with the above the question to be answered is whether the 2 properties were charged to warrant them to be used upon default. Section 79, Land Act (No. 6 of 2012) informs issue of informal charges where the case at hand may fall. This is where a title is deposited with the lender as financier with an offer to use the title as security. 14.unfortunately, the titles were not offered by the Claimant as security, as they had always been in the custody of the 1st Respondent. Further, the titles could not even be used as collateral for the reason they were still registered in the name of the 1st Respondent, that is, New Milimani Sacco Ltd.There is no way the property could have been used as security. The question to be answered is whether the Notices of Sale by Respondent Society were valid? To our observation, the said notices were not valid and as such cannot be used to sell the Properties.We are convinced the 2 titles were not given as collateral as security for the loan of Kshs 2,000,000.00. Despite the same being due, the properties Cismara/Ilmashariani Murijo 612 and Cis Mara/Ilmashiriani Mojiro/618 cannot be used at this point to satisfy the defaulted loan amount. 15.On prayer of Notice of Sale being null and void, the same is allowed. On Prayer ii - the sale of Cismara/Ilmashariani Murijo 612 and Cis Mara/Ilmashiriani Mojiro/618 is illegal to the extent of being used as security for a loan. Prayer iii fails. As such Judgment is entered in favour of the Claimant against the Respondent in the following terms:i.A Declaration that Notice of Sale is null and void.ii.A Declaration that power of sale by the 1st Defendant for the sale of Cis Mara/Ilmashiriani Mojiro/612 and Cis Mara/Ilmashiriani Mojiro/618 is illegal.iii.Prayer (iii) fails.iv.Each party to bear their own costs. JUDGEMENT DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 14TH DAY OF MAY, 2026.HON. J. MWATSAMA - AG. CHAIRPERSON SIGNED 14.5.2026HON. BEATRICE SAWE - MEMBER SIGNED 14.5.2026HON. FRIDAH LOTUIYA - MEMBER SIGNED 14.5.2026HON. MICHAEL CHESIKAW - MEMBER SIGNED 14.5.2026HON. P. AOL - MEMBER SIGNED 14.5.2026Mutai Court AssistantKaranja for the Claimant/ApplicantMuguku advocate for the Respondent