[2020] KECPT 77 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL APPEAL NO. 2 OF 2016

WAWERU RICHU..............................................................................................APPELLANT

VERSUS

HON. COMMISSIONER OF CO-OPERATIVES.....................................RESPONDENT

BILA JASHO HUPATI SACCO LIMITED ............................INTERESTED PARTY

JUDGMENT

The matter for determination is the appeal lodged by the Appellant, Waweru Richu vide his memorandum of Appeal dated and filed on 13. 4.2016. The Appeal is founded on the following grounds:

1. That the Hon. Commissioner for Co-operatives Development erred in law and in fact by the surcharging the Appellant based on a defective, inconclusive, questionable and uncertain inquiry Report marred with contradictions .

2. The Hon. Commissioner for Co-operatives Development erred in law and in fact by making his order based on a report that was erroneous in claims that there were unauthorized payments whereas all payments were duly authorized and passed by the entire management committee.

3. The Hon. Commissioner erred in law and fact by making his order based on a report that was erroneous in claims that the Appellant single handedly ran the entire SACCO to absolute exclusion of other officials and solely withdrew funds from various accounts.

4. The Hon. Commissioner for Co-operative Development erred in law and fact by making his order based on a report that was erroneous and misleading on claims that he Appellant absolved officials from their duties and responsibilities as management committee members whose roles are clearly outlined.

5. The Hon. Commissioner erred in issuing the said order without appreciating the fact that the inquiry Report was inaccurate, imprecise and illogical and thus not sufficient to issue the surcharge orders

6. The Hon. Commissioner erred in issuing the said order without taking into consideration the balance sheet and final accounts which were duly submitted every year with the approval of the Management committee.

7. The Hon. Commissioner erred in law and in fact by selectively and discriminately surcharging the appellant without reasonable and lawful cause.

8. The Hon. Commissioner erred in failing to take into consideration that he appellant was the chairman and that the honours of book keeping and recording transactions did not lie with him.

9. The Hon. Commissioner erred in issuing the said order without taking into consideration that despite the fact that the officers from the Banking Fraud investigation unit having carried out independent investigations, no charges have ever been preferred against the Appellant.

10. The Hon.Commissioner misdirected himself in finding that the Appellant was guilty of misapplications and embezzled the societies funds and proceeding to surcharge him.

11. The Hon.Commissioner misdirected himself and erred in law in arriving at the wholly misconceived decision to surcharge the Appellant.

We note that there was a Notice of Preliminaryobjection filed on 17. 6.2016 and determined vide the Ruling dated 10. 2.2017 dismissing it and confirming jurisdiction of the tribunal to entertain the matter. Thereafter, the application dated 1. 2.2018 seeking to enjoin the interested party was allowed vide the Ruling delivered on 8. 1.2019.

The matter came up for the Appeal and parties sought to have it disposed of by way of written submissions.

The Appellant filed his written submissions on 21. 6.2019 together with his list and bundle of authorities. The Respondents and the Interested Party did not file their written submissions despite having taken directions on 20. 6.2019 and on 6. 2.2020.

Issues for determination

We have framed the following issues for determination;

(a) Whether Appeal has been lodged in compliance with the mandatory provisions; and

(b) Whether the Appellant has laid a proper basis to warrant the Tribunal to allow the Appeal.

Procedure

The procedure for filing an appeal is provided for under Rule 8 of the Co-operatives Society (practice and Procedures) Rules 2009. Specifically, sub Rule (3) indicates the mandatory documents to be filed together with the Memorandum of appeal. They include:

(a) Memorandum of appeal;

(b) Inquiry order;

(c) Inquiry/Inspection order;

(d) Minutes of the General Meeting whose decision is appealed against;

(e) Notice of intention to surcharge;

(f) Surcharge order; and

(g) Any other relevant documents.

We have looked at the documents accompanying the Memorandum of Appeal and note that the same does not contain the minutes referred to in (d) above. The appeal also does not contain the supporting documents of the Inquiry Report.

Rule 8 (3) is couched in mandatory terms and that all the documents referred to therein must accompany the Memorandum of Appeal.

Merits of the Appeal

Inquiry, inspection and surcharge are provided for under sections 58,59,60A,73,74 and 75 of the Co-operative Societies Act (Cap 490)

The Commissioner of Co-operatives has a mandate under section 58 to conduct an inquiry. Under section 58 (1), he can do so either on his own accord, on the direction of the minister or on the Application of the members. Under section 58 (3),the Commissioner is mandated to report the findings at an Annual General Meeting and seek directions from the members for the implementation of the recommendations of the inquiry report. Thereafter, he is mandated to issue a surcharge based on the inquiry report.

In this matter, inquiry filed alongside the Memorandum of Appeal was conducted vide the Gazetted order of 29. 5.2015. It is Gazette Notice No. 3918. The said inquiry was concluded and signed on 25. 6.2015. Thereafter, Notice of Intention to Surcharge was issued on 25. 1.2016 and surcharge orders issued on 21. 3.2016.

The Appellant avers that the Commissioner of Co-operatives Development erred by surcharging him. The Memorandum of Appeal has raised 11 grounds.

On procedure for Appeal against a surcharge, sections 73 and 74 of Co-operative Societies Act (Cap 490) are clear that after inquiry, the Commissioner has powers to issue surcharge orders requiring a person to repay or restore the property or any part thereof to the Co-operative Society together with the interest.

As per section 73, any person aggrieved within 30 days to the Tribunal.

In this matter, we note that after completion of the inquiry, the Notice of intention to surcharge was issued on 25. 1.2016 requiring the appellant herein to show cause within 14 days from the date of receipt of the notice he should not be surcharged. There is further notice that ;

“ unless an explanation is received within the aforesaid period, an order of surcharge SHALL be issued without further reference…….”

We note that the said Notice was delivered on 4. 2.2016 and a surcharge order was consequently issued on 21. 3.2016 and served on 1. 4.2016.

We have perused the grounds of Appeal and the documents accompanying the memorandum of appeal, we note that the appellant has not demonstrated if he Showed Cause why she should not be surcharged within the mandatory 14 days. Indeed, having been served on 4. 2.2016, he should have communicated any objection/challenge on or before 28. 2.2016. The Surcharge order dated, 28. 2.2016 indicates that there was more than sufficient time afforded to him to challenge the intention to surcharge.

Upon conclusion of an inquiry under section 58 of the Act, the commissioner SHALL report his findings for the members at the General Meeting of the Society and shall give directions on the implementation of the recommendations of the inquiry report (58 (3)). At this point, the Appellant herein has not produced the minutes of the said General Meeting to show that we challenged the said inquiry report or the findings and recommendations therein. Thereafter, the intention to surcharge was issued requiring the Appellant to show cause and the appellant having not responded and/or filed any submissions challenging or showing cause why he should not be surcharged, the Commissioner proceeded to issue a surcharge order.

We have looked at the grounds of appeal and note that the appellant bases his appeal on the procedure and findings in the inquiry carried out by the Commissioner and the resulting inquiry report. We note that it is the mandate of the commissioner to carry out the inquiry and the report gives the description of the nature of the inquiry, the authority, terms of reference and methodology as shown at pages 1-4. We note that the report is comprehensive on the procedure used, documents examined,interviews conducted and audit done. All these is laid out from pages 1-39 of the inquiry report.

At page 30 paragraph 17. 0 of the report, the applicant was summoned to appear before the inquiry team at Nyayo house on 19. 6.2015 at 11a.m. He appeared and was interviewed in the presence of Njoroge Mwangi, the Co-operative officer – Kamukunji and 11 members of the management and supervisory committee. His statement is recorded at pages 31 and 32 of the report of which he alleged to have been kidnapped on 1 and 2 /9/2014. However, the observation of the said committee was that the alleged kidnappings were irrelevant and had nothing to do with matters relating to the inquiry. That the oral denial of responsibilities in the presence of the inquiry team was not acceptable in light of the documentary evidence availed. (see page 33 of the report.)

The inquiry team gave its conclusions and recommendations (see page 34 of the report) after the inquiry.

The inquiry report was adopted by the members at the General Meeting. The Appellant has not stated if he raised any objection in the said meeting. Thereafter, the Appellant was issued with a Notice of intention to surcharge but he did not show cause why he should not be surcharged. It is in the light of this procedure that we find that the Appellant was accorded fairness and opportunities to defend himself during the inquiry before the inquiry team, at the General Meeting and finally after issuance of intention to surcharge. We find that the procedure followed by the commissioner culminating to the surcharge order was fair and procedural, and the appellant was accorded sufficient opportunities to defend himself. He did not do so.

The inquiry carried out by the commissioner is independent of any other lawful process carried out by separate body or person arising out of the same subject matter. This is as provided for by section 73 (3) of Co-operative Societies Act (Cap 490). This is in regard to ground No. 9 and 10 of the Memorandum of Appeal.

We have carefully considered the written submissions by the Appellant and the authority cited.We note that the said authority Angela Mwai & 3 Others Vs Commissioner For Co-operative Developmentis based on a Judicial review Procedure against the administrative action of surcharging the 5/9 board members.

The gist of the said Judicial Review was on the decision making process and not on the merits of the decision.

We have noted the submissions of the Appellant that there was no evidence on record of any such meeting and opting the inquiry report. However, as stated earlier, it is the duty of the Appellant to file the minutes of such a meeting together with the Memorandum of Appeal. This is of crafted in mandatory terms. The Appellant did not file any such minutes and this issue raised in the written submissions in regard to the General Meetings has not been raised as a Ground of Appeal.

Section 27 (5) (b)and 6 (a) of Co-operative Societies Act (Cap 490) is a provision in regard to General meetings carried out as a management tool of the Co-operative Society.

In totality, we find that the grounds constrained in the Memorandum of Appeal have no merit sowing to the discussion above. We find that the whole decision of the Commissioner for Co-operative Development to Surcharge the Appellant was proper and that it adhered to the due process and procedure as enshrined in Co-operative Societies Act (Cap 490). We therefore find that this Appeal has no merit and dismiss it with no orders as costs.

Read and delivered in an open court this 27th day of February, 2020

In the presence of ;-

Appellant : Mr. Ruto Ken holding brief for Kuria Advocate for

Claimant

Respondent : No Appearance

Court Assistant : Leweri Raphael

Hon. B. Kimemia

Chairman Signed

Hon. Terer

Deputy Chairman Signed

P. Swanya

Member Signed