Anthony Nduati Nyambura vInagibTravellers Sacco Limited & Co-operative Bank Limited [2021] KECPT 285 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO.272 OF 2020

ANTHONY  NDUATI  NYAMBURA............................................................... CLAIMANT

VERSUS

INAGI  TRAVELLERS  SACCO  LIMITED.......................................1ST RESPONDENT

CO-OPERATIVE  BANK LIMITED....................................................2ND RESPONDENT

RULING

1. The matter has 2 Applications  for determination  dated  2. 9.2020 and  14. 1. 2021.

There is  a Preliminary  Objection dated  28. 1.2021 which  also  seeks  determination against  the Claimant’s Application.

We shall start with determining  the Preliminary  Objection   dated  28. 1.2021 by the  2nd Respondent  towards  the Claimant’s  Application  dated  2. 9.2020.

The Application dated  2. 9.2020  is brought  under Rule  6 and II Co-operative  Tribunal  (Practice and Procedure ) Rules  2009,  Section  1A, 1B,83A, 68 (e ) Civil Procedure  Act Cap  21 and all other  enabling  provisions  of the law.

The same  seeks  for Orders:

a.Spent

b.Spent

c.That  an order  be and is hereby  issued  restraining  the Respondent’s herein whether by themselves, employees servants, agent, assigns, Remma Auctioneers and/or  any other  person  whatsoever  acting  on their  behalf  and/or  under their  mandate  or instructions  from repossessing, advertising  for sale, offering  for sale, taking  possession,  transferring selling, disposing  and/or  in any other  way dealing  with the vehicle registration  number  KCH 241 U pending  the hearing  and determination  of the main suit.

d.That the OCS Kiambu police station  and/or  the National  Transport and  Safety  Authority  to ensure  strict  adherence  with the  orders  of this  Honorable  court.

e.Any other or further  orders  and/or  directions  as this Honorable  court  deems  just and  expedient.

f.That the  costs  of this application  be provided  for.

2. The Application  is supported  by the grounds  on the  face of  the Application  and Affidavit  in support  of Antony  Nduati  Nyambura  sworn  on  2. 9.2020 to which  he  avers he  purchased  Motor Vehicle  Registration  No. KCH 241U on 13. 7.2016 for Kshs.2. 5 Million.

That  Clyde Motors  enters into  a Sale  Agreement  with him  dated  13. 7.2016. He  was to pay  a deposit of Kshs.460, 000/= and balance  of purchase  price  paid by  1st Respondent  through  a loan  facility  from  2nd Respondent. As a result  of the Agreement  the motor vehicle  was registered  in the name of 1st and 2nd Respondent.

The 1st Respondent  and  Claimant  then entered  into an Agreement  which  Claimant  was obligated  to repay  the balance  of the  purchase price  Kshs.2,052,722/=. The Claimant  avers  he was to pay  monthly  installments  of Kshs. 71,773/-  for  a period  of  36 months loss  of his  motor vehicle.

He seeks  for the Claimant’s protection  that the  2nd  Respondent  be barred  from repossessing  his motor vehicle.

The 1st Respondent  is at fault  and did not  fulfil  its loan obligations  with the  2nd  Respondent  despite  him  having  paid  the whole  amount.

3. The 1st Respondent  filed  a response  in opposition  to the Application  and filed  a replying Affidavit  sworn  by Charles  Njenga  dated  5. 10. 2020 and filed   on  14. 10. 2020. He  stated  he is the chairman  of the 1st  Respondent  and stated  the claimant  is misleading  the Tribunal  with falsehoods  and failure  to disclose  material facts.

That  the loan  facility  was  negotiated on behalf of the group  of the 1st Respondent  members and not individuals. Thus  the loan  was a  group loan and  Applicant  therefore lacks  locus standi  to act  on his own  behalf.

4. He avers  that he paid  all the installment  when they were  due and gave  a schedule  of the payments.  He  attached the account statements  marked  ANN-4.

On clearing  the loan  due he wrote  to the  1st  Respondent  seeking  for discharge  of his motor vehicle  registration  No.  KCH 241 U   that  was used  as security.

The 1st Respondent  responded  vide  a   letter dated  25. 8.2020 stating  they were  liaising the  2nd Respondent  to have  the motor vehicle  discharged.

On  25. 8.2020  he received  a letter  from 1st  Respondent  when he  had visited  their offices  drawn by  2nd Respondent  instructing  Remma  Auctioneers  to repossess  his vehicle  for an  unpaid  loan of  Kshs.5,709,377. 43/=  the  letter  is annexed  as ANN-7.

From  the foregoing  it was clear  the 1st  Respondent  failed  to  remit his  monthly  loan  repayment  as agreed  thus exposing  him  to grave  risk  and  potential.

The request  was declined  vide  letter  dated  24. 9.2019.

The  1st Respondent  therefore  find  it unfair  for the Applicant  to  accuse  it of failing  to remit loan  repayments  given  the difficult  financial  environment  it is  operating   in.

The outstanding  loan  of Kshs. 5,709,377. 43/=  is  a group loan  and not  belonging  to the Applicant  only.  The  1st Respondent  has tried  to renegotiate repayments terms of the subject  loan including  the 2nd  respondent  to have  the loan  restructured.

The Applicant  has had  other disputes  with 1st  Respondent  and  thus  the motivates  behind  the Applicant’s  suit against  the  1st Respondent  before  exhausting  the laid  down  procedures.

5. That the Applicant’s decision to institute suit is counter productive as it will jeopardize efforts  by  1st Respondent  to have  an amicable  repayment  structure.

That  the Applicant  has not  exhausted  the internal channels  available  within  the  1st  Respondent  before  this suit as provided  in clause  93  of the  1st Respondent  by laws  under  the sub-head  ‘disputes’ which  requires  the member  to refer  any dispute  for settlement  by the  Management Committee  or the General Meeting.

That  the applicant  therefore  ought  to have  exhausted  all internal  mechanism  for dispute  resolution  before  instituting  a suit against  the 1st  Respondent.

That the 1st Respondent  has been  operating  in extremely  difficult  environment  following  the Covid- 19  outbreak which  grounded  its operations  and is just  regaining  its  foothold.

That  even  before  Covid- 19  the Applicant  wrote to the  1st Respondent  pleading  for restructure  of  payment  agreement  vide  letter  dated  18. 9.2019 and  19. 11. 2019 marked  CN3.

6. The  2nd  Respondent  filed their  Preliminary  Objection  dated  28. 1.2021  and stated  under  Section  76  Co-operative  Societies  Act  (490).

(i) Tribunal  lacks  jurisdiction  to  hear and determine  the Claimant’s  Application  and claim  to  the  extent  that it  relates  to  on  is against  the  2nd Respondent.

(ii) The 2nd Respondent  is  therefore  improperly  joined  to the claimant’s  Application  and claim.

The  2nd Respondent  thus  pray  that  the claim  be dismissed  or struck out  with costs  to the 2nd  Respondent  to that extent. The  2nd  Respondent  further filed  a Replying Affidavit  sworn  by  Mary  Kalekye  the Legal  Officer  of  Co-operation  Business  on  28. 1.2021  filed  on  29. 2.2021 in which  the 2nd  Respondent  averred  assuming  the Tribunal  has jurisdiction  over  the  Bank  vide  a letter  of offer  dated 30. 10. 2015  the 1st Respondent  entered  into an  asset  finance  loan Agreement  of  Kshs.20,000,000/=. The  terms  of Agreement  were  set out in the Bank ‘s  letter  of offer  dated 30. 10. 2015  and the  Bank’s  General  Terms  and conditions  which  the 1st  Respondent  authorized.

Paragraph  9 of  the letter  of offer  stated  the facility  would  be secured  by joint  registration  of each  motor vehicle  purchased  by 1st Respondent  using  the credit  line.

That  paragraph  10  of the  letter of  offer  provided  that the loan facility was to be in trenches and each loan  disbursement  would  run  for a term  of  36 months  respectively.

Condition  No.  13  1 (a) and ( c)  of the Bank’s  General  terms and conditions  provides  that failure  by  1st Respondent  to make  repayment  of principal  or  interest  the  same  was default and would  amount  to  2nd  Respondent  would  to a demand  in writing  and after the  2nd Respondent  would  by notice  to the 1st Respondent  declare the security  has  become enforceable  where upon  the Bank  shall  be  entitled  to exercise  its rights  under  the security.

7. Amongst  the  motor vehicles  purchased  from the  loan facility  is the subject  motor vehicle  KCH  241U .

The 1st Respondent defaulted  and failed  to make  repayments  in accordance  with the terms  of the  loan facility.

On various  occasions between  12. 1.2018 and 20. 3.2019 the bank sent out  several  demand  letters  to the  1st Respondent.

The  1st Respondent  did not honor the demand  which  prompted  the Bank  to exercise  its right and  thus  instructed  Remma Auctioneers  to realize  the security. Thus the bank  was within its rights  under  the Agreement  and the  loan facility  to seek  to  realize  its security  as it did.

Despite  the loan  restructure  the  1st  Respondent  has defaulted  and failed  to make payments  in accordance  to the  restructured  facility.

8. Further  to that  the  Bank  is not privy to any  agreement  or arrangements entered  into between  the Claimant  and 1st  Respondent  on  motor vehicle  KCH 241U.

The  Claimant  is not a party  or privy  to any  Agreements  or arrangements  entered  into  between  the Bank  and the  1st Respondent.

The Claimant  is thus  a stranger  to the Bank  in so-far-as  the Agreement  between  the Bank and  1st Respondent.

Thus orders sought  against  the bank  are  not  merited  and  the Claimant’s Application  ought  to  be dismissed with costs  to the Bank.

The  parties  were directed  to file  written submissions  to dispose  off the  Application  and 2nd  Respondent  filed  their written submissions dated 28. 1.2021 on  29. 1.2021.

The  Claimant’s filed  their written  submissions  dated  filed  on  1. 2.2021 and another  set dated 9. 4.2021 filed on  12. 4.2021 and  did  yet  another  set on  the  2nd Respondent  Preliminary Objection  written submissions  dated  29. 3.2021 filed  on  12. 4.2021.

Having considered  and analyzed  all the  above  the issues  are:

Issue  one

Whether  the Tribunal  has jurisdiction  to determine  the  claim  as against  the 2nd Respondent?

Issue two

Whether  the Claimant  should to be  granted  the orders  sought.

9. Issue  one

Whether  the Tribunal  has jurisdiction  to determine  the claim

Jurisdiction

The case  of Owners  of the  Motor  Vessel “lilian S” – vs-  Caltex Oil  (Kenya)  Limited  [1989]KLR  1where Justice  Nyangi  of the  Court of  Appeal  held as follows:

“ I think it  is  reasonably  plain  that a question  of jurisdiction  ought to  be raised  at the earliest  opportunity  ….the  court seized  of the month  is  then  obliged to  decide  the issue  right away on the material  before it.  Jurisdiction  is everything.

Without  it, a court  has no power  to make  one  more step.  Where a court  had  no jurisdiction,  there  would be  no basis  for a continuation  of proceedings  pending other evidence.  A court  of law downs  tools  in respect  of the matter  before it the  moment  it holds  the opinion  that  it is  without  jurisdictions..”

The  2nd Respondent have  cited  Section  76  Co-operative  Societies  Act  and the  same provides  for :

“  Disputes  concerning the  business  of a Co-operative  Society  shall  be referred  to the Tribunal,

However,  not all  disputes  shall be  referred   to the Tribunal,  Section  76 (1) of the Act  limits it to disputes  between  or among  the following:

a. Among members, past  members and persons claiming  through  past members or deceased members; or

b. Between  members,  past members or deceased  members  and the Society, its committee  or any other  officer  of the Society;  or

c. Between  the society  and any other  Co-operative  Society”

The 2nd  Respondent  clearly  does not  fall  in the ambit  of those  mentioned  in the Section  above.

Despite  the fact  that  there is a nexus related  to the  motor vehicle  in question  there is  nothing  binding  the 2nd Respondent  to the Claimant  if at all  to this extent  without  much further  a do  the Preliminary Objection  is successful  to the extent  of the 2nd Respondent.

10. Issue  two

Whether  the Claimant  should  be  granted  the Orders  sought.

The Claimant’s/Applicant  seeks  for  restraining  orders  against  1st and 2nd Respondent from advertising  for sale, offering  for sale, taking  possession,  transferring selling, disposing  and/or  in any other  way dealing  with the vehicle registration  number  KCH 241 U pending  the hearing  and determination  of the main suit.

The 2nd Respondent  not being  party  to the suit  as per  the  averments  the same  cannot  be issued.

The 2nd Respondent have  exercised  their rights  over motor vehicle  KCH  241U which  unfortunately  beneficially belonged  to the Applicant.  The  party  at fault  if at  all is  the  1st  Respondent  for  failure  to remit  the  payments.

We  note  the  1st  Respondent  has not  denied  the Applicant  cleared his debt.

It would  be an academic  exercise  on our part to go into  the  nitty gritty  of Giella – vs-  Cassman  Brown  on the  ingredients  necessary  for an injunction  to be ordered.

The only  recourse  the Applicant  has  it against  the 1st Respondent  unfortunately  the 1st and  2nd  Respondent  had an agreement  and the 2nd Respondent  can exercise  its authority  over the  subject  motor vehicle.. we  cannot  issue  orders in vain.

To this end  the  Application  dated  2. 9.2020  fails.

11. The Application  dated  14. 1.2021 was also  for determination.  The same was  brought  under Section  1A, 1B,3A and 63 Civil Procedure Act  Cap  21,  Order  51  (1) Civil Procedure  Rules  2010,  Section  30  Contempt  of Court Act  and all other  enabling provisions  of the law.

The said Application  seeks  for orders:

a. That  this  Application  be certified  urgent  and heard  ex- parte  in the first  instance  and service  of the same  be dispensed  with.

b. That pending  the hearing and  determination  of the Application and/or proceedings herein, this  Honorable Tribunal  be pleased to issue  an order  directing  the 1st  Respondent,  its Chairman,  officials, agents, employees  and/or whosoever from unduly interfering in any manner  whatsoever with  the operations  of the Applicant’s  motor vehicle  registration  No. KCH 241U at  the  1st Respondent’s  Sacco  on account  of the proceedings  and/or  orders  obtained  herein.

c. That a Notice  to  Show Cause  does issue  against the  Chairman  of the  1st Respondent – Gabriel  Ndichu  Gathogo  and all  Officials  of the  1st  Respondent  to show  cause why  they should  not be  punished  for contempt  of court and/or  blatant  disobedience,  disregard  and/or  ridicule  of this  Honorable  tribunal’s process  and orders  issued  by Hon. B. Kimemia  on 7th  September, 2020.

d. That this  Honorable  Tribunal be pleased to find  upon  hearing  of  the Notice  to show cause  that the  Chairman  of the 1st  Respondent – Gabriel  Ndichu  Gathogo and all  officials  of the 1st Respondent  are in  contempt  of court and/or  have blatantly  disobeyed,  disregarded  and/or  ridiculed  this Honorable  Tribunal’s processes  and orders  issued  by Hon. B. Kimemia  on 7th September,  2020.

e. That  this Honorable  tribunal  be pleased  to punish  the chairman  of  the 1st Respondent – Gabriel  Ndichu Gathogo  and all Officials  of the 1st Respondent  for contempt, blatant  disregard and/or  ridicule  of this Honorable  Tribunal’s process  and orders  issued  by Hon. B. Kimemia  on 7th  September  2020.

f. Any other  or further  orders  of the court  geared  towards  protecting  the dignity  and authority  of the court .

g. Costs of this Application  be provided for.

12. The Application  is premised  on the grounds  on the face  of the Application  and annexed  Affidavit  of Antony  Nduati  Nyamburasworn  on 14. 1.2021  he stated  that on 7. 9.2020  the Chair of  the Honorable Tribunal  Hon.  B . Kimemia  issued  orders  in the nature  pending  the hearing and determination  of his Application.

The said orders were served on the 1st  Respondent on 11. 9.2020.

On  18. 12. 2020  during  the pendency  of  the  orders  the 1st Respondent  wrote  a letter dated  18. 12. 2020  suspending  his (Applicant) membership and further  directing  him to  desist  from  operating  the suit motor vehicle in the  1st  Respondent Sacco.  The 1st  Respondent  directed  the Applicant  to surrender  the  TLB  license  issued in favour  of the 1st  Respondent  on the basis  the Applicant  had instituted suit against  them  that cannot  be a member  of  the Sacco.

The 1st Respondent agents and or employees violently and unlawfully  removed  all stickers and  labels that contained   the  1st Respondent  name and  matter was  reported  at Githunguri  Police station  order OB No. 31/30/12/2020.

13. The same  was done  in contempt  of the courts  orders  and the same  is disobedience  and process  of the  Hon. Tribunal  which amounts to grave travesty to justice. ..

That  it is in the interest  of  justice  that  the Application  be heard and orders issued as  prayed.

The 1st  Respondent  did not  respond  to the Application  for contempt  and thus  the same  can be deemed to  be  unopposed.

The law relating  to contempt   of court is  well found  in the Contempt  of Court Act  Cap  2016. Section  3  states  the objectives  of the Act  include  upholding  the dignity  and authority  of the court,  ensuring  the observance  and respect  of the due  process of law  and preserving an effective  and impartial  system  of justice.

The issue  if at all  despite  no response  would  have been  whether  there was  service  of  the court order.

The fact  that the  1st Respondent  knew about  it and  the Applicant’s  suspension  was  pegged on the case  is also sufficient  for the  Tribunal  to hold  the  1st  Respondent  knew  of the  orders  given.

In recent  cases :

Kenya  Tea  Growers  Association  - vs-  Francis  Atwoli  and  5 others  Petition  No.  64 of 2010 it was  opined :

“ In the case before  me,  I am more  than satisfied that even  at higher  level  of  beyond  reasonable  doubt, when  an individual has been  served with and/or  has knowledge  of  a court order  but  not  only ignores  it but  in  fact incited others  to do  the same, the threshold  for  contempt  has been  met.  Francis Atwoli  in fact  went further  to arrogate himself  the decision  to determine  when  the strike  should  end despite  the fact  that the court  order had  stopped it….. His contempt  was obvious  and  his conduct and words  can attract  no  other findings”

The letter  dated 10. 12. 2020  annexed  in the  Applicant’s  Notice of  Motion  dated  14. 1.2021 as a ANNI   is a clear  indication  of the  aforementioned quote.

The  1st  Respondent  clearly  had knowledge  of the court  order.

We  tend to  stand  with the school of  thought  that knowledge  is higher  than personal  service.

A court  order must  be obeyed  whether  one  agrees  with it or  not.

To this end the Application  is  found to be  with merit  and thus  a Notice  to Show Cause  is hereby issued against the  Chairman  of the  1st Respondent – Gabriel  Ndichu  Gathogo  and all  Officials  of the  1st  Respondent  to show  cause why  they should  not be  punished  for contempt  of court and/or  blatant  disobedience,  disregard  and/or  ridicule  of this  Honorable  Tribunal’s process  and orders  issued  by Hon. B. Kimemia  on 7th  September, 2020.

In summary:

1. The Preliminary  Objection  dated 28. 1.2021 has merits  and the same  is accordingly  upheld.

2. In effect  therefore  the Application  dated 2. 9.2020has no  merits  and is therefore dismissed with costs.

3. Application dated 14. 1.2021 is allowed, the Chairman (Charles  Njenga) of 1st Respondent(Inagi  Travellers  Sacco Limited)  to show  cause why  he should  not be punished for  contempt  of orders of 7. 9.2020.

4. Mention  on5. 10. 2021.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 19TH   DAY OF AUGUST, 2021.

Hon. B. Kimemia   Chairperson   Signed  19. 8.2021

Hon. J. Mwatsama  Deputy Chairperson Signed  19. 8.2021

Mr. Gitonga Kamiti  Member   Signed  19. 8.2021

Tribunal Clerk   R. Leweri

Malonza advocate  for 2nd  Respondent:

Miss Wangu Advocate holding  brief  for Kango for  Claimant:  Present

No appearance  for 1st Respondent

Notice  to issue  to 1st Respondent.

Hon. B. Kimemia   Chairperson   Signed  19. 8.2021