Atieno v Metropolitan Sacco Limited [2025] KECPT 174 (KLR)

Atieno v Metropolitan Sacco Limited (Tribunal Case 46/E026 of 2023) [2025] KECPT 174 (KLR) (27 February 2025) (Judgment)

Neutral citation: [2025] KECPT 174 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 46/E026 of 2023

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

February 27, 2025

Between

Teresia Atieno

Claimant

and

Metropolitan Sacco Limited

Respondent

Judgment

1. The Claimant was a member of the Respondent’s Sacco, and the Respondent received the Claimant's share contribution through the Claimant’s employer, the Teachers Service Commission, and it was a term of contract between the Claimant and the Respondent that the Claimant will stop her membership in the Respondent’s Sacco by instructing her employer to stop deductions of her salary and remittance to the Respondent and the Respondent would in that case pay the Claimant her deposits or shares within 60 days from the stoppage and notification date.

2. That around 1st August 2015, the Claimant gave the Respondent 60 day notice to pay or refund her deposits after instructing the Teachers Service Commission to stop her salary deduction and remittance to the Respondent, and that at the time of the Claimant’s retirement and cessation of membership the Claimant's cumulative share contribution with the Respondent were worth Kshs. 351,258. 71/=

3. That the Respondent has failed, neglected and or refused to refund the Claimant her share contribution in breach of the Respondent’s by-laws despite demand made of a notice of intention to sue, necessitating the filing of this Statement of Claim dated 19th January, 2023 for recovery of the sum of Kshs. 351,258. 71/= plus interest at the rate of 14% from 1st August 2022 until payment in full.

4. The Respondent filed their response stating among others that:i.The Statement of Claim is replete with outright falsehoods, misrepresentation and concealment of material factsii.As per its 2019 Annual General Meeting resolutions, members resolved and agreed to schedule refunds on a first come first serve basis and consequently the Claimants refund was put on hold until the liquidity challenges faced by the Respondent ceases and which the liquidity problems are facts which are well within the Claimant’s knowledgeiii.The Respondent never received the Claimant’s notice of withdrawal and in fact a closer look at the Claimant’s letters attached, none of them are stamped, a clear indication that the same were never received the Respondent.iv.The Respondent only learnt of the Claimant’s intention to withdraw from the Respondent Sacco when the suit was filedv.As per the 2022 Annual General Meeting resolutions, which were adopted by the General Assembly and passed by the Sacco, no further payments are to be made on any refunds for a period of two years due to the liquidity challenges facing the Respondent. This is to stop the run on deposits which might lead to collapse of the Sacco, and which means other members will lose their savingsvi.As per the 2022 Annual General Meeting resolutions, members resolved and agreed to stop all further refunds as the same is unsuitable taking into account the large number of former members exiting the Sacco. This has been brought by the liquidity challenges facing the Respondent, a fact that is well known and within the Claimant’s knowledge

5. This Tribunal on 7th August 2024 gave directions for the Respondent to file and serve Statement of Accounts within seven days and for the parties to file their written submissions. The Claimant filed their written submissions dated 18th June 2024 stating among others:a.That her total savings as at the time of withdrawing her membership amounted to Kshs. 351,258. 71/= and the same is reflected in her salary slip for July, 2022b.That the Claimant was no longer a member of the Respondent Sacco as her contribution to the Respondent had ceased as shown by a copy of her salary slip for August, 2022c.That the Respondent’s Defence is a mere denial of the Claimant’s suit as it does not deny owing the Claimant, it only states that the claimant has never served any notice of withdrawal and that the 2022 Annual General Meeting did put a stop to all further refunds pending an end to the saccos liquidity challengesd.That the Claimant has proved service of notice of withdrawal of her membership and that is clear from her handwritten letter dated 1st August 2022, as she personally took the letter to the Respondent's officee.That the Claimant is no longer a member and as such is not bound with a resolution passed by members of the Respondent’s Sacco, and also there is no time limit given as to when she would be refunded and as such she cannot wait in perpetuityf.That it's only SASRA who can suspend or restrict the withdrawal of deposits from a Sacco and not the Respondent Sacco, and that an Annual General Meeting of a Sacco does not have the power to suspend the withdrawal of members deposits

6. As at the date of writing this judgment, the Respondent was yet to file a Statement of Account or their written submissions.Has the Claimant sufficiently proved her claim on a balance of probabilities and is she entitled to a refund?

7. We note that the Claimant did properly withdraw from the Respondent by issuing a handwritten letter dated 1st August, 2022 for a refund of her savings formally, and the Respondent has not produced anything to show that there is a standard format for notice of withdrawal from the SACCO, and as such, the said letter by the Claimant constitutes a proper Notice of Withdrawal and request for refund.

8. The Respondent has not pleaded any liability on the part of the Claimant in terms of loans and guarantees to other members, and in as much as we sympathize with the Respondent’s financial situation, we are also alive to the fact that a member has a right to her deposits. The Co-operative Societies Act is clear on the concept of voluntary membership to a Co-operative Tribunal, and as long as a Co-operative society is in operation, it is expected to honor its obligations to its members. The Legal Notice No. 82 (The Sacco Societies Act) at Section 21 (6) is also clear to the effect that:“A non-deposit-taking Sacco society shall refund to a member the amount accumulated in the member's non-withdrawable account within sixty days of receiving the written notification of the member to withdraw from membership of the Sacco society.”

9. The Claimant produced her salary slips for July and August 2022, and the Respondent did not dispute the amounts owed, and this Tribunal is inclined to believe that the Respondent owes the Claimant Kshs. 351,258. 71/= in refunds.Final Ordersi.The Claimant’s Statement of Claim dated 19th January, 2023 succeedsii.Judgment is entered in favour of the Claimant for the sum of Kshs. 351,258. 71/= with costs and interest at Tribunal rates.

JUDGMENT SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 27TH DAY OF FEBRUARY, 2025. Hon. B. Kimemia - Chairperson Signed 27. 2.2025Hon. J. Mwatsama - Deputy Chairperson Signed 27. 2.2025Hon. Beatrice Sawe - Member Signed 27. 2.2025Hon. Fridah Lotuiya - Member Signed 27. 2.2025Hon. Philip Gichuki - Member Signed 27. 2.2025Hon. Michael Chesikaw - Member Signed 27. 2.2025Hon. Paul Aol - Member Signed 27. 2.2025Tribunal Clerk MutaiNo appearance by the parties.Hon. B. Kimemia - Chairperson Signed 27. 2.2025