Boniface M. Karanja v Mikumbune Farmers Co-Operative Society Limited [2021] KECPT 530 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO. 57  OF 2018

BONIFACE  M. KARANJA

(Suing  as liquidator  Nkuene farmers’

Co-operative Society Limited)..................CLAIMANT

VERSUS

MIKUMBUNE FARMERS  CO-OPERATIVE

SOCIETY  LIMITED .........................RESPONDENT

RULING

Vide the Application  dated 29. 6.2020,the Claimant has moved  this Tribunal  seeking  for Orders inter alia:

1. That  the Respondent’s counter claim be struck  out with costs  to the Claimant;

2.  Costs;

The Application is supported by the grounds on its face and the  Affidavit  sworn by the Claimant on 29. 6.2020. The Respondent   has  opposed  the same vide  the  Replying  Affidavit  sworn by David  K. Mugiira on 7. 9.2020.

Vide  the  directions  given  on  27. 7.2020,   the Application  was canvassed  by way of  written submissions.  The Claimant filed  their written submissions  on  8. 10. 2020 while  the Respondent did so on 5. 11. 2020.

Claimant’s  Contention

The Claimant  has taken  issue  with the counterclaim  dated 25. 4.18 as amended  on  13. 12. 2019on the grounds  that he Tribunal  does not  have jurisdiction  to entertain  the same. That  the same  invite  the Tribunal  to exercise  powers  which  are exclusively  preserved  to the Liquidator.

The Claimant  has brought  to our attention  the provisions of Sections 65, 68and69 of the Co-operative  Societies  Act. He specifically  contend  that Section  69  of the Act  precludes  this Tribunal  from  delving  into matter,  touching  on liquidation. That by dint  of Section  68,  the liquidator  is subject  to the limitations  imposed  by the  Commissioner. That  any member  who has an issue  with the Liquidator must  first raise  the same with  the Liquidator. That if is after the Liquidator makes a finding  that the member  can seek  refuge  in the Tribunal.

That the claims  (especially  ...at paragraphs  15,16,17,18and19 of the counter claim  cannot be  handled  by the Tribunal  without  firstly  being dealt with by  the liquidator or Commissioner for  Co-operative  Development. That matters  touching  on land  are spelt  out under Section  66 (k). he cited the decision  of  the court  in Moses  Mukhaya &  2 others  -vs-  Johnson  Miano Gatu  &  3 others.

Respondent’s Case

The Respondent  has opposed   the Application  on grounds  that  the Counterclaim raises  triable  issues  worthy  of being tried  and determined.  That the  Applicant, as Liquidator  of Nkuene Farmer’s  Society,was  bestowed  with a fiduciary  and statutory  obligation to account for the mother society’s  assets  and financial  affairs  during  and even  after its  liquidation which  he has  breached  as follows:

(i)  Failing  to pay besides  others the terminal  dues owed  to the former employees  leading to  execution  proceedings  against  it in Nyeri  ELC NO. 49/13;

(ii)   Failing  to comply  with a court order  to file a scheme  of arrangement on the payment  of final  dues  to the mother  society’s  former employer as ordered  by the court.

That Section  69 and 76 of the Act  donates  to this Tribunal  the jurisdiction  to determine  disputes  between  Liquidators  and their members.

That  to the extent  that  the Claimant  did not  account  for the cash and proceeds  from the  sale of  its Assets, the Respondent  is entitled  to the balance  of the payment.

That  to the best  of the  knowledge  the Claimant  did  not  hold any meetings  with the liquidation committee  and give appropriate  disclosure  of his dealings with  the assets.

Issues  for determination

We have  framed  the following  issues  for determination:

a. Whether the Tribunal  has  jurisdiction  to entertain  the counterclaim  filed by  the Respondent  vide the statement  of  Defence  and counter claim  filed  on  23. 1.2020.

b. Who should  meet  the costs  of the Application?

Jurisdiction

Jurisdiction  is everything. Without  it a court  of Law  downs its tools. This  was the holding  in the celebrated  case of  the Motor  Vessel  Lilian  “s”[1989]KLR. The question  abound  as to whether  we have jurisdiction  to entertain  the matters  raised  in the counter claim  filed  on  23. 1.2020.

Part XIII of the Co-operative Societies Act deal with liquidation of Co-operative Societies. Section  65  thereof  provide  for appointment  of  a liquidator  while  Section  66  sets  out his  powers. Section  68  of the Act  provides  for  the powers  of the Commissioner  for Co-operative Development  during  liquidation  process.  They include.:

a. Rescind or  vary any  order  made by  the liquidator  or make  a new order  he thinks  proper;

b. Removes  the liquidator  from office  and appoint a new  liquidator in his place;

c. Call for  all  books, documents  and assets  of the Society;

d. At his  discretion, require  accounts  to be rendered  to the Commissioner  by liquidator;

e. Procure  the auditing  of the liquidator’s  accounts and  authorize  the distribution  of the assets  of the society.

f.   Make  an order  for the remuneration of the liquidator;

Section  69  of the Act provides that  any  person aggrieved  by an order  of the Commissioner  or the Liquidator may Appeal  to the Tribunal  within  30 days of the said  order  or decision.

What  we decipher  from  the provision of  Section  68  of the Act  is that at all  times, the powers  of a Liquidator  are  under  the control  and/or  supervision  of the Commissioner  for Co-operative Development. What  this mean is that  if a member  of a  Co-operative  Society subject  to liquidation  has  an issue  regarding  the manner  in which  the Liquidator  is discharging  its mandate,  then  the first  part of  call  is the office  of the Commissioner of Co-operatives.

We have  perused  the paragraphs  15-19 of the Counter-claim,  the Respondent  is seeking  orders against  the Claimant  regarding  the manner  in which  he discharged  his duties. As stated  above,  we do not  have jurisdiction  to deal  with such  matters.  The same falls within  the exclusive domain  of the Commissioner of co-operatives.

Conclusion

With the foregoing  finding  in mind,  we agree  with the  Claimant  that we do not  have jurisdiction  to entertain  the counterclaim. We  accordingly strike  it off  with no  orders  as to costs.  Orders  accordingly.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY THIS 4TH DAY OF MARCH, 2021.

Hon. B. Kimemia                  Chairperson                Signed

Mr. P. Gichuki                       Member                       Signed

Mr. B. Akusala                      Member                       Signed

Mugambi for Respondent

Getange advocate for  Claimant

Hon. B. Kimemia                  Chairperson                Signed       4. 3.2021

Pre- trial   on  26. 5.2021.

Hon. B. Kimemia                  Chairperson                Signed       4. 3.2021