Energy Regulated Non-EDT Society Limited v Muthee [2025] KECPT 275 (KLR)

Energy Regulated Non-EDT Society Limited v Muthee (Tribunal Case 329/E409 of 2023) [2025] KECPT 275 (KLR) (27 February 2025) (Judgment)

Neutral citation: [2025] KECPT 275 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 329/E409 of 2023

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

February 27, 2025

Between

Energy Regulated Non-EDT Society Limited

Claimant

and

Peter Wambua Muthee

Respondent

Judgment

1. The claim herein was brought vide the Statement of Claim dated 10th May 2023 filed on 12th June 2023, praying for judgment against the Respondent for:a.The sum of Kshs. 2,318,813. 48/= saved together with interest at the prevailing commercial rates.b.General damages for the inconveniences and frustration caused by the Respondentc.Costs of this claim together with interest thereon at such rate and for such period of time as this Honourable Tribunal may deem fit to grant.d.Any such other or further relief that the Honourable court may deem appropriate

2. The Claimant’s claim is that the Respondent became a member of the Claimant on 25th August 2017 vide membership No. 1079 as he was impressed by the Claimant’s financial products which include inter-alia development loans, emergency loans and so on; that the Claimants policy was to lend the Respondent three times his savings; that the Respondent took advantage of the development and emergency loans and took deposits which amounted to Kshs. 538, 728/= as at 2nd December 2019, without accounting for interest and dividends thereon; that the first loan amount of Kshs.1,000,000/= was cleared and paid in full vide monthly instalments and a final lumpsum in cash; that tat the time of taking out the second loan or Kshs. 1,600,00/= on 4th December 2019 he had already cleared the first loan of Kshs. 1,000,000/= and as such he took the second loan on a clean slate; that it was a policy of the Claimant as per clause a paragraph 3 of the loan agreement, that outstanding loans must be cleared before a new loan is granted and it is preposterous for the Claimant to now bring suit claiming there were outstanding arrears in relation to the first loan; that he therefore denies the particular of special damages under paragraph of the statement of claim as took out several loans which he has failed/refused to pay; that the loan of Kshs. 1,000,000/= taken by the Respondent on 10th July 2018 and the loan of Kshs. 1,600,000/= on 4th December 2019 totaling to Kshs. 2,600,000/= now have a loan balance of Kshs. 1,600,674. 25/= with an accrued loan interest of Kshs. 718,139. 23/= making a total of Kshs. 2,318,813. 48/= loaned to the Claimant; that despite requests and demands to the Respondent has neglected and/or otherwise failed to repay Claimant.

3. In response to the claim the Respondent filed on 14th July 2023, a Statement of Response dated 27th June 2023. In his response, the Respondent denies all the allegations made against in the claim save that he was a member of the Claimant and adds that he was a faithful member of the Claimant diligently saving having been confronted with falsified figures and outrageous interest rates intended to mislead the Tribunal as to the exact amount owed by the Respondent. The Respondent states further that having cleared the first loan of Kshs. 1,000,000/= he has since made substantial payments towards the record loan in monthly instalments averaging Kshs. 59,000/= for about 8months, totaling to Kshs. 511,650/= and that any claim against him should be itemized and/or he should be provided with a detailed statement of account to substantiate the claims; that he made numerous instalments and lumpsum payments to the Claimant and he was issued with receipts; that the current suit is meant to intimidate him after he refused to bear witness against some employees of the Claimant in a case of embezzlement; that his loans were secured by his shares held by Respondent and on which basis the loans were granted; that further, the Claimant has refused to account for cumulative interest on the shares and dividends since 2nd December 2019 which amounts have increased his shares; that he has refused to pay despite demands and requests form the Claimant.

4. In response to the response, the Claimant filed a Reply of Defence dated 7th September 2023 wherein it denies the contents of the response and averrers further the only shares the Respondent held amounts to Kshs. 75,000/= and that the dividends were being fully paid until the Respondent defaulted on the loan repayment; that all loan repayments were being done via the bank and receipts brought to the Claimant’s office and at no point does the Claimant handle cash from its members; that despite clause G 3 of the loan agreement, the Claimant provides different loan products that allow members to take additional loans to the ones existing and pay back as one payment; that in this case, the Respondent took out different loan products; that the monies owed are the total of the loan balance and the accrued loan interest hence there is no discrepancy; that the Claimant has provided on multiple times the statements of accounts for the Respondent and he has provided no evidence/receipts to contradict the accounts; that the Claimant has already utilized the Respondent’s shares to settle his loan and the amount Claims is the balance; that the last payment made by the Respondent was on September 21st 2021 for Kshs.59,000/= and it is therefore false for the Respondent to claim that he has been up to date on his loan repayment. After the hearing, parties filed written submissions in support of their respective case. The Claimant’s submissions are dated 3rd October 2024, while the Respondent’s submissions are dated 28th October 2024.

Claimant’s Case 5. At the hearing the Claimant’s witness Stanley Mwachi Ayumba adduced sworn and produced the witness statement dated 10th May 2023 as his evidence in chief. He also produced in evidence the Claimant’s List of Documents the attached documents of which are marked as exhibits are marked as exhibits 1.

6. The witness stated that the Respondent owes Kshs. 2,318,813. 48/= the amount held was Kshs. 72,540/=; that member statements at the time had deposits that were not a true reflection as they were not supported by the documents of the Sacco; that what prompted verification of contributions is that one of the spouses of the staff had a loan and issue arose as to how he quickly cleared the loans taken; that the Respondent is yet to pay his loan; that the last payment made on 8th October 2021 was Kshs. 59,000/=

7. On cross-examination, the Claimants witness stated that the Respondent was to pay the first loan in instalments of Kshs. 33,215/=; that the said loan had security in form of shares, guarantor and a stand by order; that under Clause H of the loan agreement, the Respondent had shares of Kshs. 334,550/=; that loans are given three times the deposits of a member; that a member can take a loan when they have an existing loan; that the Respondents loan of Kshs. 1,600,000/= was to be repaid at Kshs. 56, 252/= and it had guarantors as security, the shares and stand by order; that in case of default, the Sacco goes for the share contributions first, followed by the guarantors; that through the statement produced as Claimant’s exhibit 5 is not on the Claimant’s letterhead but comes from the Sacco; that the deposits are Kshs.72,250/= and unsupported amount is Kshs. 464,350/=; that the deposits were not verified at the time of issue of the loan; that the loan agreement has a different amount of deposits; that the out of Kshs. 59,000/= instalment, Kshs. 56,850/= went towards the Kshs. 1,000,000/= loan, Kshs. 2,000/= towards the deposits and Kshs. 150/= to benevolent fund; that the Respondent paid until October 2021; that the Respondent did not respond to the Claimant’s letter but a response come from the Respondent’s lawyer; that the Respondent was not given a tabulation of interest on his shares; that defaulters are not entitled to dividend; that the issue of staff who received cash was yet to be concluded by DCI; that the Respondent’s deposits have already been deducted.

Respondent’s Case 8. The Respondent Peter Wambua Muthee also adduced sworn evidence and produced and adopted his witness statement filed on 10th October, 2023 as his evidence in chief and produced the list of Respondent’s documents dated 10th October 2023 and marked the documents therein as Respondent’s exhibit 1-4. In his evidence in chief, the Respondent admits that he borrowed the two loans of Kshs. 1,000,000/= and Kshs. 1,600,000/=; that he was left with the loan of Kshs. 1,600,000/= which he paid until Covid struck.

9. On cross-examination, the Respondent admitted that he has not cleared the second loan of Kshs. 1,600,000/=; that he owes the Claimant money; that he made some cash payments as per the receipts produced in the Respondent’s list of documents but has not made a payment since 2021; that the instalments of Kshs. 59,000/= for 8 months amounted to Kshs. 472,000/=. On re-examination, the Respondent stated that he stopped paying after he was given the wrong figures; that he had made lumpsum payments in cash.

Analysis And Determination 10. We have considered the pleadings and documents filed by both parties as well as the oral evidence of the witness and the written submissions pf both parties; and note that: - 1. The main issue for determination is whether of not the Respondent owes the Claimant sum if Kshs. 2,318,813. 48/=

2. It is not in question that the Respondent took out two loans as a member of the Claimant being the sum of Kshs. 1,000,000/= granted on 26th June 2018 and the sum of Kshs. 1,600,000/= granted on 4th December 2019.

3. Though the Respondent admits owing the Claimant money, he states that he finished paying the first loan before being granted the second loan amount of Kshs. 1,600,000/= of which he paid the sum of Kshs. 472, 000/= at the rate of Kshs. 59,000/= paid for eight months

4. The Claimant’s witness did at the hearing clarify that out of the sum of Kshs. 59,000/= paid, the sum of Kshs. 2,000/= went to deposits, the sum of Kshs. 150/= went to the benevolent fund leaving the sum of Kshs. 56,850/= towards payment of the loan

5. The Respondent stated that the Claimant’s claim is not accurate as he made lumpsum payments and was issued with receipts; however, no receipts were produced by the Respondent to prove that he paid any cash amounts towards the loan.

6. The receipts amounting Kshs. 296/= produced by the Respondents on the face thereof give us the indication that they originate from the Claimant; however, the same are in respect to shares are in respect to “shares” and not loan payments. The same payments can be seen on the Statement of Account (no. (39)150) for the period 1st January to 31st May 2018, produced by the Respondent as exhibit number 3 and was confirmed by “Clause 1” as emanating from the Claimant.

7. There is no evidence adduced in support of the Claimant’s statement that as per the Sacco policy cash payment was not allowed. We therefore find that cash payments were accepted.

8. In the loan agreement for the loan of Kshs. 1,000,000/= produced on Claimant’s exhibit 3, the Respondent’s shares were indicated as Kshs. 334,550/=; whereas in the loan agreement for the loan amount of Kshs. 1,600,000/= being Claimant’s exhibit 4, the Respondent is shown to have Kshs. 38,728/= shares. These being the Claimants documents have no reason to doubt that the Respondent had the stated shares and qualified for the loans granted.

9. Despite there being no evidence from the Claimant of the policy document to show that two loans could run concurrently, we believe the Claimant’s that two different loans could run concurrently. It is clear from the two loan agreements herein that the two loans were different, one being a normal loan, the other being a Nishati loan.In the upshot we hold that the Claimant has proved that the Respondent has not finished paying the two loans. However, we disagree with the Claimant’s averment that the Respondent’s deposits were only Kshs.72,550/=. Having granted the Respondent loans on the basis of deposits of Kshs. 538,728/=, the Claimant is estopped from claiming otherwise.Further the Claimant’s witness did not produce any evidence of collusion fraud on the part of the Respondent or evidence of a police case involving the Respondent.

10. No evidence was adduced by the Respondent in regards to his claim on dividend. But from the Co-operative Bank account statement, there is evidence that the Respondent paid the sum of Kshs. 35,000/= seventeen times. Based on the evidence of the Claimant, the amount applied to the loan after deduction would be the agreed sum of Kshs. 33,214. 31/=. It is therefore sufficient to find that the Respondent has proved payment of Kshs. 564,643. 95/= towards the first loan of Kshs. 1,000,000/=.

11. In the Co-operative Bank account statement produced by the Respondent, and the Respondent admission, the Respondent paid the sum of Kshs. 59,000/= for eight months towards the instalments which after deductions amounted to the agreed amount of Kshs. 56,252/= per month, totaling to the sum of Kshs. 450,016/= paid to the record loan amount.

11. In conclusion we hereby shall enter judgment in favour of the Claimant in the sum of Kshs. 1,287,991. 00 being the claimed sum of Kshs. 2,318,813. 48/= less following sums: - 1. Kshs. 564,642. 95/= paid on the first loan

2. Kshs. 466,178/= on account the Respondent’s shares after deduction of Kshs. 72,550/= from Kshs. 538,728/=

3. Interest on the decretal sum at Tribunal rates from date of filing suit.

4. The claim of general damages fails.

5. Costs to the Respondent.

12. We therefore hereby enter judgment in favour of the Claimant against the Respondent in the sum of Kshs. 1,287,991. 99/= together with costs of suit and interest at Tribunal rates from the filing suit.

13. The claim for general damages fails.

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 JonahMr. Guyo advocate for Respondent- PresentMs. Njeri for Claimant- PresentMr. Guyo for Respondent – I pray for 30 days stay of executionMs. Njeri – No objection.Order30 days stay of execution grantedHON. B. KIMEMIA CHAIRPERSON SIGNED 27. 2.2025