Grace Wangui Mundia & Eunice Ngai Nyaga v Stima Sacco Society Limited & Joash Mumo Ndangi [2019] KECPT 53 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO.216 OF 2019

GRACE  WANGUI MUNDIA........................................................................1ST CLAIMANT

EUNICE  NGAI  NYAGA.............................................................................2ND CLAIMANT

VERSUS

STIMA SACCO SOCIETY LIMITED..................................................1ST RESPONDENT

JOASH MUMO NDANGI......................................................................2ND RESPONDENT

RULING

The Matter  for determination  is  a Notice of Motion  application  dated  15. 4.19 filed  on 16. 4.19 seeking  the following  orders:-

1.  Thatthis application  be certified  as urgent  and be heard  exparte  in the  1st instance and service  be dispensed  with.

2.  Thatpending  hearing d and determination  of this application  this honorable  court  be pleased  to grant  temporary  injunctive orders  restraining  and or prohibiting  the  1st respondent  by themselves  and or through  its agents/servants/representatives  from in any  way whatsoever  deducting  the claimants’ salaries  Kenya shillings sixty  seven  thousand  five hundred thirty  two (Kshs.67,532. 00) from  each of  them any part thereof or any  other amounts  or from  attaching  any of the  claimants’ deposits in the sacco or any other  of their  property  whatsoever  to recover the loan  amount  due from  the 2nd respondent.

3.  Thatthe  1st respondent  do immediately  refund  the 1st  claimant  Kshs.69,088. 33 deducted  from her march  2019 salary.

4.  Thatpending  hearing and  determination  of the main suit  this honourable  court be pleased  to grant  temporary  injunctive  orders restraining  and or prohibiting the  1st respondent  by themselves  and or through  its agents/servants/representatives from in any way whatsoever  deducting  the claimants’  salaries  Kenya shillings  sixty seven  thousand  five hundred thirty  two (Kshs.67,532. 00) from  each  of  them  any part thereof  or any other amounts  or from  attaching  any of the  claimants’ deposits  in the sacco or any other  of their  property  whatsoever  to recover  the loan  amount  due from  the 2nd respondent.

5.  That this honorable  court be  pleased  to order  that any monies  that the 1st  respondent  may have  deducted from the claimant’s  salaries or sacco  deposits or from  any other  of their  assets  towards recovery  of the loan due from  the 2nd respondent  be refunded  forthwith.

Based  on the grounds  on the  face of the  application and supported  by an affidavit  of GRACE  WANGUI  MUNDIA. The said  application  is  opposed by the replying  affidavit of SUSAN  MUTALI legal officer of the 1st respondent.

The application  was canvassed  by way of  written submission as ordered  6. 6.2019 and 20. 8.2019 and 1st .10. 19.

As  at the time  of  writing  this ruling,  only the claimant  had submitted  their  written  submissions on  10. 9.19 despite  orders of 1. 10. 19 of the  parties  to ensure  strict compliance  of the timelines  issued  on 1. 10. 19 on the ruling  date  as issued.

The claimant  has submitted  as follows:

1.  That  they  agreed  to guarantee  a loan  for the  2nd  respondent  who  defaulted  in paying  and later  sought a further  loan  which  was approved  and disbursed.

2.  That they  are being held  responsible  for the  default  owing  to the  guarantor’s status  in the  1st  loan.

3.  That  the 1st respondent  has deducted  the claimants  salary  a sum  of  Kshs.67,532 to  recover the loan  amount  due  from  the  2nd  respondent.

The claimants  have sought  injunction  orders to restrain  and/or  prohibit  the 1st respondent  from deducting  their salaries  or  any  other  amounts or from  attaching  their  deposits  in the sacco or any  other property. They have also a refund  of Kshs.69,088. 33/= deducted  from the  March  2019 salary  of the  1st claimant.

They  have also sought  refund  of any monies  deducted  by the  1st respondent from their  salaries  or sacco  deposits  or of  their assets towards the recovery  of the  loan  due from  the 2nd  respondent.

The prayers  sought by the  claimants are of injunctive  nature,  therefore  have  to meet  the standards  as set  out  in GIELLA VERSUS  CASSMAN  BROWN  &COMPANY  LIMITED  (1973) E.A 358 as follows:

(i)    The Application must  show  a prima facie  case until  the probability  of success.

(ii)  An interlocutory  injunction  will not  normally  be granted unless the applicant  might  otherwise  suffer irreparable  injury  which  will not be  adequately compensated  by an award  of damages.

(iii)   If the  court  is in doubt,  it will  decide  an application  on the  balance of  convenience.

The applicants  have  submitted  that  the  2nd  respondent  applied  for  a loan of Kshs.3million  of the  1st  respondent  and they  were  all members  of the  1st respondent.

They aver  that the  1st  respondent  approved the said  loan  without  carrying  out due  diligence  or any  proper  appraisal  of the 2nd respondent’s  eligibility .

That the  2nd  respondent defaulted and on the loan repayment  when the balance  was Kshs.805,224/= and  he applied  for another  loan Kshs.6million  which was  approved  and advanced.

That the 2nd respondent defaulted again and his security title No. KIAMBA/KANUNGA/2680 was sold.

That  the sale  process  was irregular and  unlawful  since  the amount  realized  was below 75% of the  forced  market value  and the proceeds  from the  sale were  used  to  offset  both loans  instead  of the  2nd  loan  for which  the title  had been  used for security.

That the  1st  respondent  did not  issue  the demand to recover  the  loan amount  from the 2nd  respondent  but  instead  informed the claimants  of the  intention  to deduct Kshs. 67,532/= per  month with effect from 20. 3.2019 and proceeded  with  instructions to the  1st  claimants  employer  to deduct  Kshs.69,088. 33 leaving  her  with a net  salary  of Kshs.0. 00.

That this resulted  in great hardship  to the 1st claimant.

That  the applicants have  raised  the issues  of fraud, negligence  and  recklessness  on the part of  the 1st  respondent  who without  any justification targeted  them both  yet  they were  not the  only  guarantors.

That  they did not  guarantee the  2nd loan yet were held responsible  for its  default.

That  due to  this, their  legal  rights  to receive  their  salaries  were infringed upon  and this  creates a prima facie  case. The  claimants  also  submitted  that if  the injunction  is  not  granted  they will  continue  to pay for  the 2nd  respondents  loan in monthly  instalment Kshs.67,253 which will  mean that  the net salary  will be  0(zero) hence  subjecting  them  to great hardship in fending  for their  families.

The  claimants  also  submitted  the balance  of convenience tilts  in their  favour  since  they  stand to suffer  extreme  irreparable  loss in  the event that  the 2nd  respondent  is  not stopped  from  deducting  the amount  from  their  salary  which  is the sole  means  of their  livelihood. They  therefore  pray for  a temporary  injunction  pending  the hearing and determination  of the  matter.

The  respondents  on  the other hand did not file their  written  submission but  we have  noted  the replying  affidavit  and annexutes  therein.

That  the two applicants  guaranteed  both loans  as per annexures SMI and SM4.

That  they conducted  the appraisal  SM2 and compliance  was confirmed  as per SM 3A, 3B  and 3C which  are  copies  of Cooperative  Bank standing  orders, confirmation  of employment  status  and  employees payslip.

That  after  the said  due diligence,  they requested  the 2nd  respondent  for  further security  for which  he gave  title  number  KIAMBA/KANUNGA/2618.

That  thereafter  the  2nd  respondent  defaulted  and the 1st  respondent  issued  the  first  notice  and the second  notice  was  copied  to all  the guarantors.

That  thereafter  the security d parcel  of land  was sold  after  issuance  of notice  to sale  SM7.

That the land parcel  was valued  at Kshs.7million with  a forced sale  value  of Kshs.5,250,000/= and the  land parcel was  sold  at Kshs.5. 3milliion  of which  1. 2million  was utilized  to offset  the first loan  of  3million  and  the balance  of 3,597,239/= was credited  to the loan  of  6million.

That  all the  other  guarantors  made payment  plans  for the guaranteed sum  except  the two  claimants  herein who  allege  of victimization in settling  their portion  of the outstanding  debt.

We have  carefully  considered  the arguments  and submissions of both parties  and we  note  that  there  are interim  orders  issued  in terms  prayer 2.

In determining  whether  to issue  the injunctive  reliefs sought,  we find  that there  is  some evidence  by  the claimants  which  shows  that  there can  only be an infringement  of a right  and which  requires  further  evidence /rebuttal  from the respondents. This  is the standard  which  established  a prima facie case  at the first  instance.  The claimants  have also  established  that they  are likely  to suffer  irreparable  injury  owing  to the deductions resulting  to the nil salary  and we  find that  such suffering  may not  be adequately  compensated  by an award  of damages  in the first  instance  herein.

We note  that in the  first instance the  balance  of convenience  tilts  in favour  of the  claimants owing  to the  fact that  the respondents  failed  to file  their  written submissions  within  the timelines  issued  on several  occasions.

We  therefore  order  as follows:

1.  Prayer  one – spent

2.  Prayer  one – spent

3.  Prayer  three

In this  prayer  we find that  we require  further  evidence  from  both parties  in the main suit since  the final prayers are for orders of declaration  of the illegality  of the decision  to  deduct  from the  claimant’s  salary. We therefore  deny  this prayer  in the first  instance. This  also applies  to prayer  5.

For prayer  4,  we  grant  the same, pending  the hearing  and determination  of the  main suit.

Prayer  6, costs  in the cause.

We further  order  the parties  to fix  the matter  for pre-trial  directions.

Read and delivered in open court, this 7th November, 2019.

In the presence of:

Claimant:Miss Nzioka for the Claimant.

Respondent:Mbuthia holding brief for Kimani for Respondent.

Court Assistant:Leweri and Buluma.

B. Kimemia          -        Chairman-signed.

R. Mwambura      –        Member-signed.

P. Swanya            -        Member-signed.