James Muhindi Machira & 2955 others v Relisa Housing Co-operative Society Limited [2021] KECPT 504 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL

AT NAIROBI

TRIBUNAL  CASE NO.35 OF 2017

JAMES  MUHINDI  MACHIRA & 2955 OTHERS......................................................CLAIMANT

VERSUS

RELISA HOUSING  CO-OPERATIVE  SOCIETY  LIMITED.............................RESPONDENT

RULING

What  is before us  for consideration  and determination  is the Respondent’s  Notice  of  Preliminary Objection  raised  orally  on 22. 9.2020.  Vide  the said  objection, the Respondent  contend that  the Tribunal  does not  have jurisdiction  to entertain  and/or  grant  the Orders  sought  in the amended statement  of claim dated 7. 8.2019. When  this became  the case,  we directed  parties  to file written  submissions in regards  to the objection. The Respondent  did so on  23. 9.2020 while  the Claimants filed theirs  on 14. 11. 2020.

Respondent’s  Case

The Respondent  has articulated  the Preliminary  Objection vide its  submissions dated 23. 9.2020 as follows:

Audit  of the Respondent and taking  of Accounts.

This  is prayer (a) of  the  prayers in the amended  statement  of  claim dated  7. 8.2019. The Respondents  borne of  contention  as regards this prayer  is that by dint  of Section  25 of  the Co-operative  Societies  Act (Cap  490) Laws  of  Kenya,  the office of the Commissioner  of Co-operative is vested  with the  requisite  jurisdiction to handle matters regarding  the filing and consequences of  failing  to prepare  and  file audited accounts.

Dissolution  of the Respondent

As regards  the prayer  for an  Order directing  the Commissioner  of  Co-operatives to dissolve  the Respondent,  the Respondent  contend  that the  said  power and  procedure  is clearly  provided  for  under section  61 of  the Act  and that the Tribunal  does nto  have the requisite  mandate  to hear  and determine  a claim  regarding  dissolution  of the society.

Sale  of Assets  and distribution  of proceeds

As regards this prayer,  the Respondent  submits  that the sale  and distribution  of the Assets  of a Co-operative  Society  can only  be done  within the ambit  of the provision  of Section  66 (L) of the  Act   and  thus the Tribunal  lacks  the requisite  jurisdiction  to entertain  a prayer  of that kind.

Claimant’s  Case

The Claimants  have opposed the  preliminary  objection  vide their written  submissions dated  23. 11. 2020. According  to them,  the Tribunal  has jurisdiction  to entertain  the claim  by dint of  section  76  of the Act. That  the  gist  of the dispute  in the  present  claim  revolves  around  mismanagement  of the Respondent  and therefore  falls  within the ambit  of the disputes  contemplated  in Section  76  of the  Act.  That to this  end  therefore,  the  Tribunal  has jurisdiction  to entertain  the claim.

Issues  for determination

We have framed  the following  issues for  determination:

a.  Whether  the Tribunal  has jurisdiction  to entertain  the claim;

b.  Who  should meet  the costs of  the Preliminary Objection.

Jurisdiction

Jurisdiction  is everything and  without  it, the court downs its  tool. This was  the holding  of the Court  of Appeal in the case of  Peter  Gichuki King’aa vs  IEBC & 2 others[Civil Appeal  No. 23/13].

No doubt,  the Respondents  oral objection  raised  on  22. 9.2020 falls  within  the rubric of a Preliminary  Objection so as  to call  for  our  determination.  As was held  by the court in  the celebrated  case of  Mukisa  Biscuit,  Manufacturers  Limited – vs-  West  End  Distributors  Limited  [1969] EA C96.

“......a Preliminary  Objection  consists  of a point  of law which  has  been pleaded  or which  arises  by clear implication  out of pleading  and which  if argued  as a preliminary  objection, may dispose of the suit. “

With the foregoing  legal  background in mind,  a question  arises as to whether  the  Respondent’s  Objection  is merited  and should  therefore see the light  of day. We look  at it thematically as follows:

Audit  and taking  of Accounts

It is  the Respondent’s case  that the exercise  of audit  and taking  of accounts  and the attendant  consequences  of non-compliance  with the requisite  procedures  lies  with the office  of the Commissioner  of Co-operatives and not this Tribunal.

We have  referred  to the  provisions  of Section  25  of  the Co-operative  Societies  Act.  Section  25  (III) provides  as follows as regards  failure  by  a Co-operative  Society  to cause  its  accounts  to be audited.

“....Where  a Co-operative  Society  fails  to cause  its accounts  to be audited  within  the prescribed  period  in respect  of its  business,  for the previous financial  year,  members  of the committee  shall automatically  lose their positions   at the  next general  meeting  and shall not   be eligible  for re-election for three  years  unless  the Commissioner  is satisfied  that  failure  was due  to circumstances  beyond  their control.

Section 26  provides:

(I)   Any officer,  agent, servant  or member  of a Co-operative  Society  who is  required  by a Commissioner  or by a person authorized  in writing  by him to do so shall, at such  place  and time  as the Commissioner  may  direct produce  all monies,  securities, books,  accounts  and documents  belonging  to  or relating  to the affairs of such society which are in  the custody  of such  officer,  agent, servant  or member...”

Clearly  therefore,  it is apparent  that the powers  and/or  jurisdiction  to  compel  officials  of a Co-operative  Society  to produce  books  of accounts  or to account for the affairs  of the society  squarely  lies  in the office of the Commissioner  of Co-operatives. We thus  agree with the Respondent  that we do not  have jurisdiction  to compel  the Respondent  to produce  books  of accounts  or even take  the said accounts.

Dissolution  of the Respondent

The Claimant  has also  asked us to compel  the Commissioner  of Co-operative  to dissolve  the  Respondent. The Respondent, vide  the  instant  Preliminary  Objection  contend that  we  do not have such  powers.

As submitted  by the Respondent,  the procedure  for dissolving  a Co-operative  Society  is clearly  delineated in section  61 of  the Act. We cite  the Section  as follows:

“ 61 (I) if the Commissioner,  after holding  an inquiry  under Section  58,  or  making  an inspection  under section  59 of this  Act,  or  receiving  an Application  made by  atleast  three fourths  of the members  of the Co-operative  Society, is  of the opinion  that the society  ought to be  dissolved , he may,  in writing,  order the dissolution  of the society  and  subsequently cancellation  of registration. ..”

Clearly,  it is manifest  that the power  to  dissolve  a Co-operative  Society  is the sole preserve  of  the  Commissioner  of Co-operatives.  Whilst  discharging  the said mandate, he is  under  no control  or direction of anybody including  the Tribunal.  We thus  uphold  the Respondent’s objection in this regard.

Sale of Assets

As  rightly  submitted  by the Respondent, the sale  and distribution  of the Assets  of a Co-operative  Society  is the sole preserve  of a liquidator  appointed  in terms of Section  66  of the Act. The Tribunal  does not  have jurisdiction  to direct  the manner  in which the process  of liquidation  is undertaken.  To this and we also  uphold  the Respondent’s  objection  in  that regard.

Conclusion

The upshot  of the foregoing  is  that we find  merit  in the Respondent’s  Preliminary Objection raised  orally  on  22. 9.2020 and find that  we do  not have  jurisdiction  to entertain  the  prayers  contained  in the Claimant’s  amended  statement of  claim  dated  7. 8.2019 and hereby  proceed  to strike  the  claim  off  with  costs  to the Respondent.

Ruling  signed,  dated and delivered  virtually  this  28th day of  January,  2021.

Hon. B. Kimemia                  Chairperson                Signed      28. 1.2021

Mr. B. Akusala                      Member                       Signed      28. 1.2021

Mr. R. Mwambura                Member                       Signed      28. 1.2021

No Appearance for parties

Hon. B. Kimemia                  Chairperson                Signed      28. 1.2021