Kariuki & 6 others v Commissioner for Co-operative Development; Tuungane Tujijenge Sacco Limited & another (Interested Parties) [2021] KECPT 685 (KLR)

Kariuki & 6 others v Commissioner for Co-operative Development; Tuungane Tujijenge Sacco Limited & another (Interested Parties) (Tribunal Appeal 5 of 2020) [2021] KECPT 685 (KLR) (19 August 2021) (Ruling)

Elias Kariuki & 6 others v Commissioner for Co-operative Development; Tuungane Tujijenge Sacco Limited & another (Interested Parties) [2021] eKLR

Neutral citation: [2021] KECPT 685 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Appeal 5 of 2020

BM Kimemia, Chair, J. Mwatsama, Vice Chair & Gitonga Kamiti, Member

August 19, 2021

Between

Elias Kariuki

1st Appellant

Isaiah Cunguti

2nd Appellant

James Ireri Stephen

3rd Appellant

Jane A Karanga

4th Appellant

Njeru Mbogo

5th Appellant

Susan Wairimu Nyaga

6th Appellant

William Mbungu

7th Appellant

and

Commissioner for Co-operative Development

Respondent

and

Tuungane Tujijenge Sacco Limited

Interested Party

Quickline Auctioneers

Interested Party

Ruling

1. The Application for determination is dated February 3, 2021. The same is brought under Article 40 (1) Constitution of Kenya 2010, Section 74 (1) Co-operative Societies Act and Rule II Co-operative Tribunal (Practice and Procedure) Rules 2009. The said Application seeks for the following orders:1. That this Application be certified urgent and fit, be heard ex-parte in the first instance.2. That the proposed 2nd Interested Party(Quickline Auctioneers) be admitted as so in this matter.3. That pending interparties hearing and subsequent determination of this application the Honourable Tribunal be pleased to issue an injunction stopping the proclamation, seizure of proclaimed items, sale of the proclaimed items by auction or otherwise by the Interested parties and/or their agents or servants against the Appellants/Applicants.4. That pending hearing and determination of the substantive Appeal the Honourable Tribunal be pleased to issue an injunction stopping the proclamation, seizure of proclaimed items, sale of the proclaimed items by auction or otherwise by the Interested Parties and or their agents or servants against the Appellants/Applicants.5. That costs of this Application be provided for.

2. The same is premised on the grounds on the face of the Application stating that on diverse dates between January 28, 2021 and February 2, 2021 the 2nd Interested Party proclaimed the Appellant/Applicant items despite an Appeal having been filed against the Surcharge Order of the Commissioner before the Tribunal.That filing the Appeal under Section 74 (1) Co-operative Societies Act within the prescribed time frame acts as an automatic stay to the Surcharge by the Respondent herein. That the 1st Interested Party acted in contempt despite being served with the Appeal.That the Appellants/Applicants stand to suffer a violation of basic human and proprietary rights, embarrassment, irreparable harm and damage if at all the unlawful proclamation is not stopped.It will be only fair and just that the Honorable Tribunal grants the Orders sought in the interest of justice and fairness.The same is supported by the Affidavit of Susan Wairimu Nyaga the 6th Appellant sworn on February 3, 2021 re stating the grounds above.

3. The 1st and 2nd Interested Party opposed the Application by filing a Replying Affidavit sworn by Josiah Kariuki Njagi sworn on February 24, 2021 filed on March 8, 2021. He swore the Affidavit as Vice- Chairperson of the 1st Interested Party and avers in response to paragraph 3 and 4 of the Supporting Affidavit of the Application that Section 74 (1) Co-operative Societies Act does not in any way expressly state and or insinuate or imply that an Appeal acts as an automatic stay pending hearing and determination of the Appeal lodged.That the 1st Interested Party did not violate any law by initiating the execution process as against the Appellants.That further the Appellants/Applicants had not applied for any stay orders as against the 1st Interested Party and hence they were not estopped from recovering the funds, from the Appellants.

4. That further other than the Surcharges the Appellants had misapplied, retained and or misappropriation funds. The Appellants had defaulted in outstanding loans granted by the 1st Interested Party and thus liable and accountable and more for Proclamation Notice was in order.They said were not subject of the Appeal.The Appellants went into slumber after filing the Appeal presuming they had “automatic stay” and thus evident the Appeal is meant to frustrate the recovery of all the funds by the 1st Interested Party.That the 1st Interested Party stands to suffer prejudice and irreparable harm if the orders sought are granted as they not only want to recover the misappropriated funds but also defaulted loans. That the Application ought to be dismissed for lack of merit.

5. The Appellant/Applicant filed a Further Affidavit stating the 1st Interested Party has denied them access to their updated Statements of Account and shares despite several requests and demands. That it would be unrealistic to demand, proclaim and proceed to recover an alleged loan default which the defaulter is not aware of the specifics. The Applicants aver they do not have any outstanding loans and or arrears with the 1st Interested Party and most of them have clearance letters from the Sacco absolving them of any liability.That the 2nd Interested Party has formally admitted in writing specifically to the 5th Appellant/Applicant they have stayed execution against the surcharge of Kshs 533,073/= but are pursuing the loan default of Kshs 1,015,062/= indeed the 5th Respondent has a credit balance of Kshs 69,642/=.The Applicants state they have not delayed the prosecution of the Appeal lodged against the surcharge they wish for their Application to be allowed.

6. The Application was to be determined by way of written submissions. The Applicants filed their written submissions on April 15, 2021and 1st and 2nd Interested Party filed their written submissions dated May 11, 2021 on May 13, 2021. After an analysis of the Application before the court and the Affidavits together with submissions therein we note the following issues need to be addressed.Issue one:Whether there was a stay order against the Surcharge Order by the Commissioner.Issue two :CostsIssue One:

6. Section 74 (3) Co-operative Societies Act states“(1)Any person aggrieved by an order of the commissioner under section 73 (1) may, within thirty days, appeal to the Tribunal.(2)A party aggrieved by the decision of the Tribunal may within thirty days appeal to the High court on matters of law.”The said Section is purely on how an Appeal is to be made before the Co-operative Tribunal.Any Appeal in whichever court does not act and cannot be an automatic stay against proceedings in a Subordinate court.We agree with the 1st and 2nd Interested Party a formal Application must be made to the Appellant court for the orders to be made.Even without going to the merits of the Giella – vs- Cassman Brown Company Limited [1973] EA 358 on conditions to be satisfied by a party for court to grant an interlocutory injunction the Appellant/Applicant had not applied for stay of execution.

7. The Applicant’s filed an Appeal without an Application for stay of execution against the Surcharge Order.The issue of Proclamation Notices being for the defaulted amounts or not being subject to the Appeal therefore the same do not arise in the instant case.There being no stay orders the 1st Interested Party was at liberty to proclaim the same from the Applicants.However, we now have an Application before us seeking for Orders.“Pending the hearing and determination of the substantive appeal the Honourable Tribunal be pleased to issue an injunction stopping the proclamation, seizure of proclaimed items, sale of the proclaimed items by auction or otherwise by the Interested Parties and or their agents or servants against the Appellants/Applicants.To this end they are justified to do so even though the proclamation has already been due.It would be an exercise in futility, as academic exercise indeed if the Interested Party are allowed to proceed and execute before the Appeal herein is heard and determined.To this end for this reason alone we are allowing the Application.

8. The Appellants/ Applicants have been awoken from their slumber by the Interested Party.We order for the Appeal to be set down for hearing within the next 4 months failure to which the Orders granting the injunction pending hearing and determination of the Appeal will stand vacated.

9. Mention for directions on October 5, 2021

RULING SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 19TH DAY OF AUGUST, 2021. HON. B. KIMEMIA - CHAIRPERSON, SIGNED AUGUST 19, 2021HON. J. MWATSAMA - DEPUTY CHAIRPERSON, SIGNED AUGUST 19, 2021MR. GITONGA KAMITI - MEMBER, SIGNED AUGUST 19, 2021Njoroge Advocate For Applicant/appellant PresentMiss Macheru holding brief for kabath presentOrder- The Respondent granted 30 days to Response.The Respondent to file and serve.Mention on October 5, 2021. HON. B. KIMEMIA - CHAIRPERSON - SIGNED AUGUST 19, 2021