Mbirua & 9 others v Commissioner for Cooperative Development; Mwiki PSV Sacco Limited (Interested Party) [2024] KECPT 247 (KLR)

Mbirua & 9 others v Commissioner for Cooperative Development; Mwiki PSV Sacco Limited (Interested Party) (Tribunal Appeal E015 of 2022) [2024] KECPT 247 (KLR) (7 March 2024) (Judgment)

Neutral citation: [2024] KECPT 247 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Appeal E015 of 2022

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

March 7, 2024

Between

Simon Kirangu Mbirua

1st Appellant

Catherine Gitau

2nd Appellant

Peter Maina Wambugu

3rd Appellant

Margret Wairimu Mbirua

4th Appellant

Joan Wanjiku Mbirua

5th Appellant

Wilson Gitau Gakubu

6th Appellant

George Wambugu Maina

7th Appellant

James Maina

8th Appellant

Joseph Mutai Gitau

9th Appellant

Prime Four Co Limited

10th Appellant

and

Commissioner for Cooperative Development

Respondent

and

Mwiki Psv Sacco Limited

Interested Party

Judgment

1. On 16th December, 2022, the Appellants filed a Memorandum of Appeal dated 25th February 2022. Thereafter, the Appellants filed an Amended Memorandum of Appeal amended on 7th September, 2023 pursuant to leave granted by the Tribunal on 4th September, 2023. The Appeal was surcharged filed pursuant to the Surcharge Orders of the Commissioner of Cooperative Development delivered on 28th May, 2020. The Appellants grounds of Appeal are that:a.The learned Commissioner erred in law and in fact by failing to appreciate that the inquiry process failed to follow due process since it was presented to members long after the expiry of the statutory 30 days.b.The learned Commissioner erred in law and in fact by failing to sufficiently appreciate the fact that the Appellants ought to have been given an opportunity by the inquiry team before any adverse funding could be made against them.c.The learned Commissioner erred in law and in fact by failing to sufficiently appreciate the fact that the culpable individuals had agreed to repay the stolen amounts after the theft had been discovered.d.The learned Commissioner erred in law and in fact by failing to acknowledge that the Appellants individually and collectively discharged their duties as mandated by the Societies Act.e.The learned Commissioner erred in law and in fact by failing to appreciate the fact that Mwiki PSV Sacco limited and Mwiki PSV Welfare Operators are two separate legal entities governed by separate laws.f.The learned Commissioner erred in law and in fact by surcharging the Appellants herein while completely disregarding the weight of the evidence before him that the Inquiry Report was obtained in an irregular manner.g.The learned Commissioner erred in fact and in law by failing to acknowledge that the powers of surcharging were being exercised sparingly, capriciously and/or maliciously against the appellants since the Inquiry Report had apportioned blames to both the current and former management teams of the Sacco.The Appellants request the Tribunal for the following orders:i.The Appeal to be allowed with costs to the Appellantsii.The surcharge orders issued against the Appellants issued on May 28, 2020 be set aside.iii.Such other or further orders be made as this Tribunal will deem just.The Interested Party responded to the Appeal vide its Replying Affidavit sworn on October 16, 2023 and filed on by Bianjo Mwaniki Mutero.In the Replying Affidavit, the Interested Party states that:-1. Subsequent to the Annual General Meeting convened by the Interested Party on December 2018, the Commissioner for Cooperative Development the Respondent herein, instigated an Inquiry into the operational facts of Mwiki Sacco Society Limited. The objective of the Inquiry was to sanitize the Interested Party’s:-a.Working and financial conditions from the year 2013-2018. b.Stakeholder’s compliance to the by-laws, regulations and CooperativeSocietiesAct Cap 490. c.The conduct of present or past Management Committees in accordance with CooperativeSocieties Act Cap 490 Laws of Kenya. 2. Consequent to the inquiry the Respondent compiled an exhaustive report, the findings of the inquiry, which was presented to the members of the Interested Party during a Special General Meeting convened on 18th October, 2019.

3. The report incorporated a recommendation by the Respondent for the surcharge and subsequent recovery of the sum of Kshs. 22,536,000/= from certain members, which notably encompassed the Appellants in the present matter.

4. Upon the adoption or acceptance of the recommendation by the members of the Interested Party, the Respondent issued a Notice of Intention to Surcharge, dated 3rd March 2020, against the Appellants herein.

5. In line with the Notice of Intention to Surcharge, the Appellants herein were invited to show cause within 14 days of receipt of the surcharge as to why they should not be surcharged for the amounts indicated in the report.

6. The Appellants submitted their respective submissions which were duly considered by the Respondent and were later found to lack merit.

7. The Respondent proceeded to issue a surcharge order dated 28th May 2020, to the Appellants herein, ordering the payment of the surcharged amounts within 30 days.

8. The surcharge process against the Appellants was in line with law.

9. The jurisdiction of the Tribunal as per Section 74 (1) of the Cooperative Societies Act, is limited to the procedural aspects leading to the issuance of the surcharge process.

10. The Tribunal is not empowered to scrutinize the merits, fairness or accuracy of the report that once the Tribunal verifies that due process was followed and that the Appeal was submitted within the prescribed time frame its jurisdiction is exhausted.

11. The grounds raised in the Memorandum of Appeal only seek to invite the Tribunal to look into the merits of the report, contrary to the provisions of the law.

12. Furthermore, if the Appellants were dissatisfied with the contents of the report or the manner in which the Inquiry was conducted, their proper recourse would have been a Judicial Review, as stipulated in section 7 (2) of the Fair Administrative Action and article 165 (3) (b) of the Constitution f Kenya .The Interested Party asks that the Tribunal to dismiss the instant Appeal and allow the Interested Party to recover the surcharged amounts from the Appellants for the benefit of its members. Determination1. Surcharge and jurisdiction of the tribunalSection 73 (1) of the Cooperative Societies Act, Cap 490, empowers the Commissioner to Inquiry into the conduct of Officer or member of a Cooperative Society, if it appears that such a person:a.Has misapplied /or retained or become liable or accountable for any money or property of the society; orb.Has been guilty or breach of trust in relation to the Society. Under section 73(2), the Commissioner may if he considers it appropriate make an order requiring the person to pay or restore the money or property or any part thereof to the Cooperative Society together with interest at such rate as the Commissioner thinks just or to contribute such sum to the assets of the Society by way of compensation as the Commissioner deems just.Section 74 (1) of the Cooperative Societies Act cap 490, provides that any person aggrieved by an Order of the Commissioner under section 73 may within thirty days, Appeal to the Tribunal.The Respondent has not filed any document or response to the Appeal as at the date of writing this judgment.2. IssuesThe Appeal proceeded by way of written submissions.The Appellants submissions dated 15th December, 2023 were filed on 29th January 2024, while the Interested Party’s submissions dated 6th December 2023 were filed on 7th December 2023. We have considered the argument and submissions of the Appellant and the Interested Party and have several issues.1. What is the mandate of the tribunal?The Inquiry by a Commissioner under section 73 of the Cooperative Societies Act, and the decision which emanates therefrom are not judicial processes, but administrative actions which the Commissioner is empowered by Section 58 of the Act to undertake.The Commissioner is therefore not a court of law and his decision is not judicial, any grievances may be subjected to Judicial Review.Section 74 of the act gives the Tribunal the mandate to hear and determine appeals against the Surcharge Order of the Commissioner made pursuant to section 73. This mandate is limited to ascertain that he procedure culminating in the issuance of the Surcharge Order was proper.2. Form of appeal.Rule 8 (3) of the Cooperative Tribunal (Practice and Procedure) Rules 2009 provides that at the time of filing the Memorandum of Appeal or before setting down the Appeal for hearing, shall file a Record of Appeal which shall be paginated and shall contain:a.The Memorandum of Appeal,b.The Inquiry Orderc.The Inquiry and/or Inspection Reportd.The Minutes of the General Meeting whole decision is appealed against .e.The Notice of Intention of Surcharge.f.The Surcharge , Order, andg.Any other relevant documentsThe Record of Appeal herein contains:a.The Memorandum of Appealb.The Inquiry Reportc.Notice of interpretation to surchargeThe Record of Appeal does not contain the minutes of the general meeting, the Inquiry Order or the Surcharge Order. The requirements under rule 8 (3) is made mandatory, by the use of the word, shall it therefore follows that the Appellants have not complied with Rule 8 (3).3. Whether Duly Process was Followed Before The Surcharge Order was Issued.He Who Alleges Must Prove.The Appellants have not brought out the process which the Respondent failed to follow in contradiction of Section 58 of the Act.The Inquiry Report is in respect to Mwiki PSV Sacco Society Limited.We have considered the notice of Intention to Surcharge dated 3rd March 2020, filed bythe Appellants.The same gives the Appellants 14 days within which to Show Cause why they should not be surcharged in accordance with Section 73 of the Act. In the absence of any evidence from the Appellants to prove that they did show cause within the said 14 days period, w find that they did not comply with the requirement for show cause under the Notice of Intention to Surcharge.Once the Surcharge Order was issued on 28th May 2020, the Appellants remaining recourse was by way of appeal to this Tribunal.4. Matters For Consideration By The TribunaLThe Tribunal’s jurisdiction is invoked by the issuance of the Surcharge Order issued under Section 74 of the Cooperative Societies Act. The Tribunal has no jurisdiction to entertain any matters which delve into the merits of the Inquiry Report, as we are called upon to do by the Appellant in the Grounds of Appeal and the Appellant’s written submissions.

In conclusion we hereby find that the Appeal herein lacks merit and we dismiss it with costs to the Respondents.

JUDGMENT SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 7TH DAY OF MARCH, 2024. Hon. Beatrice Kimemia - Chairperson Signed 7. 3.2024Hon. Beatrice Sawe - Member Signed 7. 3. 2024Hon. Fridah Lotuiya - Member signed 7. 3.2024Hon. Philip Gichuki Member Signed 7. 3.2024Hon. Michael Chesikaw Member Signed 7. 3.2024Hon. Paul Aol Member Signed 7. 3.2024Tribunal Clerk JemimahOmunyoma advocate holding brief for Wachira advocate for Appellants.Muchiri advocate for Interested Party.No appearance for RespondentHon. Beatrice Kimemia Chairperson Signed 7. 3.2024nrb.ctc. appeal no.e015 of 2022 judgment a.w.n 0