Ngoma v Sokoro Sacco Society Limited [2024] KECPT 1405 (KLR)

Ngoma v Sokoro Sacco Society Limited (Tribunal Case 862 (E958) of 2022) [2024] KECPT 1405 (KLR) (29 August 2024) (Judgment)

Neutral citation: [2024] KECPT 1405 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 862 (E958) of 2022

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

August 29, 2024

Between

Joseph Owiti Ngoma

Claimant

and

Sokoro Sacco Society Limited

Respondent

Judgment

1. The fact giving rise to this suit is a dispute resulting from a Claim of Kshs. 157,448/= which was claimed by the Claimant as owed to him by the Respondent. The Claim was disputed by the Respondent. In a Statement of Claim dated 4th November, 2022, filed on 7th November, 2022, the Claimant seeks for: -a.A refund of Kshs. 157,448/=b.Costs and interest of this suit.c.Any other relief that this Court may deem fit and just to grant.

2. In support of the claim, the Claimant annexed a Verifying Affidavit, a Witness Statement, List of Witnesses and List of Documents all dated 4th November, 2022 and filed in the Tribunal on 7th November, 2022.

3. On 2nd December 2022, the advocate of the Claimant caused Service of Summons, the Statement of Claim and the annexures via email to the Respondent.

4. When the Respondent failed to respond, the claimant made an Application dated 21st December, 2022 and requested for judgement.

5. However, before the request was acted upon by the Tribunal, the Respondent filed a Notice of Appointment of their advocate. On 15/2/2024, during mention, the Respondents and the Claimant’s advocate agreed to canvass the matter by way of Written Submissions. The Tribunal directed that each party to file their Written Submissions within 14 days and judgement to be delivered on 29/8/2024.

6. Upon plain reading and examination of the documents filed by the parties, we isolate three (3) issues for determination.a.Whether the Claimant owed the Respondent unpaid Loan?b.Whether the Claimant is entitled to the refund of Kshs. 157,448/=.c.Who bears the cost of this suit.

Issue 1 Whether the Claimant owed the Respondent unpaid Loan? 7. It is not in dispute that the Claimant’s shares/deposits held by the Respondent as at 21/05/2022 was Kshs. 157,448/= as shown in the Loan/Share Statement of Account filed by the Claimant and marked as exhibit 8&9. However, the Account Statement filed by the Claimant is only part of the Share Statement Account which does not show the chronology of the Loan part of the account from 2013 to 2023.

8. One of the Respondent Witnesses M/S Pamela Auma Osongo brought out the Kshs. 63,315/= which was owed by the Claimant at the time he applied to have his shares/deposit to be refunded to him. To proof the outstanding loan, the witness produced a Loan/Share Statement of account printed on 10/7/2023 which showed that the Claimant had a Loan arrears of Kshs. 63,315/= in November, 2022.

9. To Circumvent his way out, the Claimant wrote a letter to his employer not to channel his money through the Sacco but this was nabbed by the Sub-County director of Co-operatives who wrote a letter dated 31st August, 2022. The letter provided a list of Members of the Sacco whose salary is not being deducted in satisfaction of Loan repayment.

10. Although the Respondent’s by-laws and the Loan application from which was filled and signed by the Claimant were not filed in the Tribunal we have no doubt that the Claimant borrowed and was advanced with the loan. Upon examination of the Respondents Further List of Documents, in particular the Claimant’s Loan/Share Statement of Account, it is our finding that the Claimant owed some loan arrears to the Respondent, an issue which the Claimant alluded to in the last sentence of his resignation letter dated 30/5/2022 which state; “So I am to balancing my savings with my Loan balance.”

11. Given that the amount owed has changed because of interest and repayments (if any) from 2022 to date, we direct that the parties should sit down and do reconciliation with a view to reach an agreed amount to be settled by the Claimant.

ISSUE 2 Whether the Claimant is entitled to the refund of Kshs. 157,288? 12. We note that the Claimant resigned from the Sacco vide a letter dated 30/5/2022 which according to him was to take effect from 1st June, 2022. Although the by-laws of the Respondent was not filed in the Tribunal, it is a general practice in Saccos that a member gives notice of termination of a certain period of time as provided in the by-law. On this, we find that the Claimant erred by giving one(1) day notice to the Respondent to terminate his membership.

13. On refund of shares/deposits, the Sub-County director of Co-operatives letter dated 31st August, 2022 provided a proper position on the management of member’s shares and deposits. Accordingly, the conditions in the loan agreement for the type of Loan that the Claimant had taken was listed as follows:i.No member will resign from the Co-operative until the Loan has been fully paid.ii.The members’ deposit will not act as security for this Loan in case of default but only the guarantors. Therefore in case of default, the guarantors will bear the burden,iii.In case of termination, the Loan shall be recovered from terminal dues.

14. The Claimant failed to follow the Condition (i) above and erred to advice the Sacco to balance contrary to Condition (ii) in the Sub-County director’s letter.

15. The Sacco’s Societies Act Section 36 provides that a Sacco has a first charge against shares and savings deposits of her members, specifically it provides as follows:“36(1) A Sacco Society have a first charge against deposits and share capital and upon any dividend or interest payable to a member for any debt due to the Society from the member, either as a guarantor on endorser of a Loan or Credit facility or for any other obligation.36(2) A Sacco Society may refuse to allow withdrawal from any deposit account operated by a member where the member is in arrears on a debt owed to the Society.”

16. In adherence to the provisions of the Law, we find that the Respondent was acting within their mandate by refusing to refund the Claimant’s Savings/deposits of Kshs. 157,488/= until he repays all his outstanding Loan and be discharged by the Respondent from any other liability such as guarantorship.We therefore affirm that the Claimant is not entitled to the refund of the shares/deposits until he meets the conditions as provided above.

17. In conclusion, we consider that the Claimant’s prayers stated in the Statement of Claim is devoid of merit hence cannot grant orders subsequently.

Claim dismissed with costs to the Respondent.It is so ordered.

JUDGMENT SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 29TH DAY OF AUGUST, 2024. HON. B. KIMEMIA CHAIRPERSON SIGNED 29. 8.2024HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 29. 8.2024HON. BEATRICE SAWE MEMBER SIGNED 29. 8.2024HON. FRIDAH LOTUIYA MEMBER SIGNED 29. 8.2024HON. PHILIP GICHUKI MEMBER SIGNED 29. 8.2024HON. MICHAEL CHESIKAW MEMBER SIGNED 29. 8.2024HON. PAUL AOL MEMBER SIGNED 29. 8.2024TRIBUNAL CLERK JONAHKiprop advocate for the RespondentJoseph Owiti -Claimant- No appearanceHON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 29. 8.2024.