Ouko & 4 others v Chuna DT Sacco Society & 4 others [2025] KECPT 169 (KLR)

Ouko & 4 others v Chuna DT Sacco Society & 4 others (Tribunal Case E139 of 2025) [2025] KECPT 169 (KLR) (4 March 2025) (Ruling)

Neutral citation: [2025] KECPT 169 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case E139 of 2025

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

March 4, 2025

Between

Esther Awuor Ouko & 4 others

Claimant

and

Chuna DT Sacco Society & 4 others

Respondent

Ruling

1. The Application for determination is dated 18. 2.2025 filed on 20. 2.2025. The same is brought under Section 76,77 and 78 Cooperative Societies Act Cap 490 and all other enabling provisions of the law:The Application seeks for:a.Spentb.That in the interim, pending the hearing and determination of this application, issuance, acceptance and processing of the delegates application/vetting forms for the upcoming delegates elections of the 1st Respondent be suspended.c.That in the interim, pending the hearing and determination of this application, the upcoming delegate’s elections of the 1st Respondent slated for 7th March, 2025 be suspended.d.That pending the hearing of the claim herein, this Honourable Tribunal does suspend the issuance, acceptance and processing of the delegate application/vetting form introduced by the Respondents (society’s leadership).e.That an order does ISSUE restraining the 2nd, 3rd, 4th and 5th Respondents, their agents, servants or employees from conducting the delegates elections scheduled for 7th March 2025 pending the hearing and determination of this claim.f.That an order does ISSUE DIRECTING the Respondents to conduct the elections in accordance with the existing by-laws and the proper eligibility criteria of Kshs. 100,000/= for non-withdrawable deposits and Kshs. 41,500/= for share capital.g.That the tribunal does ISSUE such other or further orders as it may deem just and expedient in the circumstances.h.That costs of this Application be granted to the Applicants.

2. The Application supported by the Affidavit of Esther Awuor Ouko sworn on 18. 2.2025 where the Applicant swore the affidavit on her own behalf and 4 other claimants/applicants. She avers that the 1st Respondent has announced its elections which are scheduled for 7th March 2025 which she and the other Applicants intended to contest as a delegates. However, she avers the current leadership of the society has introduced new delegate Application/vetting forms altering the eligibility criteria which deviated from the registered by-laws of the society.

3. The new laws have the following changes.a.The minimum non-withdrawable deposit of Kshs. 100,000/= which has been increased to Kshs. 300,000/=.b.The minimum Share Capital of Kshs. 41,500/= increased to Kshs. 60,000/=. The applicants aver the above changes are being done without Amendment of By-laws without consultation or approval from the general membership and proper approval from commissioner of cooperators.The Applicants state the new requirements are deliberately designed to lock out eligible members like the Applicants and others from participation in the electoral process which violates the 1st Respondent’s By-laws, Cooperative Societies Act and Article 27 and 38 Constitution of Kenya.The Applicants attached:a.Call for application for election as delegates dated 6. 2.2025. b.Delegates application /vetting formc.By laws of 1st Respondent revised on November 2022 registered on 8. 2.2023. d.The Applicant’s statement of accounts.

4. The Respondent filed a response to the application by filing a Replying Affidavit sworn by Kefah Omwando Juma on 24. 2.2025 where he swore it as chairman of Chuna DT Savings and Credit Cooperative Society the 1st Respondent herein where he stated the 6th Annual Delegates meeting held on 20. 4.2024 a resolution was passed by majority vote to amend the 1st Respondent By-laws increasing the share capital from Kshs. 41500/= to Kshs. 60,000/= and member deposits for delegates from Kshs. 100,000/= to Kshs. 300,000/= .As such the 1st Respondent By-laws was consequently amended to read:Section 30:0 Eligibility for election as a delegate30:1 to be elected as a delegate a member as outlined in section 4, by-laws 13,1,I,ii&iii, must have BOSA deposits of at least Kenya shillings three hundred thousand (Kshs.300,000/=) and above. All contributed monthly and not by one-off boosting within six months prior to election.30:2 a minimum share capital of Kshs. Sixty thousand(Kshs. 60,000/=)30:3 a minimum of secondary education30:4 must have been a member and must have an active FOSA account with a minimum balance of at least Kshs. 5000/=(five thousand) three (3) months prior to the elections or must have his salary pay point at FOSA for the last six months prior to the elections.30:5 must have been a member of CHUNA for at least 24 months consecutively without a break before nominations30:6 has not been adversely named by the Commissioner of Cooperatives or his/her representative in an inquiry report endorsed by an annual or special delegate meeting for mismanagement or corrupt practices whilstt still a member of the board of a cooperative society, or named in any other national inquiries where he/she has been shown to be engaging in dishonest activities, or30:7 has not been adversely named by any national authority/regulator in an inspection report for mismanagement or corrupt practices while still a member of the board of the Sacco society.30:8 has not been charged of any offence involving dishonesty, a crime involving fraud, perjury or breach of contract of a licensed financial institutions.30:9 has no any uncleared debt owing to the SACCO at the end of its financial year other than in respect of a loan under the provision of any rules made under the act and this by-laws.30:10 is not a board member of another existing SACCO society licensed under the act,30:11 does not hold any money belonging to the society other than a loan at the end of the financial year.30:12 is not undischarged bankrupt.30:13 he/she not is under twenty one years of age.30:14 is not of unsound mind30:15 is not an official of or does not hold a political office at any level30:16 has not been removed from public office on disciplinary action30:17 does not lend money on his own account30:18 must conform to the minimum qualifications standards in accordance to the applicable law.The 2nd Respondent further states that out of the resolution made there was dissatisfaction from a section of 1st Respondent members including the Applicants who lodged a complaint/petition to the commissioner of cooperative development on 1st July 2014 and copies SASRA.

5. As a result, the office of the commissioner of cooperative development and SASRA wrote to the 1st Respondent citing issues raised and directed the 1st Respondent board and management to address the concerns raised in the petition and file a report on the progress.On August 12th 2024 the 1st Respondent had sensitization meeting which were attended by officers from the office of the Commissioner for Cooperative Development and the applicants failed to communicate to members and their petition unanimously dismissed.A report was submitted to the Commissioner for Cooperative Development and SASRA on 28. 8.2024 which led to the approval and registration of 1st Respondent Amended By-laws on 8. 11. 2024. On conformity to the Amended by-laws the 1st Respondent issued a notice on 6. 2.2025 calling for pplicants for prospective candidates for elections scheduled for 7. 3.2025. The scheduled 1st Respondent elections are based on the new delegate application /vetting forms which conforms to the eligibility criteria set out in 1st Respondent Amended by-laws.

6. The Respondent in response to the Application aver:Applicants have moved the Tribunal on account of the 1st Respondent by-laws which have since been amended and which were shown by the Applicant’s upon approval and registration. The Applicant’s did not made full disclosure of all material facts and as such do not deserve any favour of the tribunal.The 1st Respondent further aver loss and damage would be incurred if the orders sought by Applicants are granted as alot of resources have been expended in organizing the delegates elections scheduled for 7. 3.2025. Respondent thus pray for the Application dated 18. 2.2025 to be dismissed with costs.The Respondent’s attacheda.Copy of ADM and minutes for meeting held on 20. 4.2024b.Copy of letter dated 12. 8.2024 from SASRAc.Report submitted to SASRA and Commissioner of Cooperative Development and County Director of Cooperatives.d.Certificate of amendment of 1st Respondent by-lawse.Notice for application for prospective candidatesf.Copy of delegates application/vetting

7. The Applicant’s filed a Claimant’s Supplementary Affidavit sworn by Esther Awuor Ouko on 25. 2.2025 who stated when the Applicants began raising concern about the share capital increment the directors explicitly stated the matter was still under consideration.Further in the education meeting held in August 2024, the Directors stated the amendments had not yet been forwarded to the Commissioner for Cooperative and were still under deliberation.The Respondent conduct in keeping the amendments secret until when they can be used for electoral purposes demonstrates bad faith and discriminatory intent. The applicants aver that Respondent’s conduct did not involve members to participate and offer views and insights into the intended amendments violating the principles of member participation and democratic member control fundamental to cooperative societies.

8. The parties their own submissions on 25. 2.2025 of concern by Applicant at the time was that members were not given ample time to raise their share capital. The By-laws being used by 1st Respondent introduced as current were presented for certification on 18. 11. 2024 which is barely 3 month to elections thus the Application.The Applicants further alluded the deadline to clear the delegate was 25. 2.2025 as such they prayed for prayers in the application to be allowed more so 2 and 3 in the interim.

9. The Respondent responded and stated 1st Respondent By-laws have been amended and share capital stood at Kshs. 60,000/= and deposits stood and Kshs. 300,000/-. The Respondent aver the approval was done on 8. 11. 2024. Respondent confirm there was continuous engagement of the members as they took out sensitization meetings and upon satisfaction the By-laws were approved.In a brief rejoinder the applicants stated the amendments ought to have been issued in good time.Upon clarification of the matters by the Tribunal members present the Respondent’s confirmed that members ought to have complied 3 months before the vetting date. Deposits of Kshs. 300,000/= had to be done by then.They did not accept lumpsum payment of the increment of deposits to Kshs. 300,000/= as stipulated in the By-laws.On keen perusal and consideration of the applications, the responses, the annextures and oral submissions by counsel of the parties the issues for consideration are:Issue oneWhether the amended by laws are properly placed/registered?Issue twoWhether the respondent’s have acted fairly by issuing the amended by-laws to call for electionsIssue threeWhether the elections of 7. 3.2025 should be suspended?

10. Issue oneWhether the Amended By-laws are properly in place/registered?The Applicant’s claim was that the by-laws by the Respondent were not properly or registered and or could not be used a public participation was not done more so on the eligibility criteria of delegate.From the evidence adduced by the Respondent indeed there was an amendment of the By-laws of the 1st Respondent and the same were approved by the commissioner for cooperative on 18. 11. 2024. This proves that the 1st Respondent by -laws were revised in May 2024 and approved in November 2024 and as such are the guiding laws of the society.Section 8 Cooperative Societies Act - Amendment of By-laws 8(2) no amendment of the by-laws of a cooperative society shall be valid until the amendment has been registered under this Act for which purpose a copy of the amendment shall be forwarded to the Commissioner in the prescribed manner.8(5) when the Commissioner registered an amendment of the by-laws of a Cooperative Society he shall issue to the society a copy of the amendment certified by him, which shall be conclusive evidence of the fact that the amendment has been duly registered.In the case at hand, the Commissioner for Cooperative Development the did sign the Amended By-laws as adduced by Respondent in REX number KOJ6.

11. Issue twoWhether the Respondent’s have acted fairly by using the Amendment by-laws to call for elections on 7. 3.2025?In any society the By-laws to be used are those in operation at the time of action.Indeed it is right for the Respondent’s to use the Amended By-laws a approved on November 2024. However, the question that is yet to be answered is it fair and just for the Respondent to use the by-laws as amended in November 2024 for election being held in March 2025?The Applicant’s contention is clear that they have not been issued with sufficient time to comply with the new directions of the Amended By-laws.The Respondent by themselves admitted that the increment of deposits from Kshs. 100,000/= to Kshs. 300,000/= is gradual and cannot be done at one go as per Section 30(1) of Amended By-laws.

12. This essentially locks out persons who would be interested in vying and have not caught up with the new amendment barely 3 months since they came to light.The Applicants or any other aspirant thus are disadvantaged in this area with no leeway granted to them to comply.The Amended By-laws as they stand would seem unfair and unjust to the members of the 1st Respondent having no time to comply in readiness for a delegate election.It would seem the timing of the elections though not pre-meditated the timing when the amendment was done and new regulations come in place is what is worrisome or unfair.The intent of the Amendment as rightly put by Respondent’s was to be at par with best practices however, the when for amendment.When for elections seem to have clashed with having a small window to allow compliance of all parties.From the above we find as much as Respondent have acted within the Amended by-laws to call for the Annual Delegates Meeting the timing of the election was not right as the same is ideally locking out members of the 1st Respondent from participating due to the factors of:a.Increment of share capitalb.Increment in non-withdrawal deposit which can only be complied with 6 months to the Amendment

13. What then is the solution to the problem above?This brings us to issue number 3Whether the elections of 7. 3.2025 are to be cancelled/suspended?The 1st Respondent submitted they have not only used financial resources but to plan for the Annual Delegates meeting on 7. 3.2025. It would be imprudent if the Annual Delegates is suspended because of the Applicant’s Application and them not being satisfied.The Applicants in the other hand request the Tribunal to suspend the elections and or as per payer 6 of their Application for Respondent to conduct the elections in accordance to the by-laws with criteria of share capital of Kshs. 41,000/= and non-withdrawal deposit of Kshs. 100,000/=.

14. We appreciate that the 1st Respondent are in a bind to have the annual delegate meeting happen in line with the Cooperative Society Act and have rightfully called for the annual delegate meeting.The concern of the Tribunal is the (time frame) when and how soon after the amendment of by-laws of 1st Respondent the same has been done.Justice not only needs to be done but ought to be seen to be done. There has never been a perfect time for the above phrase to become alive.Lord Chief Justice Hewart in Republic versus Sussex Justices exparte Mc Canty (1924) IKB 256(1923) ALL ER Rep 233. It is important to note there are social and other benefits that result when judges observe procedures regarded as fair.The principles of Justice inclusive:a.law must be both readily known and available, certain and clearb.Law should be applied to all person equally and should not discriminate between people or arbitrary or irrelevant ground.c.All people are entitled to presumption of innocence and to fair and public trial.In this regard we find the Applicants have been discriminated rightly so since the Amended by-laws are shy of being 3 months old when annual delegate meeting has been called upon which will essentially shut them out.

Should the Tribunal suspend the elections? 15. Indeed with what is before the Tribunal all reasoning leads to suspension of elections and first having or giving an opportunity to all members or those interested in vying step up to the new rules then an annual delegates meeting can be held.However, we are also cognizant of the fact that suspension of elections would lead to losses, non- compliance by the society to rules and regulations set out by the Commissioner for Cooperative Development and as such we shall not go that direction.

UpshotWe find the Application dated 18. 2.2025 is found to be with merit and order as follows:-a.Prayer 6 – we order for the Respondent’s to conduct the elections in accordance with the by-laws revised in November 2022 and approved by Commissioner for Cooperative Development on 8. 2.2023 with eligibility criteria of members being Kshs. 100,000/= for non-withdrawal deposits and Kshs. 41,500/= for share capital.b.The issuance, acceptance and provision of the delegate application/vetting to conform to order 1 above and period be reopened and extended to Wednesday 5. 3.2025 at 10a.m to give room to any would be Applicants.c.Delegates elections do proceed as earlier planned for 7. 3.2025d.Noting the orders sought in the main claim have been dealt with in this ruling the case is marked as closed.e.Each party to bear their own costs.

CONCUSIONSRULING SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 4TH DAY OF MARCH, 2025. HON. B. KIMEMIA CHAIRPERSON SIGNED 4. 3.2025HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 4. 3.2025HON. BEATRICE SAWE MEMBER SIGNED 4. 3.2025HON. FRIDAH LOTUIYA MEMBER SIGNED 4. 3.2025HON. PHILIP GICHUKI MEMBER SIGNED 4. 3.2025HON. MICHAEL CHESIKAW MEMBER SIGNED 4. 3.2025Tribunal Clerk JonahOnenga advocate for Claimant/ApplicantsKamwara advocate for RespondentHON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 4. 3.2025