Rwahoima & 4 Others v Maseru Growers Cooperative Society Limited (Miscellaneous Application 6 of 2023) [2024] UGHC 933 (30 September 2024)

### **THE REPUBLIC OF UGANDA**

#### **IN THE HIGH COURT OF UGANDA AT FORT PORTAL**

### **MISC APPLICATION NO. 006 OF 2023**

### **(ARISING FROM HCT-01-LD-CS-033 OF 2021)**

| 1.<br>GERTRUDE RWAHOIMA | | |--------------------------------------|---------------------| | 2.<br>NYARUBONA MICA | | | 3.<br>MAHURUBA AWENU B. JELLIE | :::::::: APPLICANTS | | 4.<br>GONZAGA GODFREY | | | 5.<br>COMMISSIONER LAND REGISTRATION | | | VERSUS | |

### **MAWENU GROWERS COOPERATIVE SOCIETY LTD ::: RESPONDENT**

# **BEFORE HON. MR. JUSTICE VINCENT EMMY MUGABO RULING**

#### **Introduction**

This is an application by Chamber Summons under Section 98 of the Civil Procedure Act Cap. 71, section 40 of the Arbitration and Conciliation Act and Section 73 (now 142) of the Cooperative Societies Act Cap 107 as amended seeking the following orders:

- a) That Civil Suit No. 33 of 2021 involving the dispute between the applicants and the respondent be referred to arbitration. - b) Costs of the application be provided for.

The grounds for this application are set out in the affidavit of Gertrude Rwahoima, the 1st applicant herein, the gist of which is that; -

i. The respondent herein filed Civil Suit No. 33 of 2021 in this court which is pending determination. However, this court has no original jurisdiction for disputes between a cooperative society and its members.

- ii. It is mandatory that if a dispute arises between a registered society and its members, it should be referred to arbitration. - iii. That Civil Suit No. 33 of 2021 is incompetent having been filed in this court as a court of first instance, yet it has never been referred to any arbitrator as a requirement of law.

iv. That it is in the interest of justice that this application is granted.

The respondent filed an affidavit in reply deponed by Mr. Musinguzi Christopher, one of its members, opposing this application on the following grounds:

- a) That the 2nd, 3rd, and 4th applicants are not members of the respondent. - b) That this court has original jurisdiction to determine civil suit No. 33 of 2021 since the 2nd, 3rd and 4th applicants are not members of the respondent. - c) That the claim before this court involves fraud and the respondent is seeking cancellation of the 1st applicant's name from the certificate of title for land comprised in LRV 1625 Folio 2 land at Buzinda Bwera measuring 25.47 hectares, which order can only be granted by this court. - d) That this court has original jurisdiction over matters involving allegations of fraud. - e) That this application is brought in bad faith with the intention to delay the hearing of Civil Suit No. 33 of 2021.

# **Background**

The respondent, a duly registered Cooperative Society, filed Civil Suit No. 33 of 2021 on 6th September 2021 before this court against the applicants, seeking remedies including the cancellation of the 1st applicant's entry in the certificate of title for the land described in Buzinda-Bwera LRV 1625 Folio 2, a permanent injunction, and compensation from the 1st applicant. The respondent claims ownership of the suit land and alleges fraudulent procurement of the registration of the 1st applicant as the suit land's proprietor by the 2nd, 3rd, and 4th applicants. This application challenges the competence of Civil Suit No. 33 of 2021, on the basis that this court lacks original jurisdiction to adjudicate disputes between a cooperative society and its members.

### **Representation and hearing.**

At the hearing, Mr. Nyakoojo Imran of Jingo Ssempijja & Co. Advocates represented the applicants while Mr. Lwanga Richard of Mukiibi & Kyeyune Advocates represented the respondent. Counsel for the applicants filed written submissions which have been considered in this ruling.

### **Issues for determination**

In this application, the issue for determination is whether this court has original jurisdiction to hear and determine Civil Suit No. 33 of 2021.

# **Submissions by Counsel for the Applicants**

Counsel for the applicants submitted that the resolution of disputes between a registered cooperative society and its members is by way of arbitration in accordance with **Section 73 of the Cooperative Societies Act.** Counsel further submitted that if any party is aggrieved by the decision of the arbitrators appointed under the Act, then an appeal therefrom lies in the Board of Directors of the Uganda Cooperative Alliance Limited.

It was the submission of counsel for the applicants that arbitrators so appointed under the Cooperative Societies Act can only refer a matter to this court on a point of law and that any party aggrieved with the decision of the Board can appeal to this court only on a point of law.

Counsel referred this court to the case of *Ibanda Cooperative Savings and Credit Society Ltd Vs. Sarah Kyarikunda and Another HCMA No 060 of 2021* where Justice Bashaija K. Andrew held that the High Court cannot determine disputes between a registered society and its members or between members of a registered society when exercising its original civil jurisdiction and such disputes cannot be commenced in High Court even with its unlimited jurisdiction under Article 139(1) of the 1995 Constitution of the Republic of Uganda and section 14 of the Judicature Act Cap 13.

Counsel also referred this court to its decision in the case of *Kalisya Jailes Vs. Bukonjo Joint Cooperative Micro Finance Ltd HCMA No. 087 of 2020* where a dispute between a respondent, a cooperative society, and the applicant, its member, was referred to arbitration in line with the Cooperative Societies Act.

Counsel for the applicants argued that since the respondent filed Civil Suit No. 33 of 2021 in this court as a court of first instance, and there was no evidence to show that the matter was first referred to arbitration, the suit was incompetent, and this court should be pleased to grant the application with the orders being sought.

# **Consideration by Court**

Article 139(1) of the 1995 Constitution of the Republic of Uganda confers unlimited original jurisdiction in all matters to the High Court subject to the Constitution and any other law. The Supreme Court in the case of *Uganda Revenue Authority Vs Rabbo Enterprises (U) Ltd and Another Civil Appeal No. 12 of 2004* quoting *Words and Phrases Legally Defined, Volume 3, I-N at page 13* defined the term jurisdiction as:

> *"Authority which a court has to decide matters that are before it or take cognizance of matters presented in a formal way for*

*its decision. The limits of this authority are imposed by statute, charter or commission under which the court is constituted and may be extended or restricted by the like means. If no restriction or limit is imposed the jurisdiction is said to be unlimited."*

The Supreme Court went on to state that:

*"A limitation may be either as to the kind and nature of the actions and matters which the particular court has cognizance or as to the areas over which the jurisdiction shall extend, or it may partake both these characteristics. If the jurisdiction of an inferior court or tribunal ...depends on the existence of a particular state of facts, the court or tribunal must inquire into the existence of the facts in order to decide whether it had jurisdiction; ...where the court takes it upon itself to exercise a jurisdiction which it does not possess, its decision amounts to nothing."*

From the foregoing definition of jurisdiction, it can be said that the original unlimited jurisdiction of the High Court may, in some instances, be limited by an Act of Parliament.

**Section 142 (1) of the Cooperative Societies Act** Cap 107 provides thus:

> *(1) where any dispute touching the business of a registered society arises—*

> *(a) among the members, past members and persons claiming through the members, past members and deceased members;*

> *(b) between a member, past member or person claiming through a member, past member or deceased member, and the*

*society, its committee or any officer or past officer of the society;*

*(c) between the society or its committee and any officer or past officer of the society; or*

*(d) between the society and any other registered society, the dispute shall be referred to an arbitrator or arbitrators for decision."*

Section 142(2) of the Act defines the nature of disputes envisaged to be arbitrated under the Act to include *"a claim by a registered society for any debt or demand due to it from a member, past member or the nominee, heir or legal representative of a deceased member, whether the debt or demand be admitted or not."*

**Section 142(2) of the Cooperative Societies Act** seeks to delineate the claims eligible for arbitration and tries to restrict the court's authority to specific but not all cases. If this subsection is read singly, it would in essence mean that not every dispute should first be referred to arbitration under the Cooperative Societies Act. However, Subsection 2 of Section 142 of the Act seems to suggest that any dispute touching the business of the cooperative should be referred to arbitration. The same should involve members, past members, deceased members, and the cooperative or amongst cooperatives.

As opposed to what the respondent states in its affidavit in reply, the fact that the orders prayed for in the suit relate to the cancellation of title is not reason enough for the failure to refer the matter to arbitration. If the arbitrator finds that such orders are warranted, the respondent would have a remedy in applying for consequential orders before the court. Its only worry would be the cost of litigation.

Specific parameters must be met to bring a dispute under the purview of arbitration as defined by the Act. The dispute must be touching the business of the cooperative and be between members, members and the society, the society and its committee, or between registered societies.

On the issue of membership, **Section 142(1) of the Act** is to the effect that a dispute must be between a member, past member or person claiming through a member, past member, or deceased member (including the nominee, heir, or legal representative of a deceased member), and the society. The respondent herein stated in paragraph 7 of the affidavit in reply that the 2nd, 3rd, and 4th applicants are not members of the respondent. According to the respondent, the said applicants have neither paid membership fees nor owned shares in the respondent cooperative society in accordance with the Bylaws.

While the applicants allege that they are members of the respondent cooperative society, they did not provide any proof to that effect save for the membership of the 1st applicant which is admitted by the respondent. The respondent went ahead to attach its Bylaws which has a list of the founding members. Although it is conceivable that the membership of the respondent cooperative society could have grown from the date of its founding, the 2nd, 3rd, and 4th applicants did not provide proof either in the form of application forms, resolution, list of members, payment of membership fees, or any record of the transaction to prove to this court that they are members or at the very minimum, they have a claim through any member or they are nominees, heirs or legal representatives of any deceased member of the society.

I am therefore inclined to believe based on the available evidence that the 2nd, 3rd, and 4th applicants are not members of the respondent cooperative society. As such, the issue of membership disqualifies this dispute from being one that can be settled by way of arbitration within the meaning of the Cooperative Societies Act.

Due to the disputed membership of the 2nd, 3rd and 4th applicants in the respondent cooperative society, it is my finding that Civil Suit No. 33 of 2021 does not fall in the purview of Cooperative Societies Act Cap. 112 for it to be first referred to arbitration. This court is clothed with the original jurisdiction to hear and determine Civil Suit No. 33 of 2021.

As a consequence of the findings above, the application is dismissed, and costs shall be in the cause.

Civil suit No. 33 of 2021 is fixed for mention on the 31st day of October 2024 at 11:00 am.

It is so ordered.

Dated at Fort Portal this 30th day of September 2024

**Vincent Emmy Mugabo Judge.**