Transmara Sugar Savings & Credit Cooperative Society Limited v Maki & 2 others [2023] KECPT 445 (KLR)

Transmara Sugar Savings & Credit Cooperative Society Limited v Maki & 2 others (Tribunal Case 626 of 2017) [2023] KECPT 445 (KLR) (27 April 2023) (Ruling)

Neutral citation: [2023] KECPT 445 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 626 of 2017

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

April 27, 2023

Between

Transmara Sugar Savings & Credit Cooperative Society Limited

Claimant

and

Antony Ole Maki

1st Respondent

Ronald N Oyagi

2nd Respondent

James Adera

3rd Respondent

Ruling

1. Application dated December 22, 2017 is for determination and seeks for;a.That this Application is certified urgent, and is heard ex-parte in the first instance.b.That the Interlocutory Judgment entered on December 10, 2017 and the Decree issued on December 19, 2017 be and is hereby set aside pending the hearing and determination of this Application interparties.c.That the costs be in the cause.The facts of the case are that the case begins by the Commissioner of Cooperatives conducting an Inquiry pursuant to Section 58 of the Cooperatives Societies Act in regards to missing funds with the Commissioner’s Report implicating 1st, 2nd and 3rd Respondents. As a result of the Inquiry, the Commissioner surcharged the three with a total of Kshs 2,888,676/= being the amount of the missing funds and Kshs 280,000/= being the cost of the Inquiry.

2. It is important to note that the Commissioner before surcharging via Notice dated May 4, 2017 informed the 1st, 2nd and 3rd Respondents of the Intention to Surcharge based on the particulars of the Inquiry Report requiring them to give a Response within 14 days from date of receipt of the Notice but the Respondents either refused, failed or neglected to respond.

3. Given that no Appeal was lodged against the Commissioner’s decision to Surcharge the Claimants then moved to this Tribunal to recover the monies.

4. The 1st, 2nd and 3rd Respondents upon the case for Surcharge being filed at this Tribunal , chose once again or failed to respond to the proceedings for Surcharge.

5. The Tribunal proceeded based on this, once an application for judgment in default of filing a Defence was argued, to issue a decree of the sum of Kshs 2,946,450/=( principal amount plus interest. )

6. Later, the advocate for the Respondent filed an Application seeking Stay of Execution giving various reasons ranging from illness to telling the client to get someone to hold brief, which the client never did, and as such, no Defence was ever filed.

7. Based on the above Application, the court allowed the Claimant to respond through written submissions, and in the Claimant submissions, he indicates that the Claimant lost money and the demeanor or past action of the Respondent clearly indicate that they have no intention to repay the Claimant. He concludes his submission by stating that he is entitled to the prayers sought in the Application dated November 6, 2017 to protect its members interest and facilitate recovery of the monies as appropriated by the Respondents.

8. The Tribunal has considered the rival submissions adduced in the application for stay by both parties and the law and has made the decision to dismiss the Application based on the reasons below.

9. First, it is not in dispute that the Respondents were Officials of the Claimant society and the Process and Procedure of Surcharge or Appealing against a Surcharge is well enumerated in the Cooperative Societies Act, Sections 58,73,74 and 75(1). From the facts of the case, we find the reasons given to be flimsy and to allow the stay, will prevent the Claimants from enjoying the fruits of their work.

10. Section 58 states the circumstances under which an Inquiry may be done by the Commissioner:(1)The Commissioner may, of his own accord, and shall on the direction of the Minister, as the case may be, or on the application of not less than one-third of the members present and voting at a meeting of the society which has been duly advertised, hold an inquiry or direct any person authorized by him in writing to hold an inquiry, into the by-laws, working and financial conditions of any co-operative society. (2) All officers and members of the co-operative society shall produce such cash, accounts, books, documents and securities of the society, and furnish such information in regard to the affairs of the society, as the person holding the inquiry may require. (3) The Commissioner shall report the findings of his inquiry at a general meeting of the society and shall give directions for the implementation of the recommendations of the inquiry report. (4) Where the Commissioner is satisfied, after due inquiry, that the Committee of a co-operative society is not performing its duties properly, he may— (a) dissolve the Committee; and (b) cause to be appointed an interim Committee consisting of not more than five members from among the members of the society for a period not exceeding ninety days. (5) A person who contravenes subsection (2) shall be guilty of an offence and shall be liable to a fine not exceeding two thousand shillings for each day during which the offence continues.”Section 73 gives the Commissioner powers to Surcharge and states:“(1) Where it appears that any person who has taken part in the organization or management of a co-operative society, or any past or present officer or member of the society— (a) has misapplied or retained or become liable or accountable for any money or property of the society; or (b) has been guilty of misfeasance or breach of trust in relation to the society, the Commissioner may, on his own accord or on the application of the liquidator or of any creditor or member, inquire into the conduct of such person. (2) Upon inquiry under subsection (1), the Commissioner may, if he considers it appropriate, make an order requiring the person to repay or restore the money or property or any part thereof to the co-operative 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. (3) This section shall apply notwithstanding that the act or default by reason of which the order is made may constitute an offence under another law for which the person has been prosecuted, or is being or is likely to be prosecuted.”Section 74 captures the process of appeal and 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.”With section 75 (1) giving the procedure of recovery of the surcharge:1)Subject to section 74, an order made pursuant to section 73 for any moneys to be repaid or contributed to a co-operative society shall be filed with the Tribunal and shall, without prejudice to any other mode of recovery, be a civil debt recoverable summarily.”

11. Secondly, it is our finding that by the time the Tribunal issues a decree under Section 75(1) it is already late in the day to intercept the order at that point as the ship had already sailed. Failure, neglect or refusal to challenge the Inquiry Report first while it is still with the Commissioner, automatically necessitates the Tribunal to enter judgment upholding the Surcharge. Any Appeals to the Tribunal therefore, without first exhausting the provisions of Section 74 are therefore devoid of merit and the orders sought cannot be granted.

Upshota.Application dated December 22, 2017 is dismissed with costs.b.Parties to file Witness Statements and List of Documents 30 days from today.c.Mention to confirm compliance and Pre-trial directions on September 5, 2023. Notice to issue.

Ruling signed, dated and delivered virtually at Nairobi this 27th day of April, 2023. Hon. Beatrice Kimemia Chairperson Signed 27. 4.2023Hon. J. Mwatsama Deputy Chairperson Signed 27. 4.2023Hon. Beatrice Sawe Member Signed 27. 4.2023Hon. Fridah Lotuiya Member Signed 27. 4.2023Hon. Philip Gichuki Member Signed 27. 4.2023Hon. Michael Chesikaw Member Signed 27. 4.2023Hon. Paul Aol Member Signed 27. 4.2023Tribunal Clerk Jemimah/JonahMs. Komen holding brief for Ondogo for the ClaimantNo appearance by Respondent.Mention for Pre-trial directions on 5. 9.2023. Hon. J. Mwatsama Deputy Chairperson Signed 27. 4.2023NRB.CTC.NO. 626 OF 2017 RULING 0