REPUBLIC KENYA

IN THE CO-OPERATIVE  TRIBUNAL AT NAIROBI

C.T.C. NO.407 OF  2018

WYCLIFFE SHIVACHI AMUDAVI.............................................CLAIMANT

VERSUS

INVEST AND GROW SACCO LTD.....................................RESPONDENT

JUDGMENT

The Claimant  has  moved  the Tribunal,  Vide the Statement of Claim  dated  8.8.2018 seeking  for the following  reliefs:

(a) An order  that the Respondent  does refund  him Kshs.320,000.00 being the  shares wrongfully  and illegally  debited  from his account No. xxx-xxxxxxxx-00;

(b) An order  that the Respondent  does  refund  the Claimant  the sum of  Kshs.160,000.00 being  the dividend,  due but  not paid  to him from  the year, 2015;

(c) General  damages;

(d) Interest  and costs.

Accompanying  the claim  is the  Claimant’s  Witness  Statement  filed on  24.8.2018 and his list  and bundle  of documents  filed on  8.8.2018. The Claimant  appeared  in the Tribunal  to testify,  adopt  the Witness  Statement  and produce  the said  documents  on  13.1.2020.

It is the  Claimant’s case  that at all  times  material  to the suit,  he was  an  employee  of the Teachers  Service  Commission (TSC). That  he was also  a member  of  the Respondent.  He avers  that his relationship  with the Respondent  started  encountering  challenges  in the year, 2014. He avers  that when  he could not  resolve  the same, he moved  the Tribunal  for injunctive  reliefs  under  CTC.No.10/2016. That the said  claim was concluded in the year,  2017 wherein  the  Tribunal  held that  the Respondent  had violated  the loan  policy  and consequently  awarded  him costs.

That his complaint  in this suit  is that  despite  the Ruling  of  5.12.2017, the Respondent  went ahead  and unlawfully  withdraw  his shares  in excess  of Kshs.320,000.00. That further,  the Respondent  has since  2015,  failed  and/or  neglected  to remit  his  dividends.  He further accuses  it of unilaterally  reducing  his monthly  contributions from  Kshs.2000/= to Kshs.1,350.000/=.

The Claimant  reiterated  these averments when he  appeared  to testify  on 13.1.2020. During cross  examination,  the Claimant  was referred  to  his loan  statement (Exhibit  3 (a)). He  confirmed  that the statement  showed that he  had defaulted  in repaying  the loan.

Upon further cross examination, he  clarified  that the  loan statement  showed  that he had defaulted  in  repaying  the loan  because  he was  attached  to recover  other loans. That  the said  loans  were from  faulty  guarantorship.  That he has pursued  the matter  criminally. That  he did  not guarantee  the persons  the  Respondent alleges  to have guaranteed.

That  as for his  loan  of Kshs.360,000/= the Claimant  avers  that he applied  for it but before  he could receive  the money, his account  was frozen. That when  he went to  complain  he was informed  that there  was a computer error. That  the same  incident  happened again  on  13.12.2014.  That on January  9/2015,  he also  received  another  alert  that his account  had been  frozen. That  when he went  back to  complaint, he was  informed  that the  issue would  be sorted  out by the CEO. That  the CEO   told  him to apply  for Kshs.800,000/= to clear the outstanding  loan.

As regards  his shares, the  Claimant contend  that the Respondent utilized  it without  notifying  him. That  he had  capitalized  his shares.

Respondent’s Case

The Respondent  has opposed  the claim  by filing  a Statement  of Defence  dated  4.9.2018.  It also  filed  a list  and bundle  of documents  13.11.2019. It also  called  one witness – Joseph  Churchil,  its Credit  Recovery  Officer to testify  on 13.1.2020.

It is  the Respondent’s  case that  the Claimant failed  to service his  loans  thus  resulting  in default.  That it  did not  withdraw  his shares  worth  Kshs.320,000/=. That  his claim  is Res judicata in view  of CTC.No. 10/2016.

During  his testimony  DW-1 Joseph  Churchil stated  that the Claimant  was granted  a loan of  Kshs.360,000/= on  15.12.2014. That subsequently,  he withdrew  the said  loan  as follows:

(a) 18.12.14- Kshs.20,000

(b) 22.12.14- Kshs.25,000

(c) 25.12.14- Kshs.  5,000

(d) 1.1.2015- Kshs.   5,000

Further,  he stated  that the  Claimant withdrew  a sum of  Kshs.110,000.00/=.

That  the Claimant  repaid  the loan  until April,  2016 when  he began  defaulting. That  the loan was recovered  from his shares. That on 18.4.15,  the Claimant  was paid  dividends  of Kshs.27,187.  That again  on  21.4.2016  he was  paid dividends  of  Kshs.34,386. That  in view  of  this,  it is not therefore  true  that  he was  not paid  the same.  That dividends  stopped  flowing  to  him from  the date his  shares  were utilized  to repay the loan.

As  regards the claim  of fictitious  loans,  DW-1 stated  that the Claimant  has not  led evidence  to prove his allegation. That he  guaranteed  loan for people  who defaulted  in repaying  their loans.

Upon cross examination, DW-1 stated that the Respondent advanced  the Claimant  a sum of  Kshs.360,000/=. That the said loan would be recovered by way of monthly deduction from his salary.  That  the loan would  be repaid  in  48 monthly  installments. That his  salary  was  processed  through  the Respondent.

That once  the loan was  disbursed, it  was recovered  through  the salary  until April, 2016. From  May  2016,  salary flow  through  the account  was no sufficient  to pay interest  and the loan. That  most probably, the Claimant  had committed  his salary  elsewhere. That as at April, 2016,  the salary  that came into  his account  was Kshs.5,621, yet  the loan  repayment  was supposed  to be  Kshs.13,176. That as at April,  2016, the loan  balance  was  Kshs.259,712. That  the principal  amount recovered  from  the  shares  plus  interest  was Kshs.259,710 and Kshs.44,115 respectively.

That at the time  of recovering the outstanding  loan from  his shares,  the Claimant  was duly  notified.

As regards the loan  he  guaranteed  other people,  the Respondent  contend  that  the Loan  Application  forms  for  the said  persons  to have the  Claimants details.

Written Submissions

At  the close  of their cases,  the Tribunal  issued directions   for  filing  of  written  submissions. The Claimant filed  his on 30.1.2020 while  the Respondent did so on 4.3.2020.

Claimant’s  Submissions

Vide  these submissions,  the Claimant  reiterated the averments  made above and further submitted  that whilst  he was dutifully servicing  his loan  of Kshs.360,000/=, the  Respondent  in May , 2016 froze  his account  thus  prompting  him to institute  CTC. No.  10/2016.

That  vide  its Ruling  delivered  on  5.12.2017,  the Tribunal  held  thus:

“ On  12.6.2017,  the  parties  were  heard. It  came out  clearly  after taking  the Respondent’s evidence that  no further deductions  were being  made, the  entire loan  had been  paid off  by April,  2016. That being  the case,  it was agreed  that the only outstanding  issue was which  party  was to bear  costs  of the suit”.

That  the Tribunal  went  ahead  to Rule thus:

“ The Respondents  being  the cause  of the entire  confusion, and irregular  deductions  will bear  the costs  of the suit. “

That subsequent  to the Ruling, he did not  take any  loan.  That  the said  decision  of the Tribunal  was never appealed against. The Claimant  thus wonders  why the Respondent  took away  his shares  in 2018. That it is on this  basis  and on the strength  of the decision  of the  Tribunal  in CTC. No. 10/ 2016  that the Claimant  wants  the  orders sought  to be  granted.

Respondent’s  Submissions

Vide its written submissions the Respondent reiterated  the averments  in its pleadings  and the evidence of DW-1 Joseph Churchil.  Further,  the Respondent contended that it became evident  that the  Claimant  took  a loan  of Kshs.360,000/= on 15.12.14 and later on defaulted  in repaying it.  That  upon  default, it issued  all the requisite  Notices  before  recovering  the loan  from his  shares.

Issues  for determination

This  claim  has presented  the following  issues  for determination :

(a) Whether  this suit  is Res Judicata in view  of  CTC. No. 10/2016;

(b) Whether  the Tribunal  in CTC. No 10/2016  made conclusive  findings  of fact as regards  the Claimants indebtedness to the  Respondent;

(c) Whether  the Claimant  has made out  a proper  case for refund  of shares  amounting  to Kshs.320,000/= and  dividends  of Kshs.160,000/=; and

(d) Who  should meet  the costs of the suit.

Res Judicata

Though  the Respondent  did not  dwell  on this issue during  hearing  of  the claim  and even  at submission  stage, we note that  he raised  it  at paragraph  6 of  its Statement  of Response. The question  that begs  then  is  whether  the Instant  Claim is  res judicata.

Section  7  of the Civil  Procedure  Act  (Cap 21)  Laws  of Kenya  defines  res judicata  to mean.

“ No  court shall  try any  suit  or issue  in which  the matter  directly  and  substantially  in issue  has been  directly and substantially  in issue  in a  former  suit between  the same parties,  or  between  parties  under whom  they or any of them claim,  litigating  under the same  title,  in a court  competent  to try  such  subsequent  suit   or the suit  in which  such issue  has been  subsequently  raised, and has been heard  and finally  determined  by the court.”

We have  perused  the Statement of  Claim  in CTC. No. 10  of 2016. The Claimant  is seeking  for an order  of injunction  barring  the Respondent  from deducting  loan from  his  entire salary and directing  it to deduct  the same  at normal  rates.  The claim  in the instant suit  relate  to refund  of  shares and  payment  of  dividends. Clearly,  the issues  in these  two suits are different.

Secondly, there  is nothing  on  record  to show that  the said  CTC. No. 10/2016  was heard  and  determined  on  merits. What  has only  been furnished  to us is a Ruling  delivered  on  5.12.17.  This cannot be said  to have disposed  of the suit.  We thus find  that the instant claim is  not  Res Judicata.

Whether  the Tribunal  in CTC. No. 10/2016  determined  the issue of  the Claimant’s  indebtedness.

At paragraphs 8 and  9  of his  written  submissions,  the Claimant  suggests  that the Tribunal  in CTC. No. 10/2016  determined  the issue of  his  indebtness  to the Respondent  and  that  it was therefore  wrong  for the Claimant to deduct  his shares in the year  2018.

Firstly,  we note that  the Claimant  has  not  exhibited  a Judgment  emanating from CTC. No. 10/2016  to augment  his contention  that the issue  of  indebtness  has been conclusively  determined. What  the Claimant  has annexed  is a Ruling  delivered  on  5.12.2017. At  paragraph  3 of  the said Ruling,  the Tribunal  found that  the entire loan  had  been paid off  by April, 2016. It  then went  ahead to  rule on the issue of costs.  The question that comes  to  mind is which  loan was the Tribunal referring  to? Secondly, the decision  was made at an interlocutory stage. What  this meant  is that the orders  of  the Tribunal  were to subsist  to until  the hearing  and  determination  of the main  claim.  Now that  the Claimant  did not  lead evidence  to show  that the said claim  was heard  and determined  on merits, we find that the Ruling  of the Tribunal  in the said Claim  is  not binding  on this Tribunal.

Refund  of shares  and dividends

This  issue   forms  the crux  of this case. The question  arises  as to whether  the Respondent  illegally  withdrew  the  Claimants shares amounting  to  Kshs.320,000.00. Further,  the question  abound  as to whether  the  Respondent  refused  to  pay the Claimant  dividends  from the year,  2015. The Claimant  confirms  having borrowed  a loan of  Kshs.320.000.00 in 2014. That  it was  a term  of  the said  loan  that  he would be  paying  Kshs.7500/= per month. That  the same would  be recovered  from his salary  as his salary  was processed  through  the Respondent.  That  the Respondent  regularly  recovered  the loan  until  May, 2016 when  it froze  his accounts. That  when this happened,  he instituted   CTC. No. 10/2016 and  the Tribunal  ruled that  he did not  have  any other  loan. That  he was  perplexed  to note that  the Respondent  went ahead  to withdraw  his  shares  to allegedly  set off  the loan.

On its part,  the Respondent  contend  that the Claimant  took the  loan  and later  defaulted  in repaying  it.

We have perused the Claimants loan statement filed by the Respondent on 19.1.2019. It shows that the Claimant received a loan of  Kshs.360,000/=.

On 12.5.2014, the said statement  shows  repayments from  1.2.2015 until  27.4.2016. That as at this date, that is, 27.4.2016, the outstanding  loan was  Kshs.259,712.70. There is nothing on record to demonstrate  if  the said  loan was  ever repaid.

We note that  the Claimant  contend that  as at April,  2014, he had  completed  repaying  the  loan.  Apart  from stating  so,  he did not  lead evidence  to  confirm  this.  The loan  statement produced  by  the Respondent  confirms  this  his loan  standing  as at 27.4.2016.

We thus find that in the absence  of proof  of repayment  of the loan,  the Claimant  was  in arrears and the Respondent  was legally  bound  to apply  his shares  to recover  the same.

As regards the procedure  for recovery of the shares,  the Claimant  contend  that  the Respondent  did not  comply  with the provision of Rule  30  of the Co-operative  Society  Rules.  He contends  that the said  Rule  required the Respondent  to give a mandatory  14 days’ Notice before  exercising  its  rights under section  34  of the Co-operative  Societies  Act  (Cap 490) Laws of  Kenya. He  then cited  the case of  Republic  - versus-  Legal  Education  &  Another, Exparte Sabiba  Kassamia  & Another[2008] eKLR to buttress the importance  of Service  of Notice.

During his  testimony, DW-1 stated that  the  requisite Notice  was issued  to  the Claimant  but  did not produce  the same  before  us. The question  that  arises  is whether  the  Respondent  violated  Rule  30  of the Co-operative  Society  Rules  and  if so,  whether  the same  is fatal  to the Respondent’s case.

Whilst  the Respondent  confirmed  that it did not  produce  the requisite  Notice  in court,  DW-1 stated  that indeed  the said  Notice  was issued.  We thus find  that whilst  the Respondents  state so,  it  did not  lead evidence  to buttress it.  It therefore  follows that as we write  this Judgment, there is  nothing  on  record  to  show that Rule 30  was  complied  with.  The question then is whether, in the absence  of  the said  notice,  the Claimant’s  claim should succeed.  Our answer  is in the negative.  It is an established fact that as at 27.4.16,  the Claimant  was in arrears to the  tune of  Kshs.259,712.70. The  said arrears  (plus interest) was due  and  that failure  to exhibit  documents  confirming  proof  of  issuance  of Notice  of utility of the shares is not fatal  to the suit.

Payment  of dividends

The Claimant claims payment of dividends  for the period  beginning  May,  2015.  He has tabulated it at Kshs.160,000. The  Respondent  has opposed  the  same and  averred  that  the Claimant  was paid  dividends amounting to Kshs.27,187/= on 18.4.2015 and  Kshs.34,386/= on  21.4.2016. That  dividends  stopped  flowing  to him from  the date  his shares  were applied  towards  settlement  of the loan  arrears.

We have considered the material  before us. We  note that  the Claimant  only pleaded  a figure  of Kshs.160,000/= as dividends for the year, 2015 onwards without  specifically proving  it.  We  have flipped  through  all  the documents on record  and  fail  to find any  which  proves  this figure. If the absence of  prove of accrual  of the said  dividends, the  claim falls  float  on its foot. It is therefore  disallowed.

Conclusion

The upshot  of the foregoing  is that  we find  that the Claimant  has not  proved  his  case  on a balance  of  probability  and hereby  dismiss   it with no  orders  as to costs.

Judgment  dated,  signed  and delivered  in accordance  with the  directions  given  by the  Hon. Chief Justice  on  15.3.2020, this 9^th day of April,  2020.

Prepared by Hon. B.Kimemia Chairman, Hon. F. Terer Deputy Chairman, P. Gichuki Member.

With consent  of the parties, the  final orders  to be delivered  by email, as accordance  to the prevailing  measures  during  the covid-19.

Hon. B. Kimemia        Chairman                    Signed              9.4.2020

Hon. F. Terer               Deputy Chairman      Signed                 9.4.2020

P. Gichuki                              Member             Signed                9.4.2020