1.The matter for determination is a Notice of Motion application dated March 20, 2020 seeking the following orders:a.That the Notice of Appointment of advocates and Defence filed by the respondent be struck outb.That judgment be entered against the Respondent as sought in the statement of claim.c.That the costs of this application be borne by the Respondent.Based on the grounds on the face of the Application and the Affidavit of Naftali Macharia and Supplementary Affidavit deponed on November 19, 2021.The Application is opposed vide the Replying Affidavit of the Respondent deponed on March 19, 2021.The application was ordered to be dispensed with by way of written submissions. The Claimant filed written submissions dated May 2, 2022 while the Respondent filed on August 18, 2022.
2.The Claimant submitted that the Respondent did not enter appearance but only filed a ‘notice of appointment’ instead of a Memorandum of Appearance.That the Respondent has never entered appearance as provided under Order 1 Rule 1 Civil Procedure Rule, hence the Defence and Appearance are unproperly on record.That to challenge an Inquiry they must file an Appeal against a Surcharge within 30 days under Section 74 (1) Cooperative Society Act.That despite Service of Intention to Surcharge and Surcharge Orders having been served, the Respondent did not take any action or Appeal.That the Special General Meeting adopting the Inquiry Report was done.The Respondent submitted that they filed a Defence to deny the claim of the Surcharge.That there was inadvertent error by the Claimant who filed a notice of appointment as opposed to a Memorandum of Appearance. That justice should be administered without undue regard to procedural technicalities.
3.That the Respondent was not summoned before the Inquiry Officers to give his side of the story and that he was never served with the Notice for Special General meeting, Inquiry Report, Notice of Intention to Surcharge and Surcharge Order.That the delivery book only indicates service of letters and not ‘surcharge orders’ hence he was not served.That had the proper procedure been followed, the Respondent would have exercised his right under Section 74 Cooperative Society Act by filing Appeal.That the Tribunal should therefore dismiss the application.
4.We have carefully considered the submissions of the parties and the documents on record.We note that the Inquiry was advertised in the Kenya gazette GN4620 of June 26, 2015. The gazette notice indicated that the Inquiry would last 10 days.An Inquiry Reports dated April 28, 2016 was presented to the Claimant wrote the details of the ‘summary for surcharge.’A notice of Special General Meeting was issued on April 13, 2016.Notice of Intention to Surcharge and Surcharge dated August 22, 2016 and November 18, 2016 respectively have been filed.A delivery book for Surcharge Notice and Surcharge Order was filed.We have noted the Replying affidavit of the Respondent and the contents therein.The provisions of Cooperative Society Act are clear on how Inquiry is conducted. Its clear that the members of the society were all aware that there was in Inquiry being conducted.
5.The said inquiry was gazette in the Kenya gazette. The Respondent herein was the Vice-Chairman of the society at the time of the Inquiry. The officers and members are required under section 58 (2) Cooperative Society Act to produce all documents as required.We note that the Inquiry was prompted by members during a Special General Meeting held on November 21, 2014. That a resolution to resolve the Board was made to pave way for the investigations. An interim Board of 5 members was also appointed.That among other resolutions was a vote of no confidence of the sitting Board of Directors the Respondent was a member of the Board.The procedure for the Inquiry is clear under section 58 Cooperative Society Act. The members were all aware of the inquiry that was ongoing especially the Board members.The Commissioner for Cooperative Development (CCD) under Section 73 Cooperative Society Act issued the Surcharge Orders after it was adopted by the Special General Meeting. The procedure to challenge a Surcharge is clear under the act. That a person surcharged is required to Appeal against the order of the Commissioner for Cooperative Development within 30 days of issuance. Under section 74 Cooperative Society Act. If a person fails to appeal within the period of 30 days the amount is recoverable as a civil debt summarily under section 75 (1) Cooperative Society Act.
6.In the instant case, we note that the Respondents were aware of the Inquiry and the outcome of the same by virtue of being Board members. They were the custodians and the governing body of the society. All the powers were vested in them for the proper management of the society.The Management Committee are therefore liable for any losses as enumerated under section 28 (6) Cooperative Society Act.During the Inquiry, the members of the Board were responsible to ensure that they cooperated with the Cooperative Officers to the final conclusion of the Inquiry. A notice was sent to the members for the Special General Meeting and failure to attend the Special General Meeting cannot be blamed upon the Claimant.We note that the notice and Surcharge Orders were served as per the Delivery book provided.The essence and duty of the Tribunal after the issuance of a Surcharge Order is either to adjudicate upon the Appeal under Section 74 or to recover the sum surcharged summarily under Section 75 Cooperative Society Act
7.There having been no appeal against the Surcharge Orders, the Tribunal is vested only with the jurisdiction of summary recovery of the surcharge amount under Section 75 (1) Cooperative Society Act. If the procedure for Inquiry leading to Surcharge is to be challenged, the same ought to be done before the expiry of the 30 days of service of the Surcharge Order.
8.The Respondent challenges the service by indicating that what was served was a letter. We note the title of the delivery book as ‘notice’ and ‘order’.The Respondent cannot purport not to be aware of the Inquiry, yet he was in the management of the society.If he was not aware, then it means that he failed to adhere to the duties accorded to him under Section 28 Cooperative Society Act circumstances. This is because there was a Special General Meeting on November 21, 2014 called by members and authorizing the Commissioner for Cooperative Developments to carry out an inquiry. Thereafter, a gazette notice was issued and a temporary committee put in place. How can a Committee/Board Member not know of such landmark decision of the society which he was empowered to manage?.
9.We note that the purpose of exercise of jurisdiction in this claim is to enter judgment in terms of the Surcharge Order for purpose of recovery as a civil debt, the surcharged amounts.If the Respondent wishes to challenge the mode and procedure of issuance of the Surcharge, they were to do so after service of intention to Surcharge. We are convinced that the notice to Surcharge was properly served.There being no Appeal preferred against the Surcharge Order, we have no jurisdiction as it is now to look into the process leading to the fairness or otherwise of already issued Surcharge Order- Alfayo Nyairo – versus- Nyabomite Farmers Cooperative Sacco Limited eKLR.
10.On the issue of striking out of the Defence, we have noted the submissions of the parties. On this instant suit, as discussed above, the issue of whether the Surcharge Order being right or wrong, does not suffice.The purpose of the Tribunal in the matter is just to adopt the Surcharge Order of the Commissioner for Cooperative Development to enable recovery of the same. Section 75 (1) Cooperative Society Act is clear, and crafted in mandatory terms. There is therefore no avenue for arguing out the matter on the basis of the procedure of the Commissioner for Cooperative Development Felix Otande-versus- Commissioner for Cooperative Development eKLR.
11.We find that the Notice of Motion application dated March 20, 2020 is allowed as prayed with costs. Judgment is entered as prayed in favour of the Claimant against the Respondent for Kshs 1,086,884/80 plus costs and interest as prayed in the claim.