Murata Farmers Sacco Society Ltd v Co-operative\nBank of Kenya Ltd [2001] eKLR

Murata Farmers Sacco Society Ltd v Co-operative

Bank of Kenya Ltd [2001] eKLR

Case Metadata

Case Number:

Civil Case 548 of 2001

Parties:

Murata Farmers Sacco Society Ltd v Co-operative Bank of Kenya Ltd

Date Delivered:

25 Apr 2001

Case Class:

Civil

Court:

High Court at Nairobi (Milimani Law Courts)

Case Action:

Ruling

Judge(s):

Tom Mbaluto

Citation:

Murata Farmers Sacco Society Ltd v Co-operative

Bank of Kenya Ltd [2001] eKLR

Advocates:

Mr Njenga for the Applicant,

Mr Ohaga for the Respondent

Court Division:

Civil

Parties Profile:

Individual/Private Body/Association v Individual/Private Body/Association

County:

Nairobi

Advocates:

Mr Njenga for the Applicant,

Mr Ohaga for the Respondent

Case Summary:

Murata Farmers Sacco Society Ltd

v

Co-operative

Bank of Kenya Ltd

High Court, at Nairobi April 25, 2001

Mbaluto J

Civil Case No 548 of 2001

Co-operative Society

– dispute - dispute concerning the business of a cooperative society within the meaning of section 76 1 (c) of the Societies Act – disputes which ought to be referred to the Co-operative Tribunal.

The plaintiff, a co-operative society, duly registered under the Co-operative Societies Act (Cap 490) sued the defendant, a statutory body established under the Co-operative Societies Act and licensed to carry on the business of a bank and financial institution under the Banking Act. At the hearing a preliminary objection was raised. It was argued that disputes concerning the business of a co-operative society within the meaning of section 76 1(c) of the Co-operative Societies Act, must be referred to the Tribunal established pursuant to section 77 (1) of the Act. It was further contended that the dispute should have been filed at the Tribunal and that the jurisdiction of the High Court arose only on appeals from the Tribunal.

Held:

1. The functions of the plaintiff and defendant institutions fell within the ambit of the business of a co-operative society.

2. The registration of the defendant under the Co-operative Societies Act and not under the Banking Act clearly indicate the intention of the legislature to bring the defendant within the provisions of the Cooperative Societies Act and more particularly section 76 thereof. The Companies Act did not apply.

3. The ‘business of the society’ within the meaning of section 76 of the

Co-operative Societies Act covers every activity of the society within the ambit of its by laws, rules and includes the business of banking and provision of financial services.

4. The Co-operative Societies Act section 76, applied to this suit, hence it ought not to have been filed in the High Court in the first instance.

Objection upheld, suit struck out with costs.

Cases

Gatanga Coffee Growers Co-operative Society Ltd v Gitau

[1970] EA 361

Statutes

1. Co-operative Societies Act (cap 490) sections 76(1)(c); 77(1)

2. Banking Act (cap 488)

3. Companies Act (cap 486)

Advocates

Mr Njenga

for the Applicant

Mr Ohaga

for the Respondent

History Advocates:

Both Parties Represented

Case Outcome:

Objection upheld, suit struck out with costs

Disclaimer:

The information contained in the above segment is not part of the judicial opinion delivered by the Court. The metadata has been prepared by Kenya Law as a guide in understanding the subject of the judicial opinion. Kenya Law makes no warranties as to the comprehensiveness or accuracy of the information

REPUBLIC OF KENYA

IN THE HIGH COURT AT NAIROBI

CIVIL CASE NO 548 OF 2001

MURATA FARMERS SACCO SOCIETY LTD……..

APPLICANT

VERSUS

CO-OPERATIVE BANK OF KENYA LTD………..

RESPONDENT

RULING

When this matter came up for hearing before me on 17.4.2001, learned counsel for the respondent Mr Ohaga raised a preliminary objection. His contention was that the plaint shows that the plaintiff is a Co-operative Society duly registered under the Co-operative Societies Act (Cap 490 of the Laws of Kenya) while at paragraph 2 of the same plaint the defendant is shown as a statutory body established under the Co-operative Societies Act and licensed to carry on the business of a bank and financial institution under the Banking Act. Given that position, Mr Ohaga submitted that any dispute between the plaintiff and the defendant, being a dispute concerning the business of a co-operative society within the meaning of section 76 1(c) of the Societies Act, must be referred to the Tribunal established pursuant to s 77(1) of the Act. He further contended that because of that requirement, the plaintiff was wrong to institute a suit arising from the dispute between it and the defendant in this Court and the same ought to be struck out.

Mr Ohaga also submitted that there was no limitation as to the nature of the matters that fall within the term “business of the society” and that the jurisdiction of the High Court arose only on appeals from the Tribunal. In that regard he referred to the case of

Gatanga Coffee Growers Cooperative

Society v Gitau

(1970) EA 361 in which the High Court at Nairobi interpreted the meaning of the term ‘business of the society’ in the Co-operative Societies Act. At page 363 of the report, it is stated:- “I can see no justification for adopting so restricted an interpretation. In

Wakiro and Another v Committee of

Bugisu Co-operative Union,

(1968) EA 523 at p 527 RUSSELL, J, considered this expression:-

‘It appears, however, to be generally accepted,’ he said, ‘that even though the words must be strictly construed as s 68 of the Act ousts the jurisdiction of the Courts the word ‘disputes’ includes all matters which could form the subject of civil litigation and ‘touching the business of the society’ is not confined to disputes regarding the internal management of the affairs of the society or disputes in regard to the principles which would regulate the conduct of business.’

Section 68 of the Act refers to s 68 of the Co-operative Societies Act (Cap 93) of Uganda, sub-s (1) and (2) of which are substantially the same as sub-s, (1) and (2) of s 80 of the Kenya Act. The expression ‘business of the society’ in my opinion covers every activity of the society within the ambit of its by-laws and rules.”

The business of the plaintiff according to the plaint is the provision of financial services to its members and depositors while that of the defendant is as described in paragraph 2 of the plaint “to carry on the business of banking and financial services under the Banking Act.” As to the business of the plaintiff, it must be clear from the very wide interpretation given to the phrase “business of a co-operative society” by Simpson J in the case of

Gatanga Coffee Farmers Growers v Gitau

that the term must include “every activity of the society within the ambit of its by-laws and rules”. In my view the dispute about the defendant’s alleged failure to honour the plaintiff’s cheques is one which squarely falls within the business of both parties.

Mr Njenga who represented the applicant in this matter submitted that the business of the defendant is banking and that the matter complained of is between a bank and its customer, the complaint being that the defendant had breached that relationship. According to him the matter did not therefore fall within section 76 of the Co-operative Societies Act.

I do not however agree with Mr Njenga’s views. In my opinion, the words ‘the business of the society’ appearing in section 76 is as aforesaid wide enough to include the business of banking and the provision of financial services. By the plaintiff’s own admission as contained in the plaint, the plaintiff’s basic business is the provision of financial services while that of the defendant again according to the plaintiff’s own description in paragraph 2 of the plaint, is ‘the carrying on the business of a bank and financial institution’. The functions of the two institutions are therefore similar and they fall within the ambit of “the business of a Co-operative Society”. In any case the registration of the defendant under the Cooperative Societies Act and not under the Banking Act clearly indicates that the intention of the Legislature was to bring the defendant within the provisions of the Co-operative Societies Act and more particularly section 76 thereof. Clearly the Companies Act does not apply.

For the above reasons, I am of the view that section 76 of the Co-operative Societies Act applies and this suit ought not to have been filed in this Court in the first instance. Accordingly, the objection is upheld and the suit struck out with costs.

Dated and delivered at Nairobi this 25

th

day of April, 2001

T. MBALUTO

……………

JUDGE