Njeru v Nawiri Sacco Limited & another (Tribunal Case 267/E316 of 2022) [2025] KECPT 338 (KLR) (26 June 2025) (Judgment)

Neutral citation: [2025] KECPT 338 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 267/E316 of 2022

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

June 26, 2025

Between

Ephantus Mugendi Njeru

Claimant

and

Nawiri Sacco Limited

1^st Respondent

Restorers Consult Auctioneers

2^nd Respondent

Judgment

1.The Statement of Claim dated 13th May 2022 was filed on 16^th May, 2022 for orders of:i.A permanent injunction against the Respondents jointly and severally, their agents, employees, servants or anyone claiming through them, restraining them from attaching, selling at a public auction or otherwise land parcel numbers Ngandori/Kirigi/15901, Ngandori/Kirigi/15555 and Ngandori/Kiriari/4953ii.An order to account.iii.An order that the loan repayment period be extended with 18 more months.

2.In the year 2020, the Claimant applied for a loan facility from the 1^st Respondent for the sum of Kshs. 3,000,000/= which amount was deposited in three separate loan accounts numbers XXXXXXXXXXXX, XXXXXXXXXXXX and XXXXXXXXXXXX.To secure the loan, the Claimant charged his properties namely Ngandori/Kirigi/15901 and Ngandori/Kirigi/15555 as security for the loan together with a guarantor John Njue Mwaniki who offered his property namely Ngandori/Kiriari/4953 as security.

3.According to the Claimant, the said loan facility was applied and utilized for the purposes of working on tenders awarded to him by the Embu County government through companies owned by him trading in the name of Ephatec Contractors Limited and Wangalex Ventures Limited and which purpose the Claimant disclosed in his loan application form.When the County Government of Embu failed to pay for the work the Claimant had done for the said tenders, the Claimant fell back on servicing the loans for which he communicated the same to the 1^st Respondent about the delayed payments and negotiated for more time to service the loans, but the 1^st Respondent instructed the 2^nd Respondent to attach and sell the charged properties.

4.The 2^nd Respondent served the Claimant with the redemption notice on 25^th February 2022 claiming the sum of Kshs. 3,762,943/= on behalf of the 1^st Respondent failure to which the charged properties will be sold at a public auction.

5.It is the Claimant's position that the statutory notices do not disclose the correct loan amount, and that the 1^st Respondent is in breach of their duty of care and good faith having failed to issue the Claimant with the accurate loan account statement despite numerous requests by the Claimant, necessitating the filing of the suit.

6.The 1^st and the 2^nd Respondent filed their Statement of Defence dated 10^th June, 2022 stating among others that the Claimant paid a few installments but later on ceased paying completely, resorting to deposits that cannot even pay interest accruing. It was the Respondents position that the Claimant had failed to pay his loan which had accrued balances of Kshs. 3,922,152.14/= and that they followed the laid down procedure and did not commit any breach to proclaim and issue notification for sale of the charged properties.

7.The Respondents also stated that the Claimant’s loan account statements have always been available both physically and digitally and are accessible on demand, and that the Claimant has not moved the Honorable Tribunal with clean hands and as such not entitled to the reliefs he is seeking.

8.During trial, the Claimant testified that he had paid in excess of Kshs.2.100,000/= and the loan arrears could not be Kshs.3,400,000/=, and that he had requested the 1^st Respondent to restructure his loan which they refused. That the arrears he owes the 1^st Respondent cannot be more than Kshs.1,100,000/=.

9.Joseph Mwaniki Kithinji the Credit Manager of the 1^st Respondent testified and stated among others that the Claimant took a business loan which was guaranteed by three properties and when he failed to pay, they engaged the 2^nd Respondent to help with recovery.

10.On 4^th November, 2024 this Tribunal gave orders for the parties to file their written submissions . The Claimant filed his submissions dated 13^th January, 2025 stating among others:i.That following negotiations, the 1^st Respondent issued a letter of loan restructuring on 4^th December 2023.ii.That the 1^st Respondent failed in its legal and contractual obligations towards the Claimant by withholding crucial information and acting in a manner that prejudiced the Claimant’s rights. That despite repeated written requests, the 1^st Respondent failed to provide loan statements to the Claimant as a result of which the Claimant was unaware of his actual loan balance, which significantly hindered his ability to manage his loan repayment and comply with the terms of the loan agreement.iii.That the 1^st Respondent retained the Claimant’s title deed for land parcel Ngandori/Kirigi/7106 which the Claimant had offered as security for a loan issued to Charles Mbogo where he was the guarantor despite the loan having been fully repaid.iv.That the Claimant had informed the 1^st Respondent of the intention to sell Ngandori/Kirigi/7106 to offset his current loan balance, but the 1^st Respondent refusal to release the title deed denied the Claimant the opportunity to resolve his financial challenges. The 1^st Respondent provided no lawful justification for withholding the title, raising questions about their intentions and good faith.v.That the actions of the 1^st Respondent demonstrate a lack of transparency, accountability and fairness.vi.That the 1^st Respondent breached their duty of good faith by failing to engage reasonably and meaningfully with the Claimant who had communicated his financial challenges caused by delayed payments from the Embu County Government. That despite acknowledging receipts of the Claimant's correspondence, the 1^st Respondent did not provide assistance or alternatives such as restructuring the loan terms or pausing enforcement measures.vii.That the 1^st Respondent on 2^nd November 2024 refused to accept payment of Kshs. 500,000/= without offering any explanation, effectively undermining the Claimant's efforts to address the loan deficit. That the refusal demonstrated a lack of goodwill and raised questions about the 1^st Respondent’s underlying intentions, particularly in light of their insistence on proceeding with the auction.viii.That the Claimant has established a strong case for the grant of a permanent injunction to restrain the Respondents from auctioning the charged properties. The 1^st Respondent refusal to provide loan statements or release the title deed for the fully repaid loan properly demonstrates their unwillingness to act in a fair and transparent manner. That furthermore, the Claimant has shown that the Respondents have consistently refused to consider his reasonable proposals, including partial payments and alternative repayment options to resolve the arrears.ix.That the irreparable harm likely to be caused by the sale of the properties outweigh any inconvenience to the Respondents as one of the charged properties serves as the permanent residence of the Claimant's guarantor whose right would be severely prejudiced by the proposed auction.x.That the 1^st Respondent should be compelled to disclose the loan balance as this measure would ensure that the Claimant is afforded a fair opportunity to address the arrears without the undue prejudice caused by the 1st Respondent’s refusal to co-operate.

11.The Respondents on their part filed their written submissions dated 14^th January, 2025 stating among others:I.That the loan was not given on condition that it was to be repaid when the Claimant was paid by the Embu County Government.II.That the Claimant is a loan defaulter and as at the date of the hearing, which was 4th November 2024, the loan arrears stood at Kshs. 3,494,000/=III.That it is now more than 5 years since the Claimant got the loan and the Claimant has not demonstrated or proved that the first respondent refused to supply him with his loan statement indicating accurate figures as outstanding.IV.That the only lawful way to recover the loan after default was by realizing the securities charged by advertising for sale the land parcels offered as security.V.That given that the 1^st Respondent was in arrears to the tune of Kshs. 3,494,900/=, the 1^st Respondent had every right to execute the charges as long as the Claimant remained in arrears.VI.That the Honorable Tribunal cannot issue a permanent injunction against the 1^st Respondent to restrain it from exercising its power of sale as chargee by attaching through its agent the (2^nd Respondent) the charged properties as long as the loan remains in arrears.VII.That courts have no jurisdiction or power to rewrite contracts for parties who go to court for determination of disputes, and as such, the Honorable Tribunal cannot order the 1^st Respondent to restructure the loan.VIII.That the Claimant has not proved his case on a balance of probabilities as he has not demonstrated or established a proper cause and basis to warrant grant of the orders he has sought before the Honorable Tribunal.

Analysis and Way-forward

12.We have considered the pleadings, evidence gathered during the hearing and the written submissions filed, and it is our considered decision that given that the parties are yet to reconcile their statement of accounts, it is not possible at this moment to have the exact figures of the accrued loan amount. As such we make the following orders:i.The parties are hereby ordered to meet and undertake reconciliation of accounts to ascertain the actual loan balance within Sixty (60) days from the date of this judgement.ii.We issue an order restraining the sale of Property No. Ngandori/Kirigi/15901, Ngandori/Kirigi/15555 and Ngandori/Kiriari/4953 for 60 days pending reconciliation of the accounts between the Claimant and the 1^st Respondent.iii.We issue a permanent injunction restraining the 1^st and 2^nd Respondent jointly and severally, their agents, employees, servants or anyone claiming through them, from attaching, selling at a public auction or otherwise interfering land parcel number Ngandori/Kirigi/7106 as there is no evidence it was not agreed upon as a security for the debt subject of this suit.iv.Each party to bear their own costs.

JUDGMENT SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 26 ^TH DAY OF JUNE, 2025. HON. J. MWATSAMA - DEPUTY CHAIRPERSON SIGNED 26.6.2025 HON. BEATRICE SAWE - MEMBER SIGNED 26.6.2025 HON. FRIDAH LOTUIYA - MEMBER SIGNED 26.6.2025 HON. PHILIP GICHUKI - MEMBER SIGNED 26.6.2025 HON. MICHAEL CHESIKAW - MEMBER SIGNED 26.6.2025 HON. P. AOL - MEMBER SIGNED 26.6.2025 Tribunal Clerk GechikoNo appearance by partiesJudgment delivered in absence of the parties.