Sheracco Co-operative Savings and Credit Society Limited v Karuturi Limited (Under receivership) & another [2021] KEELRC 1303 (KLR)
The bottom line
#Kenya's Employment Court removed CFC Stanbic Bank from a Sacco savings suit because the Sacco proved no relationship or wrongdoing by the bank.
What this practically means
#Executive summary
#Key legal issues
#Nexus between the plaintiff and the 2nd Defendant
No relationship was demonstrated between the applicant and the plaintiff warranting the 2nd Defendant's continued joinder
The court examined the plaint and the parties' affidavits and submissions. The plaintiff's case was that the 2nd Defendant, as debenture holder, appointed a receiver-manager over the 1st Defendant and was thus vicariously liable. The court found that the claimant had not demonstrated that the 2nd respondent actually deducted the dues or that any agency or employment relationship existed between the claimant and the 2nd respondent.
Employer-employee relationship as basis of claim
There is no employer-employee relationship between the claimant and the 2nd respondent
The court reasoned that the claim rested on an alleged employment relationship matter, but the claimant failed to demonstrate any employee-employer relationship with the 2nd respondent. Without such a relationship, the vicarious liability theory collapsed and the 2nd Defendant was wrongly sued in this court.
Striking out a wrongly joined party
The application under Order 1 Rule 10(2) of the Civil Procedure Rules is merited to the extent that the 2nd respondent is struck out of the suit
Having found no demonstrated relationship, agency, deduction or employment nexus between the plaintiff and the 2nd respondent, the court concluded that the 2nd respondent had been wrongly sued and allowed the application striking out its name, while leaving the suit to proceed between the plaintiff and the 1st defendant.
Legal principles established
#- A party seeking to hold a debenture holder/receiver's principal liable must demonstrate the actual agency or deduction relationship; a claimant must show how the 2nd respondent actually deducted the dues and failed to remit them
- In an application under Order 1 Rule 10(2) the court examines the plaint as filed and the relationship pleaded; absent an employer-employee or agency nexus, the wrongly joined party is struck out
Court orders
#- 1.The 2nd respondent (CFC Stanbic Bank Ltd) is struck out of this suit
- 2.No order as to costs
- Jurisdiction invoked
- Original jurisdiction of the court hearing a suit instituted by plaint dated 19th March 2016
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Sheracco Co-operative Savings and Credit Society Limited v Karuturi Limited (Under receivership) & another [2021] KEELRC 1303 (KLR)", Case Analysis (2021). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/1303/eng@2021-06-29
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.