Wakilii

Deo W. Kasozi and Another v Makumbi George and Others (Miscellaneous Application No. 31 of 2024)

High Court · [2025] UGHC 1116 · 2025 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application to strike out plaint arising from Civil Suit No. 17 of 2024
Decision
Plaint struck out for failure to disclose a cause of action and breach of mandatory dispute resolution mechanism

Observed later treatment

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Holding

The High Court held that the plaint in Civil Suit No. 17 of 2024 did not disclose a cause of action against the defendants. The court found that the dispute concerning alleged unremitted rent from leased property owned by Mirembe Inner Circle Cooperative Savings & Credit Society Limited should have been brought by the society itself as a corporate body, not by individual members. Further, the matter was filed prematurely as it had not been referred to an arbitrator as required under Section 142(1) of the Cooperative Societies Act. The plaint was struck out with costs to the applicants.

Outcome

Plaint struck out for failure to disclose a cause of action and breach of mandatory dispute resolution mechanism

Facts

The applicants and respondents are members of Mirembe Inner Circle Cooperative Savings & Credit Society Limited, a registered cooperative society. The society owns land at Mawokota Block 265 Plot 104 at Nabusanke, which was leased to various tenants. The respondents filed Civil Suit No. 17 of 2024 against the applicants (who served as chairman and treasurer of the society) alleging that they failed to remit full rent proceeds of UGX 339,000,000 to the society, causing economic strain and affecting members' dividends. The applicants filed this application to strike out the plaint, arguing that only the society as a corporate body had standing to sue for recovery of rent, and that the respondents failed to follow the mandatory dispute resolution mechanism under the Cooperative Societies Act requiring referral to an arbitrator before court proceedings.

Issues

  1. Whether the respondents' plaint in Civil Suit No. 17 of 2024 discloses a cause of action against the applicants.
  2. Whether Civil Suit No. 17 of 2024 was premature for failure to comply with the mandatory dispute resolution mechanism under the Cooperative Societies Act.

Orders

  • The plaint in Civil Suit No. 17 of 2024 is struck out.
  • Costs of Miscellaneous Application No. 31 of 2024 awarded to the applicants.
  • Right of appeal explained.

Rules and key headnotes

Civil Procedure — Striking Out Pleadings — Cause of Action — Cooperative Society Disputes
A plaint does not disclose a cause of action where individual members of a registered cooperative society sue in their own names for recovery of rent allegedly due to the society, as the society itself is a body corporate with capacity to sue and is the proper plaintiff for wrongs done to it.
Commercial Law — Cooperative Societies — Corporate Personality — Capacity to Sue
Under Section 32 of the Cooperative Societies Act Cap 107, a registered cooperative society becomes a body corporate with perpetual succession and power to institute and defend suits. The society alone, not its individual members, has standing to sue for recovery of property or funds belonging to the society.
Administrative Law — Cooperative Societies — Dispute Resolution — Mandatory Arbitration
Section 142(1) of the Cooperative Societies Act Cap 107 mandates that disputes touching the business of a registered society arising among members or between members and the society shall be referred to an arbitrator for decision. Filing suit without first referring the matter to arbitration constitutes a breach of the statutory dispute resolution mechanism and renders the suit premature.
Commercial Law — Cooperative Societies — Fraud Allegations — Proper Plaintiff
Where a dispute involves allegations of fraud or misappropriation in a savings and credit cooperative society, Section 115(a) of the Cooperative Societies Act requires that the case be referred to court by the society itself, not by individual members acting in their personal capacity.
Commercial Law — Cooperative Societies — Derivative Actions — Inapplicability of Company Law Principles
The principles of derivative actions developed under company law, including the rule in Foss v Harbottle and its exceptions, do not apply to cooperative societies. Section 153 of the Cooperative Societies Act Cap 107 prohibits the application of the Companies Act to registered cooperative societies, and cooperative societies are governed by a distinct legal framework under the Cooperative Societies Act.

Legislation cited (11)

Cases cited (7)

  • Tororo Cement Co Ltd Vs Frokin International Limited
  • Kapeka Coffee Works Ltd Vs Non performing Assets Recovery Trust
  • Allied Bank International Limited v Sadru Kara and Abdul Kara (Civil Suit No. 191 of 2002)
  • Salim Jamal and 2 Others v Uganda Oxygen Ltd and Another (Supreme Court Civil Appeal No. 64 of 1995)
  • Foss V Harbottle
  • Burland versus Earle (1902) AC 83 at 93
  • Ntare Nathan v Kiboga West Livestock Cooperative Society and Paddy Kabejja (High Court Miscellaneous Application No. 249 of 2012)

Full judgment

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Deo W. Kasozi and Another v Makumbi George and Others (Miscellaneous Application No. 31 of 2024) [2025] UGHC 1116 (29 September 2025)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.