The High Court has struck out a petition seeking to liquidate the Kenya Union of Savings and Credit Cooperatives Limited (Kusco), finding that the Insolvency Act cannot be directly used to wind up a registered co-operative society.
Justice Rhoda Rutto upheld a preliminary objection by Kusco, through lawyer Cecil Miller, challenging the court’s jurisdiction to hear the insolvency petition.
The petition had been filed by Kuscco/RUPSA Regulated NWDT Sacco Society Limited on March 17, 2026, seeking a liquidation order against Kusco under the Insolvency Act.
Kuscco opposed the petition, arguing that its liquidation and dissolution are governed by the Co-operative Societies Act and that the Insolvency Act does not apply to co-operative societies except where specific provisions have been incorporated through regulations.
The court agreed with Kuscco’s interpretation of the law, noting that section 95 of the Co-operative Societies Act expressly excludes the Insolvency Act from applying to co-operative societies, subject to rules made under section 91.
“Except as expressly provided by rules made under section 91, the Companies Act (Cap. 486), the Insolvency Act (Cap. 53) and the Registration of Business Names Act (Cap. 499) do not apply to a co-operative society,” the judge stated.
Justice Rutto further rejected an argument that section 91(2A) of the Co-operative Societies Act automatically brings the Insolvency Act into operation for co-operative societies.
“Rather, it confers a delegated and conditional power upon the Cabinet Secretary, to apply selected provisions of that Act through rules made pursuant to section 91(2)(ra),” she said.
The judge noted that Kuscco is a co-operative society registered under the Co-operative Societies Act and is therefore not a “company” as defined under the Insolvency Act.
The court found that the fact that Kuscco is a body corporate does not change its legal status or bring it within the definition of a company under the Insolvency Act.
The petitioner had argued that Kuscco’s status as a body corporate meant that the insolvency framework could apply to it.
It also relied on claims concerning Kuscco’s financial position and an alleged statutory demand of about Sh108.8 million.
Justice Rutto held that Parliament had established a distinct legal framework for dealing with the dissolution and liquidation of co-operative societies.
She said the role of the High Court under the co-operative law was not to replace the statutory role given to the Commissioner for Co-operative Development.
“The High Court's involvement is supervisory and facilitative within a liquidation process already triggered in accordance with the Co-operative Societies Act. It is not a substitute for the statutory role assigned to the Commissioner under sections 61 and 65,” the judge said.
The court also referred to section 61(5) of the Co-operative Societies Act, which provides that “no co-operative society shall be dissolved or wound up save by an order of the Commissioner”.
Justice Rutto ultimately found that the petition, having been brought directly under the Insolvency Act, could not proceed.
“This Court has no jurisdiction to entertain the Petition as presently presented or to make a liquidation order against the Respondent under the Insolvency Act. Thus, the petition is unsustainable,” she ruled.
