ANTONY PATTUKULANGARA Vs. E N APPUKUTTAN NAIR

JUDGEMENT

(1.) These two writ appeals are filed by a person elected as a member of the Managing committee of the Sreekandamangalam Service Co-operative Bank Ltd. No. 974 (hereinafter called 'Society') against common judgment of the learned single Judge in two writ petitions declaring the election notification earmarking one seat of the Managing Committee to the depositors constituency under Section 28(1C) of the Kerala Co-operative Societies Act (hereinafter called the 'Act') and appellant's election in the said constituency as invalid and against the bye-law of the Society. Based on the resolution passed by the Managing Committee of the Society for holding the election to Managing committee in terms of Rule 34A(1) of the Kerala Co-operative Societies Rules (hereinafter called the 'Rules'). The Co-operative Election Commission notified the election for all the 11 members of the Managing committee representing different constituencies. The bye-law of the Society as on the date of declaration of election provided for election of 11 members to the Managing committee of which 3 are reserved for women and one for member of scheduled caste community. Even though the bye-laws of the Society did not reserve any seat in the committee to represent depositors constituency in terms of Section 28(1C) of the Act, the Election Commission felt that the non obstante clause contained in the said provision of the Act required to provide a seat in the Managing Committee to represent the depositors of the Society. On a perusal of the documents presented by the Assistant Registrar of Co-operative Societies the Co-operative Election Commission noticed that the Bank has public deposits above 22.22 crores and the non-agricultural loan given was 20.41 crores. Therefore the Co-operative Election Commission notified the election by reserving one seat in the Managing Committee for election from among depositors of the Society who hold a deposit amount of not less than Rs. 10,000/- in terms of Section 28(1C). Election notification produced as Ext. P4 in WA No. 1023/2012 provided for election to the Managing committee by assigning from out of total 11 seats 6 for general category, one for depositors constituency to be filled up by a member with a deposit of above Rs. 10,000/- or above, one for scheduled caste/scheduled tribe quota and 3 for women. There was no contest against election notification and therefore election was held in terms of Ext. P4 notification issued by the Election Commission. The appellant is the person who got elected from the constituency reserved for depositors. However after election is over, one of the members of the society and another a defeated candidate who stood for election in the general constituency challenged the election of the appellant to the managing committee by filing separate writ petitions in which contention raised was that the society not being a "Primary Credit Society" but being only a Primary Agricultural Credit Society is not required to have a representative in the Managing committee in terms of Section 28(1C) and in any case when the bye-law of the society does not provide it, the Election Commission has no authority to notify the election to the Managing committee providing one seat from the depositors' quota. The specific case canvassed by the petitioners in the writ petitions was that the Election Commission has no jurisdiction to notify election to the Managing committee of the society in deviation with the constitution of the Board as contemplated under the bye-law of the Society and also in violation of the resolution passed by the Managing committee to hold the election in terms of Rule 35A(1) of the Rules. Learned single Judge accepted the contention by holding that the Society is a Primary Agricultural Credit Society as defined under Section 2(oa) of the Act and not a Primary Credit Society as defined under Section 2(ob) which only is required to have a representative from among depositors in the Managing committee of the Society. Learned single Judge also agreed with contention of the writ petitioners that the Election Commission has to notify the election to the Managing Committee in terms of the bye-laws of the society and the resolution passed by the Managing committee of the Society. Consequent upon the findings in favour of the writ petitioners the learned single Judge declared the appellant's election as invalid and ordered fresh election to one seat in the general quota. It is against this judgment separate writ appeals are filed by the appellant, for one and same relief i.e., to declare the society as Primary Credit Society falling under Section 2(ob) of the Act which is compulsorily required to have a member in the Managing committee representing depositors as provided under Section 28(1C) of the Act. The position canvassed by the appellant that the activities of the Society reflected in the accounts furnished to the Election Commission by the Joint Registrar clearly establish that the Society has ceased to be a "Primary Agricultural Credit Society" and has become a "Primary Credit Society" which by virtue of operation of Section 28(1C) should have a member of Managing committee representing depositors irrespective of whether the requirement is incorporated in the bye-law or not. We have heard Adv. B. Pramod appearing for the appellant, Adv. V.G. Arun and Adv. P. Gopal appearing for party respondents, Adv. K.N. Renjini for the Society, Sri. D. Somasundaram, Special Government Pleader appearing for the State and Standing Counsel for Co-operative Election Commission. The question to be considered is whether the Society is required to have a member representing depositors constituency as required under Section 28(1C) of the Act. If the answer to this question is in the affirmative then the next question is whether the Election Commission is justified in providing one seat for the depositors quota while notifying election to the members of the Managing committee in deviation from the bye laws of the Society and the resolution passed by the Managing committee. In other words, question is whether the absence of a seat reserved for the depositors in the Managing committee under the bye-law of the Society, the Election Commission can provide it as a statutory requirement by operation of Section 28(1C) of the Act. Since we have to decide all these issues with reference to the statutory provisions, the relevant Sections and Rules are extracted hereunder for easy reference.

(2.) There is no dispute that in this case the Society is one registered as a Primary Agricultural Credit Society in terms of Section 2(oa) of the Act. However appellant's case is that the activities of the Society reflected in the accounts establish beyond doubt that the society has ceased to be a Primary Agricultural Credit Society and is in fact a Primary Credit Society defined under Section 2(ob) of the Act. Counsel relied on Annexure-2 produced in WA No. 1023/2012 wherein Deposits and advances are described by the Society in the letter addressed to the Assistant Registrar of Co-operative Societies as follows.-

(3.) It may be noted from the above figures that the society in this case has given very insignificant amounts towards agricultural loan under two categories amounting to only Rs. 15.5 lakhs and odd whereas it's other advances runs above 20.4 crores. Most of the loans are funded through public deposits taken by the Society which is above Rs. 22.22 crores as seen from the above figures declared by the Society to the Assistant Registrar of Co-operative Societies as on 31-03-2012. Going by the definition clause of "Primary Agricultural Credit Society" in order to constitute the Society in that category, the principal activity should be to undertake agricultural credit activities and provide loans and advances for agricultural purposes. It is further stated in the second proviso to the said definition clause that if the society does not achieve it's objective i.e., to function like an Agricultural credit society it will loose it's identity by virtue of the operation of the said proviso. From the operations of the society as evident from the above figures, nobody can dispute that the society can by no stretch of imagination be treated as Primary Agricultural Credit Society. On the other hand it squarely answers the description of the "Primary Credit Society" as defined under Section 2(ob) of the Act, the principal objective of such society being raising funds to be lent to it's members. In this case the society has taken deposits above Rs. 22.22 crores and has made advances above Rs. 20.4 crores to non-agricultural sector and advances for agricultural purposes is only insignificant amounts compared to the total lending by the Society. Therefore as rightly contended by the appellant's counsel, the Society in this case has ceased to be a Primary Agricultural Credit Society at least in the previous year in which the election was notified. There is no need for us to consider whether from the very beginning, the Society functioned in this fashion which could be possible because the society's area of operation is not known for agricultural operations. In any case the undisputed fact is that after taking registration as Primary Agricultural Credit Society, the society carries on business as a Primary Credit Society. It may also be noticed from Annexure-6 produced in W.A. No. 1023/2012 which is information furnished to the Appellant by the Public Information officer of the office of the Assistant Registrar of Co-operative Societies under the Right to Information Act that most of the objectives of the Society covered by various clauses of the Memorandum of Association are not undertaken by the Society. In other words, the operations of the society in accepting massive deposits from members and public and lending the same to non-agricultural operations has made it a Primary Credit Society. Probably the camouflage of Primary Credit Society as a "Primary Agricultural Credit Society" is to get the benefit of agricultural credits from Government agencies, Debt waiver for borrowers and also to advance loans at lower rate of interest applicable to agriculture. Obviously the functioning of the Society is in a dubious manner by getting registration under one category and by functioning as a Society of a different category. None of the party respondents including Society and also the special Government Pleader could deny the factual position stated above in as much as the Society though registered as Primary Agricultural Credit Society has ceased to be so and it is in fact a Primary Credit Society.