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TMI Blog2012 (7) TMI 1092X X X X Extracts X X X X X X X X Extracts X X X X ..... the election upheld by us the Registrar's order on re-classification will have prospective effect in terms of Note (ii) of Rule 15 as stated above. It is for him to consider the transactions already entered by the Society particularly in regard to rate of interest on deposits accepted and loans advanced and make arrangements without retrospective effect on transactions adversely affecting depositors and borrowers. Similarly if RBI sanction is required under the Banking Regulation Act, Registrar will give sufficient time to the Society to take approval from RBI which will apply for application for future operations. Writ appeals are allowed vacating the impugned judgment of the learned single Judge and by disposing of writ petitions as above. We feel the Registrar should arrange for a close scrutiny of the operations of all the Societies in the State and consider whether the societies function under the bye-laws and under the Act and if not, to take corrective measures including de-classification as required in this case. - W.A. No. 1020 of 2012 - - - Dated:- 11-7-2012 - C.N. Ramachandran Nair and C.K. Abdul Rehim, JJ. For the Appellant : B. Pramod, S.P. Ara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... signing 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 ₹ 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tituency 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. S. 2(ob) - 'Primary Agricultural Credit Society' means a Service Co-operative Society, a Service Co-operative Bank, a Farmers Service Co-operative Bank and a Rural Bank, the principal object of which is to undertake agricultural credit activities and to provide loans and advances for agricultural purposes, the rate of interest on such loans and advances shall be the rate fix ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction to the committee, in two vernacular dailies having wide circulation in the area. A copy of the information shall also be affixed on the notice board of the head office and the branches, if any, of the Society and the notification to the Representative General Body shall contain the following particulars, namely:- (a) the number of vacancies to be filled up by election; (b) any area or constituency which is specified in the bye-laws/sub rules, from which members are to be elected; . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bye-law of the Society to provide for election to the Managing Committee providing one seat in the depositors quota. Nobody has a dispute about the objective of Section 28(1C) which is essentially to protect interest of the depositors. In this case the entire funds of the society appear to be from public and members as deposit which held as on 31-03-2012 is an amount of above ₹ 22.22 crores, whereas total loan advance is less than ₹ 21 crores out of which ₹ 20 crores is non-agricultural advances. All depositors are not members and it is conceded that in case of the respondent society around 25% depositors are not even members of the Society. It is to take care of the interests of the depositors in societies like this the legislature thought it fit to have one member in the Managing committee representing the whole of the depositors so that their interest is represented in the managing committee of the Society. We are of the view that the Election Commission is perfectly justified in taking note of the change in identity of the society, under the second proviso to Section 2(oa) with reference to the sourcing and deployment of funds and business operations of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r constituency allotted for depositors but subject to this he has notified election only to the total number of 11 seats to the Managing committee. In other words notification made by the Election Commission is consistent with the bye-law as well as simultaneously in compliance with Section 28(1C) of the Act. So much so we do not find any violation of the bye law by the Election Commission when he earmarked one out of 11 seats for the quota for depositors to which appellant contested and got elected. We therefore direct the Returning officer to declare the election for one seat in which Appellant contested and to constitute the Managing committee with the person elected from the depositors quota as one of the members of the Managing committee. 7. In view of the findings as above we feel procedural compliance is required by the Registrar to re-classify the Society and issue fresh certificate under the category Primary Credit Society, the Managing committee of which compulsory requires one representative from the depositor's constituency. It is for the Registrar to direct the Society to first suitably amend the bye laws particularly object clause, for re-classifying it a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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