The Judgment of the Court was delivered by

C.N Ramachandran Nair, J.:— These two writ appeals axe 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 generah 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 fayour 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 Aran 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.

2. 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.

3. 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(oa)—‘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 principal 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 fixed by the Registrar and having its area of operation confined, to a Village, Panchayat or a Municipality:

Provided………………

…………………

Provided further that if the above principal object is not fulfilled such societies shall lose all characteristics of a Primary Agricultural Credit Society as specified in the Ack Rules and Bye-laws except the existing staff strength.”

“S. 2(ob) - ‘Primary Credit Society’ means a Society other than an apex or central society which hasits principal object the raising of funds to be lent to its members.

“S. 28(1C) - Notwilhstahdihg anything contained in the bye-laws of a Primary Credit Society or an Urban co-operative Bank, one seat in the committee of each such society shall be reserved for the members having a deposit of ten thousand rupees and above.”

“R. 34A Procedure regarding conduct of election to the Representative General Body.

(1) The election of the members to the Representative General Body of the Societies shall be conducted by the State Co-operative Election Commission.

(2) The Committee shall meet at least sixty days in advance of the date of expiration, of its term and pass a resolution fixing the date, time and place for the conduct of the election to the new Representative General Body along with the election to the committee, if the society is having a Representative General Body. A copy of such resolution shall be sent to the State Co-operative Election Commission by registered post within a week through the Registrar as specified in the Explanation to sub-rule (2) of Rule 35.

(3) ……………………… …………………………

(4) The State Co-operative Election Commission shall notify the details of election to the Representative General Body along with the notification for the election 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;

…………………

…………………

4. 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 thatthe 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 feet 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 andhadvances are described by the Society in the letter addressed to the Assistant Registrar of Co-operative Societies as follows.—

Deposit — 22,22,47,697.54 Loans — 20,41,01,375.66 Kisan Credit Card (Agricultural) — 15,47,346.00 Short Term (Agricultural) — 8,325.00

5. It may be noted from thd above figures that the society in this case has given very insignificant amounts towards agricultural lone 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 takers by the Sbeiety which is above Rs. 22.22 crores as seen from the above figures declared by the Society 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 a 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. Front 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 WA 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.

6. Going by the factual position as stated above, it was the duty of the Registrar to order alteration of classification of Society in terms of powers conferred on him under Note (ii) of Rule 15 of the Rules which is not so far done. Probably the Registrar of Societies never bothered to find out the operations of the Society to justify retention of the identity and that is why the Society continues to retain the registration originally obtained. In any case what we notice from second proviso to Section 2(oa) is that as and when the society ceases to be a Primary Agricultural Credit Society it shall loose that identity irrespective of whether the Registrar has made changes or not As noted by us above, the procedure to be followed is for the Registrar on, information whether obtained by himself or through any other source about the operation of the Society disentitling it to continue to retain it's registration in the category obtained by it should change it and issue fresh certificate of registation which is nipt done in this case.

7. In view of the findings as above, we have to declare that the Society is required to have a member elected to the Managing committee from the constituency reserved for depositors under Section 28(1C) of the Act. The contention raised by the respondents and the Society that unless Registrar changes the classification of the Society and fresh certificate of registration issued and bye laws of the Society is amended providing for reservation of one seat to the Managing committee for depositors quota, the Election Commission is not entitled to notify the election to the depositors constituency. We are unable to accept this contention because Section 28(1C) starts with anon obstante clause which is to get over the 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 Rs. 22.22 crores, whereas total loan advance is less than Rs. 21 crores out of which Rs. 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 Society and in holding that Section 28(1C) is required to be complied with while holding election to the Managing committee of the Society. In the counter affidavit also, the Election Commission has stated the reasons for reserving one seat to the depositors constituency as only because of the massive deposits availed by the Society and the advances made there from. Even though the Election Commission has not specifically stated about the change of identity of the Society from Primary Agricultural Credit Society to a Primary Credit Society, we feel this argument is also available to the Appellant at this stage. We therefore hold that by virtue of operation of second proviso to Section 2(oa) the Society has become a Primary Credit Society. Even though counsel for the respondents cited the decision of the Supreme Court in Promotors and Builders Association of Pune v. Pune Municipal Corporation, (2007) 6 SCC 143 : 2005 ICO 7010 for the proposition that the court should not do violence to literal meaning of the legislation if it is not capable of any doubt, we do not think the decision has any application to the facts of this case because we find that the operations of second proviso to Sections 2(oa) and 2(ob) and also Section 28(1C) of the Act obliged the Election Commission to reserve one seat to depositor's constituency. In our view, irrespective of whether there is compliance with the statutory provisions and the Rules by the Registrar in declassifying the society the character of the Society changes by operation of the second proviso to Section 2(oa) from Agricultural Credit Society to a Primary Credit Society to which Section 28(1C) is squarely applicable. We are therefore of the view Election commission rightly treated the society as a Primary Credit Society and reserved one post for depositor's constituency in terms of Section 28(1C) of the Act.

8. Another contention raised by the respondents is that election has to be notified and conducted by the Election Commission in terms of the resolution passed by the Managing committee under Rule 34A(2) of the Kerala Co-operative Societies Rules. It is further contended by them that the Managing committee also has to be elected and constituted in accordance with the bye-law of the society. However what the Election Commission did is only to allocate one seat from out of general seat for constituency alloted for depositors but subject to this he has notified election only to the total number of 11 seats to the Managing comnittee. 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.

9. 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 as a Primary Credit Society with corresponding changes and constitution of the Managing Committee by providing a seat for depositors quota in terms of Section 28(1C) of the Act. This shall be done at the earliest. However, we make it clear that since Note (ii) of Rule 15 provides only prospective effect for re-classification we make it clear that expept for the election upheld by us the Registrar's order on re-classification will have prospectiye 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.

10. 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.