Statutory depositor representation upheld where a co-operative society's actual operations showed it had become a Primary Credit Society.

A co-operative society ceased to qualify as a Primary Agricultural Credit Society because its actual operations were dominated by deposits and non-agricultural lending, so it became a Primary Credit Society by operation of law under the statutory definition. On that basis, the depositor constituency under Section 28(1C) applied. The Election Commission could reserve one seat for depositors in the election notification because the non obstante clause in Section 28(1C) prevailed over inconsistent bye-laws and the managing committee resolution. Prior formal reclassification by the Registrar was not required before implementing the statutory mandate. The depositor-seat reservation and the election from that constituency were upheld.

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Issues: (i) Whether the society had ceased to be a Primary Agricultural Credit Society and had become a Primary Credit Society, so as to attract the depositor constituency under Section 28(1C) of the Kerala Co-operative Societies Act; (ii) Whether the Election Commission could reserve one seat for depositors while notifying the election, notwithstanding the society's bye-laws and the managing committee resolution.

Issue (i): Whether the society had ceased to be a Primary Agricultural Credit Society and had become a Primary Credit Society, so as to attract the depositor constituency under Section 28(1C) of the Kerala Co-operative Societies Act.

Analysis: The statutory definition of a Primary Agricultural Credit Society requires the principal object to be agricultural credit activity and advances for agricultural purposes. The society's own financial statements showed overwhelmingly large deposits and advances, with only insignificant agricultural lending and substantial non-agricultural lending. On that basis, its actual operations no longer matched the character of a Primary Agricultural Credit Society. By operation of the second proviso to Section 2(oa), the society lost that identity and answered the description of a Primary Credit Society under Section 2(ob).

Conclusion: The society had become a Primary Credit Society and Section 28(1C) applied to it.

Issue (ii): Whether the Election Commission could reserve one seat for depositors while notifying the election, notwithstanding the society's bye-laws and the managing committee resolution.

Analysis: Section 28(1C) begins with a non obstante clause and therefore prevails over inconsistent bye-laws. The election notification filled only the existing eleven committee seats while earmarking one seat for the depositor constituency, which was treated as a statutory requirement. The notification was therefore consistent with the Act and did not violate the bye-laws or the committee resolution. The later formal declassification by the Registrar was not a precondition for giving effect to the statutory mandate in the election process.

Conclusion: The Election Commission was justified in reserving one seat for depositors and the appellant's election from that constituency was valid.

Final Conclusion: The writ appeals succeeded, the earlier judgment was set aside, and the election from the depositor constituency was upheld with consequential directions for reclassification and future compliance.

Ratio Decidendi: Where a society's actual operations show that it has ceased to satisfy the statutory character of a Primary Agricultural Credit Society, its status changes by operation of law and the mandatory depositor representation under Section 28(1C) cannot be defeated by contrary bye-laws or by the absence of prior formal reclassification.

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