Section 19 of the Co-operative Societies Act, 1912 - Prior Claim of Society

Section 19 appears in the chapter dealing with privileges of registered societies. It gives a registered co-operative society statutory priority over other creditors for specified outstanding demands owed by a member or past member, while expressly preserving certain prior claims of the Government and a landlord.

Current central text: The official text of the Co-operative Societies Act, 1912 continues to contain Section 19 under the heading "Prior claim of society." State amendments or later State co-operative legislation may affect the rule applicable in a particular State or Union Territory.

What Section 19 means

The provision creates a limited priority for a registered society. The priority is not an unrestricted first charge over all property of a member. It operates in relation to the particular demands and property described in clauses (a) and (b), and it remains subject to the prior claims expressly mentioned in the opening words of the section.

Text and scope of Section 19

Opening rule: Subject to a prior Government claim for land revenue or money recoverable as land revenue, and a landlord's claim for rent or money recoverable as rent, a registered society has priority over other creditors for the specified outstanding demands due from a member or past member.

Clause (a): Where the society supplies seed or manure, or lends money to purchase seed or manure, the priority attaches to the member's crops or other agricultural produce within eighteen months from the date of the supply or loan.

Clause (b): Where the society supplies cattle, cattle fodder, agricultural or industrial implements or machinery, or raw materials for manufacture, or lends money to buy those items, the priority attaches to the supplied or purchased items and, where relevant, articles manufactured from the supplied or purchased raw materials.

Key requirements

The claimant must be a registered society under the applicable statutory framework.
The outstanding demand must be due from a member or past member.
The demand must arise from one of the supplies or loans specifically described in Section 19.
For seed, manure and related loans under clause (a), the statutory period is eighteen months from the date of supply or loan.
The society's priority remains subordinate to the Government and landlord claims expressly preserved by the section.

Why the provision matters

Section 19 protects credit advanced through a registered co-operative society for agricultural and productive purposes. Instead of giving the society a general priority against every asset of a debtor, the section links the preference to crops, agricultural produce, specified goods, machinery, raw materials, or manufactured articles connected with the society's supply or financing.

Related provisions

Section 18 deals with the corporate status of a registered society. Section 20 separately provides for a charge and set-off in respect of a member's or past member's share or interest, deposits, dividend, bonus or profits for a debt due to the society. These provisions should therefore be read according to their distinct statutory subjects.

Official legal source

The authoritative central Act should be checked before relying on the provision, particularly where a State amendment or State-specific co-operative societies law may apply.

India Code - Co-operative Societies Act, 1912 (official PDF)