ORDER
P.D. Shenoy, Member
1. In this case, Mr. Iqbal Chand Arora, the complainant had invested Rs. 2,00,000 in the Monthly Income Plan, 1994 (III) fin short MIP 94 (III)) and encashed it after one year, on which date the Net Asset Value (NAV) went below the face value of Rs. 10 and accordingly he got back Rs. 1,83,000 instead of Rs. 2,00,000 and he felt cheated because he lost Rs. 17,000 of his hard earned money invested after retirement, blissfully forgetting that this MIP 94 (III) is a mutual fund where the investor has also to bear some risk.
Case of the complainant:
2. The case of the complainant is that on retirement, he invested Rs. 2,00,000 in MIP (III) with monthly option on 10.11.1994 keeping in mind that he would take back his money any day after 1.1.1996. The scheme had two options, namely (i) monthly income option and (ii) cumulative option for a period of five years, with the option of repurchase on the basis of NAV after one year i.e., w.e.f. 1.1.1996. According to the complainant, on 3.1.1996, the UTI fixed repurchase price of the Units at Rs. 8.65 per unit against its face value of Rs. 10 which meant that the investment of Rs. 2,00,000 of the complainant was reduced to Rs. 1,73,000. As per the scheme, at least 80% of the funds under the plan were to be invested in fixed income securities while only 20% were to be invested in equities and equity related instruments. Due to poor fund management by the UTI the complainant has suffered the loss. The complainant requested that his deposit of Rs. 20,000 may be refunded to him.
3. The UTI in its response stated that this form of investment carries certain risks and value of the unit is bound to fluctuate according to market conditions and other factors and the instructions regarding the possible risk to which the scheme is subjected to are printed on the application form which was signed by the complainant. Hence, the complaint is imaginary and is based on the notional loss.
4. In this rejoinder the complainant had stated that he had received Rs. 1,83,000 from the respondent on 29.7.1996.
5. The District Forum held that there is no deficiency on the part of the UTI and the complaint was dismissed. However, before parting with the case, they impressed upon the UTI the need for openness and transparency in their bulletins and offer documents announcing various schemes for the investors so that the gullible consumers are not insured to invest without knowing the exact implications of the scheme.
6. Aggrieved by the order of the District Forum, the complainant Sh. Arora went in appeal to the State Commission, wherein the State Commission held that, “the minimum obligation for the respondent was to at least return the actual amount received by UTI respondent. By not doing so and showing the appellant a moon, the respondent has indulged in unfair trade practice. In view of the above discussions, the appellant is liable to pay the respondent the balance amount with Rs. 5,000 as compensation for mental agony and harassment.
7. Dissatisfied with the order of the State Commission, the UTI has come in re vision before us.
Submissions of the learned Counsel for the petitioner:
8. The learned Counsel for the UTI submitted that the offer document of the Monthly Income Plan, 1994 (III) gives a clear picture of the highlight, risk factors; management perspection of the risk factors, Board of Trustees, application for units, mode of payment, sale of units, repurchase of units and various options in clear-cut terms. It particularly mentions about the clauses relating to the repurchase of units and the Monthly Income Option. He submitted that there shall be a one year lock-in-period.
Monthly Income Option:
9. UTI will offer to repurchase the units from the second year of holding of units under this plan. Repurchase price will be on the basis of NAV declared from time-to-time. While calculating the re-purchase price the UTI shall be at liberty to deduct administrative cost and other charges not exceeding 5% of the NAV per unit.
10. Learned Counsel for the petitioner further added that if the complainant wanted a fixed income, he could have deposited the amount in a bank as the Net Asset Value is bound to fluctuate, which is being printed every month in the UTI Bulletins. He has also submitted that the son of the complainant, namely, Sh. Neeraj Arora, is an agent of the UTI, who had secured the investment and he being an agent should have been aware of the conditions and the plus and minus points of the scheme.
Submissions by the complainant:
11. At the time of hearing, the complainant Sh. Iqbal Chand Arora and his son Sh. Neeraj Arora were present. They vehemently argued their case. Sh. Iqbal Chand Arora submitted that he had invested Rs. 2,00,000 on 10.11.1994. Being a Government of India undertaking he thought that his money was safe and he did not read the small print. He said that even the bank was giving 12% interest rate and when 80% of the collections were invested in Fixed Deposit, he failed to understand why the NAV came down. This shows mismanagement by the UTI. Accordingly, he submitted that the UTI should be directed to pay him Rs. 17,000 which is the balance amount due to him.
12. In his rejoinder, the learned Counsel for the UTI submitted that the complainant has been paid the monthly interest on this investment at the rate of 12% per annum which came to Rs. 24,000. When this sum is added to Rs. 1,83,000 paid to the complainant, it comes to Rs. 2,07,000, which is more than the sum invested by him.
Findings:
13. What is relevant in this case is the contents of the application form and also the offer document. The monthly option scheme printed on the application form reads as follows:
All investments in the plan are subject to market risks and the NAV of Schemes may go up or down depending upon the factors and forces affecting securities market. Past performance is not necessarily indicative of the future. MIP 94 (III) is only the name of the plan and does not in any manner indicate either the quality of the plan, its future prospects or returns. Please read offer document before investing and retain this brochure for future reference.
(Emphasis supplied)
14. It is clear from this clause that the investments are subject market risks and accordingly the net asset value can go up or come down. The investors were also asked to read the offer document before investing and retain this brochure for future reference. The extracts from the offer document quoted by the learned Counsel for the UTI support his contention fully. Further the complainant has already received the monthly interest on the interest for the first year apart from the repurchase value. The complainant has repurchased units from the UTI through his son, who was an agent with the eyes open. Now to claim that he should get the amount invested back whatever be the NAV, does not merit any consideration.
15. In view of the above, we allow the revision petition and set aside the order of the State Commission.
16. There shall be no order as to costs.