Judgment:
J.D. Kapoor, President:
1. The appellant had invested a sum of Rs. 2,00,000/- with the respondent-UTI. The plan was stated to be in response to the persistent demand from investors particularly retired persons for either Monthly Income or Cumulative option for a period of five years with the option of repurchases on the basis of NAV (Net Asset Value) after one year. As per the scheme, at least 80% of the funds under the plan were to be invested in fixed income securities while 20% was to be invested in equities and equity related documents. After one year he was paid Rs. 1,83,000/- against the invested amount of Rs. 2,00,000/- on the basis of prevailing NAV.
2. Feeling aggrieved, the appellant filed the complaint before the District Forum seeking recovery of the remaining amount of Rs. 17,000/- with interest. The claim of the appellant did not find favour with the District Forum solely for the reason that risk factor is provided in the application form itself and, therefore, it was duty of the complainant that he should have gone through the application form before applying for the scheme in question and further the appellant was aware that an option of re-purchase was to be based on NAV of the unit price of the scheme. It is pertinent to note here that the District Forum in the same breath observed that the respondent-UTI being the Government undertaking was entitled to complete with the financial institutions should not hold out promises or assurance that at the first sight appear very lucrative and attractive.
3. Admittedly in the instant case, respondent/UTI promised assured income @ 12% p.a. to the investors and even issued post-dated monthly dividend warrants to the investors for the first year. As is apparent from the impugned decision, it has been based upon the terms and conditions printed on the application form. The said conditions form are as under :
HIGHLIGHTS
1. Â A five year plan.
2. Â Open to resident adult individuals/mentally handicapped persons/minors/HUFs/Trusts/Bodiesoporora-te/ Regd. Societies/non-profit making companies (under Section 25 of Companies Act, 1956 excluding Banks and other companies.
3. Plan offers regular monthly income. For the first year dividend shall be paid @ 12% per annum. Dividend for the subsequent years will be declared at the end of the preceding years and paid monthly.
4. Â Post-dated monthly dividend warrants will be given for one year in advance.
5. Â There is also an option to cumulate returns instead of monthly dividend.
6. Â Repurchase allowed after the first year at NAV based repurchase price.
7. Â Scope for capital appreciation as the units will be repurchased at NAV based repurchase price.
8. Â No tax deduction at source for individual investors.
9. Â Tax benefits under Section 80L on dividends and under Sections 48 and 112 on capital gains from capital appreciation.
10. Cost efficiency of UTI has been of high order e.g. the initial issue expenses for MIP 94 and MIP 94(11) were 1.67% and 1.74% respectively of the funds mobilised under those plans.
RISK FACTORS
1. Â Investments in units of this plan are subject to market risks and the NAV of the plan may go up or down depending on market forces.
2. Â Performance of the previous Schemes/Plans of UTI is not necessarily an indication of future results. There can be no assurance that the objective of the Plan will be achieved.
3. Â Monthly Income Plan is only the name of the Plan and does not in any manner indicate the quality of the plan. Investors are urged to study the terms of the offer carefully before they invest in the plan.
Managements perception of Risk Factors
4. Â UTI has been in operation for over 30 years and has built up expertise in managing funds of around Rs. 54,000 crores from over 37 million investors and the track record of performance of the funds including previous Monthly Income Schemes/Plans has been reasonably good.
4. As is apparent the UTI by painting a rosy picture has not indicated in clear terms about the risk factors and to say that the complainant was expected to read between the lines of the implications or ramifications of the scheme is difficult to accept. By no stretch of imagination, a person who invests his life-time savings in Government organizations is expected to be conscious about or aware of such risk factors which may even deprive him of his principal amount invested in the scheme what is talk of the dividend. Such kind of promises or assurances which are ambiguous, unclear and do not convey the message in clear terms to the investors that he should invest with open eyes to such an extent that he may loose his principal amount have no worth. The real interpretation is that any terms or condition of any agreement like the one in question should be understandable to a person of ordinary prudence. Companies or institutions like UTI are not expected or supposed to hoodwink the poor retiring persons by persuading them to pump in whole life savings. In the instant case, the promises and assurance held out by the respondent were shrouded in ambiguity and also lacked in transparency.
5. Wherever there is element of risk factor in such schemes where investors are poor Government servants or gullible people such conditions or risk factors should be prominently printed and not in such a manner which is at first instance difficult for the ordinary person to even read and understand its implications in the right perspective. In the instant case risk factors are printed in such a font and manner that one has to read between the lines and with great difficulty. It was because of poor and deplorable management of UTI-respondent that the appellant has suffered.
6. The minimum obligation for the respondent was to atleast 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.
7. In view of above discussions, the respondent is liable to pay the appellant the balance amount with Rs. 5,000/- as compensation for mental agony and harassment.
In the result, appeal is allowed and stands disposed of in above terms.
Appeal allowed.