Bajaj Auto Ltd has sued Unit Trust of India (UTI) and market regulator Securities and Exchange Board of India (Sebi) for prematurely terminating UTI Growth and Value Fund-Bonus Plan, in the Mumbai High Court on Wednesday.UTI took charge of this scheme after it took over IL&FS Mutual Fund last year. But as per a Sebi circular, each scheme and individual plans under the schemes should have a minimum of 20 investors and no single investor should account for more than 25 per cent of the corpus of the scheme. Hence, it decided to discontinue the schemes.Bajaj prayed to the court to declare Sebi’s circular on the minimum number of investors in schemes/plans of mutual funds as illegal, bad in law and unenforceable in law and thus there can be no automatic invocation of winding up of the UTI-Growth and Value Fund Bonus plan.Giving details, Bajaj Auto said after the acquisition of IL&FS Growth and Value Fund, it was renamed in July 2005 as UTI Growth & Value Fund Bonus Plan. But in December, UTI informed the company that they will have to redeem units worth Rs 33 crore citing the Sebi circular. To this, Bajaj informed UTI that they have made investments keeping a year in mind and its invocation will result in additional tax and interest liability.Later during oral discussions, UTI asked Bajaj to encash units worth Rs 8 crore out of another plan called UTI Bond Advantage Fund Bonus option before December 31, 2004 and it was assured that no further redemption would be required under the UTI Growth and Value Fund Bonus plan.But on December 31, 2004, UTI informed that UTI Growth scheme is being shut down from January 1, 2005, and all investors will be refunded within 10 days. It asked Bajaj to redeem its units worth Rs 41 crore.A meeting of all unitholders was called on February 5, which was attended by only 5 people including a Bajaj Auto representative. The auto company alleged that although no resolution was moved, UTI decided to close the issue.In a statement, UTI said the particular scheme did not fulfil the Sebi requirement and it has been wound up with effect from close of business hours as on January 31, 2005 by following the regulator’s guidelines.
