Nagpur HC bench upholds Rajlakshmi termination

In response to a separate public interest litigation (PIL) filed on Wednesday, the Mumbai high court had ruled that the termination decision should ultimately depend on the outcome of the PIL.

However, according to an UTI official, the Trust will start issuing cheques in the first week of October to investors who have responded to its decision to terminate the scheme. Denying reports that Mumbai High Court had stayed the move following a PIL filed by the Investor Grievances Forum against termination of RUS, UTI Executive Director B G Daga said the court had only asked UTI to file an affidavit by October 9, so that the case could be considered for hearing two days later. The Trust will file the affidavit as directed by the court, he added.

UTI officials said they could do little about the scheme since there is no clause which allows them to change the terms of return and Sebi norms do not allow assured returns to be given by fund schemes. Officials said UTI had ensured that all investors under RUS 92 would be paid the implicit promised return ranging from 16.16 per cent to 16.75 per cent upto September 30, 2000, that is, for the maximum period of eight years since the scheme was launched.

UTI officials said the Trust had given more than the required 21 days’ notice to investors while informing them about the termination of RUS 92. Besides, over 50 per cent investors so far have already opted to switch over to the revamped Children’s Career Plan (CCP), the new avatar of the existing CCCF scheme for children. The scheme had collected about Rs 525 crore from 12 lakh investors between October 2, 1992 and October 31 1993, UTI officials said, adding the redemption value of the scheme was Rs 1,640 crore.

UTI chairman PS Subramanium had recently told The Indian Express

that the scheme is not viable considering the changed economic scenario in the country. “With the interest rate coming down across the board (to around 12-13 per cent), it’s not possible to continue the scheme. We decided to terminate the scheme in the overall interest of the UTI and its unitholders,” he had said.

However, investors complain that UTI has gone back on its commitments and abruptly terminated the scheme, leaving many of them in the lurch.