UNIT TRUST OF INDIA Vs. KAVITA GUPTA

JUDGEMENT

(1.) IN this Revision Petition No. 811 of 1995 ½ Unit Trust of India, Bombay, Unit Trust of India, New Delhi and Datamatic Ltd., Bombay, are petitioners Nos. 1,2 and 3 respectively and Maj. Gen. Dayal Mohan Gupta is the respondent. The facts of this case and the two other cases viz., Revision Petition No. 809 of 1995 where Ms. Kavita Gupta and Revision Petition No. 810 of 1995 where Mrs. Sushila Dayal Mohan Gupta are the respondents being the same, all the three cases will be disposed of by this common order.

(2.) BRIEFLY the facts are that the three respondents � Maj. Gen. Dayal Mohan Gupta, his wife and his daughter applied for allotment of 5,000 units each of the Master Gain, 1992, floated by the Unit Trust of India. They gave their application forms alongwith cheques of the requisite amount of Rs. 50,000/- each at the counter of U.T.I, on 18.5.92 and the same amount was credited to the account of the U.T.I, on 15.6.92, According to the scheme of Master Gain, the certificates were to be issued to the respondents by 30.9.92 and were to be listed in the stock exchange in February, 1993. After about 10 days of the listing, the respondents contracted to sell these units, which had not been issued to them till then, at the rate of Rs. 11.34 each through a stock broker. As they could not deliver the unit certificates to the broker in time, they contend that they have not only lost Rs. 6,500/- each but also had to pay Rs. 2,000/- as cancellation charges to the broker. It is further alleged that after sometime the price of the units fell to a low of Rs. 7/- per unit. Calculating a loss at the rate of Rs. 3/- per unit, the respondents lost Rs. 15,000/-each as on the date when the price was Rs. 7/- in addition to Rs. 6,500/- each which, they claim, lost at the time of contracted sale, at the rate of Rs. 11.30 per unit. Adding Rs. 2,000/- paid as cancellation charges, according to the respondents, each of them suffered a loss of Rs. 22,250/-. Thereafter, they filed a complaint in District Forum-II of Delhi which held that they were not entitled to any compensation on account of the loss alleged to have been suffered because of their entering into a sale transaction of the units, the certificates of which were not in their possession. However, it was established that the applications were made and the application money was deposited in time. And, therefore, the opposite party should have delivered the unit certificates to them within the prescribed time limit. The District Forum directed the U.T.I, to deliver the unit certificates within 30 days of their Order or in the alternative refund Rs. 50,000/- with interest at the rate of 18% p.a. compounded annually from 15.6.92 till the date of payment to each of them, alongwith costs amounting to Rs. 5,000/-each. The respondents were not satisfied with this Order of the District Forum and filed an appeal in the State Commission, Delhi, which after going through the affidavits of the parties held that the U.T.I, shall pay Rs. 22,250/- to each of the respondents on account of the loss suffered by the respondents, as indicated earlier. The State Commission also directed the payment of interest at the rate of 18% on this amount from 25.2.93 and on Rs. 2,000/- from 10.7.93 till the date of payment. Further, they directed the payment of Rs. 5,000/- each by way of costs.

(3.) WE have heard the Authorised Representative for the U.T.I., and the three respondents and gone through the records of the case. The main contention of the U.T.I., is that though there was delay in the delivery of unit certificates, ultimately they were delivered with retrospective effect i.e., with all the benefits from the dates the scheme came into force. It may be noted that though the unit certificates were despatched by the U.T.I, on 27.10.94 but by giving retrospectivity to their date of issue from 1992, all the benefits accruing after 1992 were part of them. Therefore, the respondents, according to U.T.I., have not been put to any loss or disadvantage because of delayed delivery of the unit certificates. Moreover, it was also argued, that the Master Gain scheme of the U.T.I, was a capital growth oriented scheme in which the value of the units is based on the net assets value as assessed from time to time. The market value while reflecting the net assets value, also reflects the speculative anticipation of the investors. The net assets value is determined periodically after deducting the value of liabilities from the total face value of the securities held by the trustees of the scheme and it naturally fluctuates according to the value of the securities and liabilities. The speculative element in the market value of such growth oriented units is a matter of perception of the investors at any given point time. In a capital growth oriented scheme, the money of the investor remains locked up for a period of 5 years. Though such units can be purchased and sold in the market on the prevailing price, after their listing in the stock exchange, the U.T.I, can take them back only at the repurchase price, notified by them, at different intervals of time, which, normally, would be according to their net assets value. The contention of the U.T.I., therefore, is that the sale transaction so soon as only 10 days after their listing in the stock exchange, was purely of a speculative character � more so in respect of a capital growth oriented scheme � and, hence, was of a commercial nature. That being so, the respondents were not entitled to seek any relief under the Consumer Protection Act, 1986, as the entire transaction of purchase and consequent contract of sale reflects an intent and purpose of commercial nature. On the other hand, the argument of the respondents is that after the listing of the units in the stock exchange, it was within their rights to take advantage of any increase in the price of units because they made the investment primarily for the purpose of earning profits. The U.T.I., according to them, is negligent for such a late delivery and, thus, depriving them of the benefit which they could obtain at an opportune time by selling these units.