S.K. JINDAL vs Unit Trust of India

THE complainant Sri S.K. Jindal approached the Commission by filing this complaint on 18th August, 1994 seeking relief against Unit Trust of India (hereafter UTI) through its agent and Registrar M.N. Dastoor & Co. Ltd. THE Commission directed issue of notice of the complaint to the UTI but inspite of notice sent by Regd. Post no one appeared on its behalf nor was any written statement filed. In pursuance of the directions contained in the orders dated 16.1.96 and 17.4.96 the complainant forwarded copies of those orders to the UTI mentioning therein the date fixed in the case and also the direction that it was to be heard ex-parte against UTI. Inspite of all this, no one has chosen to appear before the Commission on behalf of UTI. Mr. J.P. Bajpai, learned Counsel for the complainant, has placed photo-copies of two letters dated 6th January and 21st January, 1997 addressed to the complainant by M.N. Dastoor & Co. and UTI respectively which make it clear that both the UTI and M.N. Dastoor & Co. are aware about the pendency of the case before the Commission.

THE case of the complainant is that he purchased 13000 units of the UTI-Mastershare1986 scheme from the secondary market and sent the same to the UTI for transfer in his name and thereafter redemption of those units @ 49.70 per unit through M.N. Dastoor & Co. This was done in pursuance of the scheme as given out by UTI through public circular dated 25th September, 1993 in which it was mentioned that the redemption should be claimed on the prescribed redemption form and that effort would be made to make payments to the investors within a period of 30 days from the receipt of the application. The UTI redeemed 600 units and remitted the amount thereof to the complainant. Subsequently it redeemed 50 more units and made the payment alongwith interest on the amount due for the late payment. 100 units were returned to the complainant as bad delivery. The complainant says that in respect of the remaining 12150 units the UTI did not take any step whatsoever in spite of a notice sent to it through an Advocate on 15.6.94 which was duly acknowledged on behalf of UTI on 27th August and 10th October, 1994. The complainant had filed the complaint on 18th August, 1994 after waiting fort nearly two months from the date of sending the notice.

Since no one had been appearing on behalf of the UTI ex-parte hearing of the complaint was directed by the Commission by its order dated 17th April, 1996. The complainant has filed affidavit apart from a number of documents as evidence in the case. The affidavit of the complainant dated 10.7.1996 contains as Annexure ''P'' a copy of letter dated 28.5.1996 sent to him by M.N. Dastoor & Co. Ltd. In this letter, the agent of UTI has explained the position relating to the units sent by the complainant for transfer and redemption in some detail.

IN paragraph one of this letter it has been said that out of total 13000 shares submitted for transfer and redemption 600 units and thereafter 50 shares had already been redeemed and proceeds thereof received by the complainant. 100 shares have been returned under objection and out of the remaining shares 2100 shares had already been transferred to various investors of which a list was enclosed with the letter. According to the complainant no such list was actually enclosed with the letter. In paragraph two of the letter the agent of UTI has mentioned that with regard to the balance 10250 shares (correct number being 10150) which are still standing in the name of the original holders of whom a list was being enclosed there were problems regarding benefits like Bonus, Rights and dividend received by original holders.

IT is clear from this letter that UTI does not dispute having received 13000 units for transfer and redemption from the complainant. Out of these units, according to paragraph two of the letter, 10150 units still stood in the name of original holders and that some difficulties were envisaged by the UTI in the matter of their transfer and redemption which are out-lined in the paragraph. The fact that the complainant had sent all the units including 12150 units which are admittedly in possession of the agent of UTI, after purchasing from secondary market has not been disputed. The UTI has admittedly conveyed to the complainant why it was not able to transfer these units in his name and redeemed them. The units were sent for its redemption in the year 1993 some of which were actually transferred in the name of complainant and redeemed as well by UTI. The UTI has not put forwarded any reason acceptable in law for not doing so in respect of 10150 units which are still lying with it. The reasons which have been mentioned in paragraph two of the letter dated 28 May, 1996 are specious because no original holder of these units has ever come forward objecting to the transfer in the name of the complainant and the redemption of the unit even according to the letter dated 28th May, 1996. That the redemption value of these units was Rs. 49.70 at the relevant time seems to be undisputed because 650 units were actually redeemed by UTI and payment thereof made to the complainant by it at that rate. We find no justification for the failure of UTI to do so in respect of 10150 units referred to in paragraph two of its letter dated 28.5.1996. The failure to do so clearly amounts to deficiency in service on the part of UTI towards the complainant. The units were admittedly sent with duly signed redemption form which had been supplied by UTI itself. Coming to 2100 shares sent to UTI and transferred to various investors, we do not find any indication in the letter of 28.5.1996 about the date when these were so transferred in favour of various investors and by whom. Obviously these shares were also purchased from secondary market. If they had been transferred to a person other than the complainant the date of transfer thereof should have been indicated, because if, they were transferred prior to their submission by us complainant, UTI should have come out clearly with that fact in some communication or disclosed it by filing its version before the Commission. But it has failed to do so. Thus, the UTI cannot be permitted to absolve itself of the liability by merely saying that they had been transferred to various investors.

THE complaint deserves to be decided in favour of the complainant with the direction that UTI should redeem, after transferring 10150 units which are admitted to have been sent by the complainant for the purpose alongwith those units which have already been redeemed by UTI. THE UTI is liable to redeem these units @ 49.70 per unit. Since the UTI did not do so for nearly three years, though it should have been done within 30 days of receipt of the units alongwith redemption form, the complainant is entitled to payment of interest on the amount due to him in respect of these units @ 18% per annum from 11.9.94 till the date of actual payment of the amount to the complainant by the UTI. This shall be in addition to a sum of Rs. 10,000/- which the UTI is liable to pay to the complainant as compensation for the delay amounting to deficiency in service on its part.

AS far as 2100 units are concerned about which the case of the UTI in the letter dated 28.5.1996 has been that they have been transferred to other investors who have obtained benefits in respect thereof from the UTI, we find the UTI negligent towards the complainant in its service in the absence of disclosure by UTI of the date when these units were transferred to other investors. The units have been transferred without notice to the complainant but after they had been submitted by the complainant for transfer and redemption to the UTI alongwith other units. The complainant should be compensated by the UTI by paying to him compensation equivalent to the redemption amount @ Rs. 49.70 per unit alongwith interest @ 18% per annum with effect from 11.9.1994 till the date of actual payment, for these 2100 shares.

The complaint succeeds as aforesaid. The payment should be made by the UTI to the complainant within one month of a certified copy of this order being served upon it by the complainant failing which the UTI will have to pay additional interest @18% per annum from the due date of payment till the date of actual payment in accordance with this order.

LET a copy of the order be made available to the complainant or his learned Counsel and sent to the UTI by Regd. Post as per rules. Complaint allowed.