Back
2001 Supreme(Raj) 956
Rajasthan High Court, Jaipur Bench
Honble P.P. NAOLEKAR & K.S. RATHORE, JJ.
Rajasthan Upbhokta Sanrakshan Samiti - Appellant
Versus
Unit Trust of India - Respondents
D.B. Civil Writ Petition No. 4457 of 2000
Decided On : September 04, 2001
Suresh Goyal & Ajay Gupta, counsel for Petitioners Appellant D.R. Dhanuka, Sr. Advocate with P.Sanvat & V.B. Agarwala & Sudhanshu Kasliwal, counsel for Respondents(s)
Headnote:Unit Trust of India Act, 1963, Sec. 21(1) – Termination of Rajlakshmi Unit Scheme, 1992 – Application of principle of promissory estopple – Held – There must be a necessary factual foundation to apply the doctrine – Representation must be clear – There must be nexus between representation and action – The doctrine of estopple is subject to limitation – Respondents are empowered under Clause XXVII to terminate the scheme in public interest after giving notice – Investors had notice – No representation was made – Cannot be estopped on the principle of estoppel. (Para 6)
The investors were given notice that the scheme might be terminated in the midst by the Trust in order to mitigate hardship. The investors also had notice that the investments made under the scheme carry market risk. The scheme was terminated in the midst considering the interest of unitholders. Unitholders before investment in the scheme had the notice that if UTI thinks that continuation of the scheme would not be in the interest of unitholders, it could terminate it with sufficient notice to the Government. As the investors had notice of the scheme might be terminated in the midst in the interest of unitholders it could not be said that representation was made to them that in all circumstances the RUS 1992 shall terminate only after the period prescribed in the scheme was completed. It could not also be said that the petitioner has altered its position to the detriment of his interest on the basis of representation made that the RUS1992 shall complete its term. For the decision taken to terminate the scheme in the midst, of which the petitioners had notice, the respondent cannot be estoppel on the principle of promissory estoppel. (Para 6)
The Unit Trust of India (UIT) launched RUS92 exclusively for the benefit of women. The scheme itself was proclaimed to be a tribute by the UTI to women. It provided for an investment that was to grow twenty-one times in twenty years. Investment of Rs. one thousand in the name of a female child up to and including the age of one year was to become Rs. twenty-one thousand after twenty years and Rs. five thousand was to become over one lac. Depending upon the age of the child for whom the investment was to be made, the maturity value was to vary from a minimum of Rs. eleven thousand to Rs. twenty-one thousand. The scheme further declared that the maturity value was to be given only to the beneficiary, till then nobody could touch it. It was supposed to be an irrevocable gift. On 1.10.2000 the UTI took a decision to terminate the scheme with effect from that date. It is the case of petitioners that the decision for termination of the scheme was arbitrary and violative of the principles of promissory estoppel. The petitioners were let to believe that the scheme shall continue for the period it was mentioned and acting on the promise the petitioners altered their position and deposited the amounts under the scheme. Abrupt termination of the scheme without rhyme or reason was not only arbitrary act on the part of UTI but it amounted to breach of promise which was made to petitioners.
(2). It is the case of UTI that decision to terminate the scheme was taken by the Board which is the highest decision making body consciously taking into account the prevailing volatile market conditions in equity and debt market and to safeguard the overall interests of the beneficiaries of the scheme. It was a bona fide decision. According to the UTI the scheme was terminated not to deny or avoid the future return to a minor child but the ensure that there was no erosion of the capital of the scheme to the detriment of the minor child. If was explained that any further continuation of the scheme might, in the ultimate analysis, result in grave consequences detrimental to the holders of the units. The UTI took a pragmatic decision in the best interest of the unit holders. The scheme was launched with the objective to invest in debt and equity when the return on debt investment was anticipated at 18% to 20% per annum and return on enquiry was expected at 15% to 20% per annum. In the said prevailing scenario, at the relevant time when the scheme was launched the UTI thought that a return of 16.16% to 16.75% on this scheme would be a feasible return and was a foreseeable possibility. On account of the globalisation of economy and in particular in the direction of opening up the economic and financial sectors led to a sharp decline in domestic interest rates. As a result of such transitory phase in an ever changing economy coupled with a consistent drop in the interest rates, it became impossible to sustain the potential returns envisaged in 1992 as indicated in the scheme.
(3). On this submission of the UTI, whether termination of the scheme can be said to be arbitrary act on the part of government?
UTI is a statutory corporation constituted and established under the UTI Act, 1963. The corporation itself was established with a view to encourage saving, investment and participation in the income profits and gains accruing from acquisition, holding, management and disposal of securities. The Board of trustees is entrusted with the general superintendence, direction and management of the affairs and business of the Trust. The Board in discharge of its functions under the Act is mandated to act on business principles regard being had to the interest of the unitholders. The Board of tr
