The Hindu Business Line : Scheme closure: Court tells UTI to despatch final cheques

THE Bombay High Court has directed UTI Mutual Fund to continue with the process of winding up the UTI Growth and Value Fund - Bonus Plan, but with the option of allowing investors to wait till the court makes a final decision on the case.

In the hearing of Bajaj Auto Ltd's (BAL) case against UTI, the court observed that the scheme was purported to be wound up in view of the SEBI circular.

BAL had moved the court against UTI MF on its decision to wind up the plan as it did not comply with SEBI regulation which states that no investor should have more than 25 per cent of the total corpus of the fund. BAL has also challenged the SEBI regulation.

The court has now directed UTI MF to despatch a letter and the final cheque to all investors, informing them that the winding up of the scheme is being challenged in the court and that the choice of cashing the cheque rests with the investor.

If investors choose to wait for the final judgement on the case, they will get the benefit of the court order.

These letters are to be despatched by February 16. The next hearing of the case will be on February 24. The court took the view as it did not want other investors to be affected because of the legal battle between UTI MF and BAL.

The final cheque to the investors will be valued as per the net asset value of the fund as on February 1, 2005 including subsequent gains if any after deducting the expenses of winding up.

Until the case is resolved, UTI MF has been asked to invest the remaining corpus of the fund in scheduled commercial banks.

Even though the scheme has over 1,000 investors, the share of BAL's investment in the corpus was over 25 per cent.

BAL challenged the winding up of the scheme as its investments were less than a year old and early redemption would attract additional interest and taxes.

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