The Hindu Business Line : MFs are liable for deficiency: SC

In a judgment that has implications for investor services offered by mutual funds, the Supreme Court has ruled that a mutual fund was liable for `deficiency in service' even though the lapses were of the postal department in not delivering dividend or maturity payment cheques to investors.

The judgment has stated that mere posting of cheques will not amount to payment and that the post-office was only the agent of the drawer of cheques (UTI Mutual, in this case).

This judgment has been made in an appeal filed by UTI Mutual against the ruling given by Consumer Forums; about 1,600 persons had not received cheques, which had been fraudulently encashed by others.

UTI Mutual has indicated that it will comply with the judgment.

UTI Mutual has announced a dividend of 45 per cent for the UTI Brand Value Fund, which is part of the umbrella of Growth Sector Fund. The record date for the dividend is October 10.

Birla Mutual Fund has declared a dividend of 40 per cent for Birla Equity Plan, a tax-saving fund. The record date for the dividend is October 21.

Sahara Mutual Fund has proposed a dividend of 15 per cent for Sahara Midcap Fund. The record date for the dividend is September 20, 2005.

The Benchmark Split Capital Fund has been listed on the National Stock Exchange during the past week. Class A and Class B units can be separately traded.

The face value of each unit is Rs 100. Investors in Class A units are entitled to 40 per cent of the appreciation in the Nifty from the date of allotment (August 16) to the date of redemption.

If the Nifty declines, Class A investors enjoy capital protection. SEBI has notified the proposal to set apart 5 per cent of a book-built offer for mutual funds. In equity offers that are approved from now, this limit will apply.

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