Investor has to be cautious- expected returns may be far below the expectation #indianlaws

All investments were subject to markets risks and fluctuations and an investor has to exercise due caution while investing any amount in any Scheme. Simply, because the maturity amount is below their expectations they cannot drag the service provider to Court for the same.

The University employing thousands of employees has a contributory Provident Fund Scheme for its employees. The fund is maintained and administered by the University. This fund was invested by the University in one of the scheme with Unit Trust of India (UTI) with the reinvestment option of the dividend. The University contended that they were assured that the dividend income would be reinvested in further units at Net Asset Value (NAV) and on those units also, in any case, they were assured that they would get minimum return at specified rate of percent. 
The case of University was that UTI failed to honour the assurance of return at the rate of agreed percent and also committed breach of contract as UTI invested more than allowed percentage in equity markets due to which the NAV fell, which  and the same amounts to deficiency of services.

In the above background two issues arose before the Court, namely, whether the Universities fall within the ambit of the definition of “consumer” as laid down in Section 2(1)(d) of the Consumer Protection Act, 1986 (Act)  and that the “services” hired by them are not for any “commercial purpose”?

The Court observed that the words ‘commercial purposes’ would cover an undertaking the object of which is to make a profit out of the undertakings. In the present case the services of UTI were availed by the complainant for the betterment of their employees, that such an investment was made, and no benefit by way of profit was to accrue to the complainant. The intent of the Universities in the present dispute was not profiteering and the same was for benevolent interest. The investment was not made for the purposes of yielding any gain and hence in such circumstances the Universities would fall within the definition of “consumer” under the Act. In reference to determining whether there was any deficiency in services, it was held that the complainants have no case.

It was held as clearly stipulated in the ‘terms of offer’ that the maturity amount would depend on the NAV and that the same was guaranteed not to be below the per unit par value. All investments were subject to markets risks and fluctuations and an investor has to exercise due caution while investing any amount in any Scheme. Simply, because the maturity amount is below their expectations they cannot drag the service provider to Court for the same.

[Punjab University vs. Unit Trust of India]
(SC, 09.07.2014)