- (1.) The Petitioner, who appears in person, has filed these proceedings under Article 226 of the Constitution, seeking the following reliefs: (i) An order setting aside a scheme of merger of the One India Fund floated by the State Bank of India (SBI) with the SBI Magnum Equity Fund; (ii) A direction to the management of the SBI Mutual Fund to call a meeting of all investors, seeking their views on whether the swap ratio is fair and why no dividend was declared for more than five years; (iii) An independent audit into the affairs of the One India Fund; and (iv) In the alternative, that the deposit of Rs.2 lakhs made by the Petitioner be returned with interest as applicable to Fixed Deposits together with an additional amount of 0.5 percent applicable to senior citizens.
(2.) In December 2006, the Petitioner invested an amount of Rs.2 lakhs in a Mutual Fund by the name of "One India Fund" floated by SBI in respect of which he was allotted 20,000 units in January 2007. The grievance of the Petitioner is that though other SBI Mutual Funds yield high returns to investors, the One India Fund has not resulted in any return to investors over six years. According to the Petitioner, the disclosure that Mutual Funds are subject to market fluctuations, merely implies that the dividend can vary and would not justify an assumption that no dividend can be declared at all for several years. The case of the Petitioner is that the management has disregarded the interests of the depositors and the investments which were made by the Investment Team have been negligent. Effective 10 August 2012, a merger was announced of the One India Fund Scheme with the SBI Magnum Equity Fund Scheme on the basis of the prevailing Net Asset Value (NAV) as of that date. This according to the Petitioner, will result in detriment to the investors because the NAV of the fund which is to be merged is quoted almost at par whereas that of the SBI Magnum Equity Fund is above Rs.28. According to the Petitioner, sanction ought to have been taken at a meeting of the General Body.
(3.) Initially an affidavit in reply was filed on behalf of the First Respondent on 6 August 2012. Among other things, an objection to the maintainability of the Petition was raised on the ground that the First Respondent is not State within the meaning of Article 12 of the Constitution. The First Respondent stated that the Scheme Information Document of the SBI One India Fund made it clear that returns under the Fund were not guaranteed or assured and that equity instruments carry market risks. In the present case, it was stated that the scheme was an open ended diversified equity scheme with 70 to 100 percent of asset allocation under equities and equity related instruments including derivatives which made the scheme more prone to risk as compared to a debt scheme. The First Respondent stated that in pursuance of an application submitted to SEBI for the merger of the scheme with the Magnum Equity Fund, an approval was received on 20 June 2012. The Magnum Equity Fund is stated to be a large cap diversified equity fund and considering the growth potential of Indian large caps coupled with the capacity of the fund to deliver consistent long term performance, the merger is stated to be in the interest of investors.;