- (1.) THE subject matter of challenge in this writ application is the unilateral decision taken by the respondent no.2 to convert Cantriple + Scheme from close ended Scheme to open ended Scheme.
(2.) THE facts of this case in a nutshell are as follows: THE respondent no.1 was a banking company constituted under the provisions of the banking companies (Acquisition and Transfer of Undertakings) Act, 1970. THE respondent no.1 was the sponsor of the respondent no.2. THE respondent no.2 was a trust set up the respondent no.1 in October 1991. In November 1991 the respondent no.2 introduced a close ended scheme known as Cantriple + Scheme(hereinafter referred to as the said scheme). THE board of trustees formulated the said scheme which was a close ended mutual fund. Under the said scheme the respondent no.2 issued unites to the members of the public called as Cantriple +, each of face value of Rs.10/- in accordance with the scheme formulated by the respondent no.2. THE features of the said scheme are quoted below: Features: THE salient features of the CANTRIPLE + Scheme are set out herebelow: 1. CANTRIPEL + is redeemable non-debt security of face value of Rs. 10.00(Rupees Ten Only). 2. Under this Scheme, the investor has to subscribe for a minimum of 100 CANTRIPLE + 3.THE object of the CANTRIPLE + Scheme is to cumulate the capital fund in such a way that at the end of 90th month from the date of allotment, the CANTRIPLE + holders shall get an amount equivalent to THREE TIMES of their investment or more, which works out to a return of more than 14.90% p.a. 4. CANTRIPLE + under this scheme would be repurchased by the Trustees upon completion of 3 years from the date of allotment at a notified price from time to time. However, for more details on repurchase price of each CANTRIPLE + PLEASE REFER TO CLAUSE repurchase given below. 5. CANTRIPLE + are transferable 6. CANTRIPLE + under this scheme would offer more liquidity in the event of listing with Stock Exchanges. The plain for investment under the said scheme was as follows: INVESTMENT: The funds are generally invested in equity/debt instruments, National Saving Certificates, Kisan Vikas Patras, Indira Vikas Patras, GP Notes, Bonds & Equities issued by Public Sector Undertakings, Money Market Instruments such as call deposits, bills, short terms deposits/loans, commercial papers and other instruments issued by companies having regard to the restrictions, if any, under any law. Income and capital gains will be invested after making provisions for necessary expenses and in respect of the matters. There was a provision for repurchasing the units under the said scheme as follows: REPURCHASE: CANTRIPLE + is eligible for repurchase after expiry of 3 years from the date of allotment at a repurchase price to be announced by the Trustees from time to time. a) In calculating the repurchase price, the Trustees shall take into account the unrealised appreciation in the value of CANTRIPLE + Fund to the extent they deem fit provided that it shall not be less than 50% of such unrealised appreciation. While, calculating the repurchase price, the Trustees may deduct such sums as are appropriate to meet Management, Selling and other expenses including realisation of Assets and such sums shall not exceed 5% p.a. of the average net asset value of the CANTRIPLE + Fund. b) Repurchase of CANTRIPLE + will be at the repurchase price prevailing on the date of CANTRIPLE + are tendered for repurchase. c) After a period of 3 years from the date of Allotment of CANTRIPLE + when the repurchase of the CANTRIPLE + is to commence, the repurchase price shall be announced every month or as frequently as decided by the Trustees.
(3.) THE redemption clause under the said scheme was as follows: REDEMPTION: A) THE CANTRIPLE + Scheme shall be terminated upon the expiry of the 90th month from the end of the month in which the allotment of CANPRIPLE + is made. B) If 90% or more of the CANTRIPLE + are repurchased before completion of 90the month, the Trustees may, at their discretion, terminate the CANTRIPLE + Scheme even before the stipulated period of 90th month and redeem the outstanding CANTRIPLE + at the final repurchase price to be fixed by the Trustees. C) THE trustees may liquidate the CANTRIPLE + Scheme in one or more instalments. THE Trustees shall sell and/or release all realist all realisable assets, securities, instruments and other properties forming part of the CANTRIPLE + Scheme in the hands of the Trustees. Out of the realisations so made, the Trustees shall pay out or provide for payment of all liabilities, existing or contingent, allocable or apportionable in respect of that Scheme and unpaid dividend, if any. Net realisations of the Fund will be distribution shall be made by the Trustees to such holders in proportion to their respective holdings. There were miscellaneous provisions under the said scheme as follows: MISCELLANEOUS: The Trustees may from time to time, add to or otherwise amend or alter all or any of the terms of this Scheme. The terms of CANTRIPLE + Scheme, 1991 including any amendments thereof from time to time shall be binding on each holder of CANTRIPLE + and any person claiming through or under him/her/them, as if he/she/they had expressly agreed that they should be so binding.;