Acting on a petition filed by a 72-year-old Bandra resident, the Bombay high court last week sought an explanation from SBI Mutual Fund about why one of their investment plans has yielded no returns, when all their other funds are yielding high returns to investors.
The petitioner, Desmond D Souza, had invested Rs 2 lakh in The One India Fund. He said that since its inception, the company has mobilised Rs483 crore through the fund, but investors have received zero returns.
The petitioner alleged that this was a result of mismanagement and amounted to deceiving investors. His petition said that the rider – mutual funds are subject to market fluctuations – only implies there can be variations in the dividend, not that there can be zero returns for years.
Counsel for SBI Mutual Fund, Atul Damle, contended that since mutual funds are subject to market risks, the petitioner could have had no expectations about the rate of returns.
However, the division bench of justice DY Chandrachud and justice RD Dhanuka found the working of The One India Fund to be in contrast with the company’s other funds, which are yielding high returns to investors.
Acting on D Souza’s request, the court also issued notice to the Securities and Exchange Board of India (SEBI), directing the market regulator to file an affidavit stating the exact nature of the regulatory framework in place to ensure proper management of mutual funds.
The court placed the petition for further hearing on August 29.