Send Growth Fund cheques on Feb 16: HC

The Mumbai High Court has directed UTI Mutual Fund to send redemption cheques to the investors of UTI Growth and Value Fund on February 16.

It may be recalled that Bajaj Auto had filed a petition in the HC on February 8, 2005 against the winding up of the UTI MF Growth and Value Fund prematurely.

The High Court has also said that the investors could either encash the cheques or hold them till the final disposal of the matter. The matter is expected to come up for final disposal on February 24, 2005.

The letter to be sent to the investors regarding the final payment has to be agreeable to all parties concerned and has to be approved by the High Court. In the normal course of events UTI MF should have despatched the cheques to the investors on February 11, 2005.

According to sources familiar with the matter, there has been a dispute also with regard to the deployment of funds pending encashment.

UTI MF has taken the view that the funds can be deployed in some safe instruments such as the call money market. However, Bajaj Auto holds the view that it can invest the funds in RBI Relief Bonds, which are equally safe. This matter is also yet to be sorted out.

Incidentally, Securities and Exchange Board of India (Sebi) which was also named a party in the petition filed by Bajaj Auto, has asked for time to file its reply.

It may be recalled that Bajaj Auto had on February 8, 2005 filed a petition in the HC against the winding up of the UTI MF Growth and Value Fund prematurely.

The scheme had to be wound up since it did not comply with the Sebi regulation of having a minimum of 20 investors with each investor not holding above 25 per cent of the portfolio.

Bajaj Auto's main appeal in the Court was that the premature winding up of the scheme has caused it monetary loss and it has also challenged the Sebi circular which led to this scenario and asked for a review.

Bajaj Auto has an investment of Rs 80 crore in the fund, which has a total corpus of Rs 120-odd crore.