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Judgment
SINCE common questions of law are involved in these two complaints, they are being disposed of by a single judgment. The complaints have been filed on the allegations that the complainants on the dates mentioned in the complaints advanced amounts mentioned in the complaints to one Shri Prem Parkash Gupta, R/o 66, Model Basti, New Delhi against the units issued by the Unit Trust of India (hereinafter called the Trust) belonging to him and also to his clients with transfer deeds over which Shri Gupta stated to have complete ownership, with full powers to pledge or sell the same at his will and discretion. The unit certificates were given as security for the loan advanced by them to Shri Prem Parkash Gupta who defaulted in the repayment of the loans advanced to him. The complainants approached the Unit Trust of India to verify the genuinness of the units pledged as security to the complainants, when news in the press appeared of shady dealings of the said Shri Prem Parkash Gupta. According to the complainants, the Trust to the query made by them replied that the units of large denominations offered as security by Shri Gupta have been tampered with and forged and that number of units with the Unit Certificate covered were inflated both in figures and words to a very high number. The complainants case is that because of the unit certificates having been inflated they are unable to recover the loans by means of the security offered to them. In the premises the complainants contend that they have suffered the loss mentioned in the respective complaints as a result of deficiency in the services offered by the Trust to the beneficiary of such service in that the Trust failed to observe and follow the elementary rules of caution and safety by simply typing by an ordinary commercial typewriter, the number of units, in figures and words on the unit certificates issued by them which were tampered with and forged in such a manner that it was undetectable by the naked eye, causing financial loss to the complainants who reasonably believed that they could rely on the genuinness of the unit certificates on the basis of which they advanced the loans, The complainants accordingly pray that they be awarded appropriate damages on account of financial losses suffered by them due to the negligence of the Trust.
THE respondent in its reply by way of preliminary objection urge that the complaints are barred under Section 37 of the Unit Trust of India Act, 1963 (hereafter called the Act) that the transfer of the unit certificates in question is not valid and, therefore, no right accrues to the complainants to file the present proceedings; further under the Act the Trust is empowered to impose conditions subject to which a unit holder can transfer units, and that such condition is printed at the bottom of the certificates in question. THE complainants having failed to comply with the said condition have no right whatsoever to allege ''deficiency'' in service on behalf of the Trust. THE respondent further allege that there is neither any deficiency as envisaged in the Act nor any negligence in the unit certificates in question and therefore the complaints against the trust are misconceived in law. Besides, the units are not goods and cannot be pledged and, therefore the entire premises of the complaints are wrong. According to the trust the stage of rendering service to the complainants did, not arise in the instant cases because the complainants have not approached/filed any application for registration of the units in the prescribed form. THE complainants are not entitled to recover any amount on the basis of the forged unit certificates, as they have failed to make any query about the genuinness of the certificates. THE respondents deny any loan having been advanced by the complainants for want of knowledge. THE trust denies that the complainant is a beneficiary of any service of the trust as a consumer or otherwise. The complainants in their counter to the reply reiterating the averments made in the complaints allege that under the Unit Trust Scheme they are not debarred from holding units on blank transfer forms as security for any advance; that the certificates are normally to be presumed as proof of the number of units mentioned in the certificates; and that the units are taken as standard security even by the Banks who accept them on blank transfer forms as pledge. The complainant''s case is that it was not obligatory for them to approach the trust for transfer of the ownership of the units as the same remain property of the borrower of funds and that this is an accepted universal practice for raising commercial loans.
We have gone through the record and heard the learned Counsel of the parties.
ON the allegations made in the complaints the Trust cannot by any stretch of imagination be said to be in any contractual or fiduciary relationship, with the complainants entitling them to the relief sought. Smt. Usha Ventakesan, Manager of the Trust in her affidavit dated 16.1.90 (on file No. C-1/89) has categorically stated that transfer either for the purposes of alleged pledge or otherwise is valid only if it is submitted to the trust alongwith a proper application and the transfer is registered or noted by the Trust. This is a mandatory condition as printed at the bottom of the impugned units. She has denied that the units can be pledged except to the Bank and that by completing the procedure prescribed by intimating the Trust about the pledge by a letter of authority. Her sworn testimony finds credence from the documents placed on record by the Trust. In the Brochure issued by the Trust regarding the Unit Scheme, 1964 annexure ''A'' filed with her affidavit under the head "Is transfer allowed" clearly stipulates that like shares units can be transferred and that the Banks consider units of Unit Scheme, 1964 as acceptable security for granting loans to the customers. For securing this facility one has to apply to the trust in the prescribed forms annexure ''C and ''D'' to her affidavit. According to the annexure ''C unit holder must sign, execute and deliver to the Bank the letter of authority for pledging the units as security for loans and the Bank in return must write a letter (form prescribed in annexure ''D'') to the Trust forwarding the letter of authority of the unit holder intimating the Trust about the pledge as security. It is, therefore, clear that a proper procedure is prescribed for pledging the units with the Bank. Apart from the fact that pledge in favour of any other person is not recognised, the complainants, if they advanced money on blank transfer forms without making enquiry from the trust have to thank themselves for the said state of affairs in which they find themselves. Besides the facility of obtaining loan from the Banks as enumerated above, the units cannot be pledged with any other person as stipulated in the guidelines issued by the Trust in agent''s Hand Book annexure ''B'' to the affidavit filed by Smt. Venkatesan (see para 2-6 at. page 24 of the Hand Book). The bare averment of the complainants without any supporting evidence, that the units are being accepted in commercial circles in pledge on the basis of blank form of transfer cannot be accepted. On the basis of the documentary evidence, it has to be held that units can only be transferred and not held in pledge on a blank transfer form signed by the unit holder. Without having made enquiries about the genuinness of the units and accepting them on their face value, the complainants cannot contend that it was within their reasonable contemplation that the face value of the units was the correct value of the unit certificate. The complainant''s belief in the absence of any enquiry made from the Trust cannot be said to be a reasonable belief. As a matter of fact the complainants have acted unreasonably in failing to obtain information from the Trust. The complainants have themselves to thank for landing themselves in the present unfortunate position in which they find themselves. They took no steps to discover the true position of the unit certificates and rushed into entering in the present transaction against the bar prescribed in the Agent''s Hand Book issued by the Trust. The complainants have not acted as prudent persons and ventured into the transaction without making enquiries from the Trust about the deal. Having entered into the shady deal of their own volition, they cannot turn round and make a grievance against the trust. The complainants on the allegations revealed by them by no stretch of imagination can be said to fall within the ambit of Section 2(d) of the Act giving rise to any corresponding obligation on the part of the Trust to render service to them within the scope of the term service defined in Section 2(o) of the Act. The complaints are wholly misconceived and liable to be dismissed. In the facts and circumstances of the case, no case is made out against the Trust entitling the complainants to any relief. In this view of the matter the other question whether the Trust can claim protection under Section 37 of the Act need not to be gone into, the same will be decided in an appropriate case. For the reason stated above, we find no merits in the complaints which are hereby dismissed. Complaint Dismissed.