Manmohan, J.— This appeal arises out of judgment and order dated 13.7.2006 passed by the learned Single Judge in Writ Petition (Civil) No. 7463/2000 titled as “Indian Bank Mutual Fund v. SEBI”, whereby the learned Single Judge held that though the offer document floated by the Respondent Fund was capable of two constructions, namely, either offering indicative returns or minimum assured returns, but as no investor was misled, the circumstances did not warrant issuance of any direction to the Respondent to treat the expression “minimum indicative return” as a minimum assured return and not an “indicative return”.

2. The brief facts of the case are as follows:

(a) Respondent No. 2, Indian Bank which is a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970, created Respondent No. 1, by way of a Trust and Respondent No. 1 as the Principal Trustee by virtue of a Trust Deed dated 17th November, 1989.

(b) In 1990, the Respondent No. 1 issued an offer document under the “INDJYOTHI” scheme whereby it offered Plan A and Plan B to the investors. Under both these plans, the investors were offered minimum assured returns. The language used in the said offer document is reproduced herein below for ready reference—

“PLAN A

Assured minimum return at the following rates is payable annually to the investors……..

PLAN B

Investors can opt for cumulative units, wherein the value of units will appreciate in tune with the minimum assured returns or at higher returns that may be declared.”

(c) On 27.6.1991, Respondent No. 1 sought permission of the Reserve Bank of India to launch a new scheme under the name “Ind Prakash” (hereinafter referred to as ‘the Scheme’). As originally conceived, this Scheme also offered an assured return to the investors, but the Reserve Bank of India did not give its consent. In fact, the Reserve Bank of India vide its letter dated 19th July, 1991 advised Respondent No. 2 that the Scheme should not indicate specified guaranteed returns but only an approximate minimum yield should be mentioned. The Reserve Bank of India asked Respondent No. 1 to accordingly amend its advertisements and prospectus.

(d) Pursuant to this direction, the Respondent No. 1 used the term “Indicative Minimum Return” in its offer document which was thereafter approved by Reserve Bank of India vide its letter dated 1st January, 1992. The relevant portion of the offer document is reproduced hereinbelow for ready reference—

“3. THE SCHEME AND ITS OBJECTIVES

Indian Bank Mutual Fund has formulated ‘Annual Income and Growth Scheme, 1992’ under which IND PRAKASH units are being issued by this offer.

The terms and conditions of this scheme are governed by Indian Bank Mutual Fund Scheme known as, “Annual Income and Growth Scheme, 1992—IND PRAKASH’ (approved by Reserve Bank of India vide their letter DBOD No. FSC 222.C-469-91/92 dated 1st January, 1992). All the expressions used in this Offer Document shall have accordingly the same meaning assigned to them respectively under the said scheme.

The objective of the scheme is to generate and distribute a reasonable annual return to the investors and also to attempt generation of capital appreciation by investing in Non-convertible/Convertible debentures, Equities, Other Equity related Investments and Money Market Instruments. Keeping in view the nature of the underlying investments, investment in IND PRAKAH is subjected to market risk. While past performance is not necessarily indicative of future results, owing to the diversification of investments across industries and instruments, it has been possible to minimize such risks and generate reasonable Income and capital appreciation………..

7. RETURN ON INVESTMENT

This scheme is offered with two options viz. Plan ‘A’ and Plan ‘B’.

Plan ‘A’

INDICATIVE RETURN at the following rates is payable annual to the investors…….

Plan ‘B’

Investors can also opt for cumulative returns, wherein the value of units will appreciate in tune with the minimum returns indicated under Plan ‘A’ or at higher returns that may be declared. Income will not be distributed till redemption. However, certificates indicating the income accrued every year will be issued on request.

Indicative value of Rs. 1000/- invested at the above returns is given below—

End of 10th Month: i.e as on 31.3.1993 Rs. 1125/- 22nd Month: i.e as on 31.3.1994 Rs. 1297/- 34th Month: i.e as on 31.3.1995 Rs. 1498/- 46th Month: i.e as on 31.3.1996 Rs. 1734/- 58th Month: i.e as on 31.3.1997 Rs. 2011/- 70th Month: i.e as on 31.3.1998 Rs. 2338/- 82nd Month: i.e as on 31.3.1999 Rs. 2724/- End of the Scheme: i.e as on 31.3.1999 Rs. 3032/-”

(e) After receipt of the No Objection Certification of the Reserve Bank of India, the Scheme was floated in 1992 by Respondent No. 1. The Scheme was to start from 1.6.1992 and end on 30.11.1999

(f) In the meanwhile on 30.1.1992 the Appellant was established under a Central Act i.e The Securities and Exchange Board of India Act, 1992 (said Act) to protect the interests of investors in securities and to promote the development of and regulate the securities market and for matters connected therewith or incidental thereto, and the operation of mutual funds was brought within the monitoring of SEBI.

(g) By reason of the fact that the minimum returns under Plan A and B for the period 1.4.1996 onwards till close of the scheme, as indicated in the Offer Document were not paid to the investing public some complaints came to be filed with SEBI. As the Scheme was to culminate on 30th November, 1999, accordingly, the Appellant brought the complaints to the notice of the Respondents.

(h) Finally Respondent No. 2 vide its letter dated 9.6.1999 confirmed that they would pay dividend as assured to the unit holders in the offer document. Subsequently, the Appellant vide its letter dated 11.6.1999 advised Respondent No. 1 to issue a public notice in this regard, which was done on 15.6.1999 The relevant portion of the said Press Release is reproduced herein below for ready reference—

‘Ind Prakash scheme of Indian Bank Mutual Fund had offered indicative returns to the investors at the time of floating the scheme in June, 1992………..In the interest of the investors, Indian Bank, the sponsor bank of the mutual fund has proposed to meet the unpaid dividend liability, even though the scheme has only indicated the return. The Bank has approached Reserve Bank of India for necessary permission. The Fund is also proposing to pre-close Ind Prakash scheme subject to the approval of unit holders and SEBI.’

(i) The issuance of Press Release by Respondent No. 1 had an impact on the unit price of the Scheme which were listed in the Stock Exchange and several units were traded. Majority of complaints subsequently filed before various authorities are by the investors who had purchased units under the Scheme subsequent to the Press Release dated June 15th, 1999. It is pertinent to mention that according to the Respondent No. 1 subsequent to the said Press Release, Reserve Bank of India once again refused permission to the Respondent No. 1 to treat the return as “Minimum Assured Return”.

(j) The Executive Director of Respondent No. 2 and other officials of Respondent No. 1 met the officials of the Appellant on 22.10.1999 and expressed their inability to pay the minimum assured returns. However, the Appellant vide its letter dated 27.10.1999 directed Respondent No. 2 to pay dividends as stated in the offer document as according to the Appellant the same were “minimum assured returns”. Respondent No. 2 replied to the same on 29.10.1999 informing the Appellant that in view of the financial position of the bank the board of the bank had decided that payment of returns as indicated in the offer document and as agreed to in their letter to SEBI dated 9.6.1999, cannot be made. It was further claimed that there was no commitment in the offer document to make the payment.

(k) Ultimately, on 22.11.1999, the Appellant issued a show-cause notice to the Respondents to which a reply was filed. Thereafter, a personal hearing was afforded to the Respondents. On 30.11.1999, an order was passed by the Appellant in exercise of power under Section 11(B) of the said Act directing the Respondent to redeem Plan ‘A’ of the Scheme at prices as assured in the Offer Document and in case of Plan ‘B’ to pay the cumulative minimum value at the end of the Scheme as on 30.11.1999 It was further directed that in the event Respondent No. 1 was not in a position to pay the investors, the shortfall shall be borne by Respondent No. 2, being the sponsorer and Principal Trustee of the mutual fund.

(1) Respondents appealed against the order before the Appellate Authority under Section 20 of the said Act. However, the appeal was rejected on 18.02.2000 against which the Respondent preferred Writ Petition (Civil) No. 7463/2000 for quashing of the order dated 18.2.2000

3. The learned Single Judge held as follows:

“…28. Of course, the offer document was not happily worded and this led to the possible ambiguity indicated above. There is a possible explanation for this inappropriate wording employed in the offer document of IND PRAKASH. The key lies in comparing the offer document of the IND PRAKASH Scheme with that of the IND JYOTHI Scheme which was prior in time. The description of Plan A under both the schemes is identical except for the rates and dates being different and the words ‘Assured Minimum return…..’ used in IND JYOTHI being replaced by the words-‘indicative return…..’ used in IND PRAKASH. Reading these two documents, it does appear that the intention of IBMF was to inform the investors that the returns were not ‘assured minimum returns’ but merely indicative returns. Unfortunately, IBMF did not suitably amend other parts such as ‘a higher return may be decided by the trustees’ _ which, essentially, went with the expression ‘assured minimum returns’. Plan B was also not suitably reworded. This morphing genesis of the offer document from the IND JYOTHI Scheme to the IND PRAKASH Scheme is a possible explanation of the unhappy wording in the offer document.

29. It is well settled that the object of interpretation of a written instrument is to discover the real intention of the author [see Delta International Ltd. v. Shyam Sundar Garewalla, (1999) 4 SCC 545; Hind Plastics v. Collector of Customs, Bombay, (1994) 5 SCC 167; Dilharshankar C. Bhachech v. Controller Of Estate Duty, Ahmedabad., (1986) 1 SCC 701]. But, the intention must be gathered from the written instrument [see Bishumdeo Narain Rai (dead) by LRs. v. Anmol Devi, (1998) 7 SCC 498; Keshav Kumar Swarup v. Flowmore Private Limited, (1994) 2 SCC 10]. Employing these principles, the offer document by itself can lead to two possible interpretations. In this context, it may be argued that even if the intention of IBMF was to give only ‘indicative returns’ and not ‘guaranteed returns’, investors were not privy to the correspondence with RBI and could not be expected to compare the offer documents of IND JYOTHI and IND PRAKASH and then analyse the same to conclude that there is no ‘assurance’ given in the offer document for the IND PRAKASH Scheme. An unsuspecting investor will only read the offer document and taking the statements at face value interpret the same in the manner which appears reasonable to him. Therefore, it may be argued, in the facts of this case that what the IBMF intended is not as relevant as what the public understood the offer document to mean. Reading the offer document by itself, as observed above, two views are reasonably possible.

30. We have a peculiar situation here. The IBMF intended to offer only indicative returns but the document could be construed as offering (a) only indicative returns or (b) indicated minimum returns capable of only an upward revision. Now, it is possible that all persons reading the offer document understood it in the former sense. It is also possible that all persons understood it in the latter sense. It is, of course, more probable that some understood it in the former sense and some in the latter. It is therefore necessary to examine the factual position. Was anyone misled? Did anyone read the offer document as one guaranteeing minimum returns? Did anyone complain? It is here that all semantic debates lose relevance. For, I find that there is not a single complaint on record. Neither the SEBI nor the Central Government in its appellate order has referred to any particular complaint or complainant. Apart from a vague reference that complaints were received there is no mention of any specific complaint or complaints. There is no evidence on record to suggest that any member of the public was misled into investing in the scheme on the belief that he or she was assured of minimum returns. It is one thing to say that because of the ambiguity noted above, investors could have been misled and it is quite another to say that one or some of them were, in fact, so misled. There is no evidence of the latter. In the absence of any such evidence, all arguments based on semantics lose relevance. Therefore, I am of the view, that circumstances did not warrant the issuance of the direction to IBMF to redeem Plan A at prices as ‘assured’ in terms of the offer document and in case of Plan B to pay the cumulative ‘Minimum’ value at the end of the scheme as on 30.11.1999 It may be noted that scheme has worked itself out. All investors have got back their principal amounts along with an overall return of 14.32% under Plan A and of 12.15% under Plan B over the 7½ years scheme period. As submitted by the petitioners, these returns are not insubstantial though they are lower than the indicative returns mentioned in the offer documents. But, according to them, no one complained. And, there is no evidence on record of any such complaint. Finally, the question—is the Indian Bank liable in its capacity as a trustee and sponsor of the scheme?—remains to be considered. This has become academic inasmuch as I have come to the conclusion that IBMF itself is not liable.”

4. The learned Single Judge while allowing the writ petition of the Respondents recorded the following observations:

“(a) After perusal of Clauses 3 and 7 of the offer document it could legitimately be said that only “indicative returns” and “indicative values” had been suggested. There was no assurance or guarantee of minimum return in the said Scheme.

(b) The words “minimum returns” have been expressively used with reference to the returns under Plan A. There was no reference to lower returns but only to the possibility of higher returns being declared. Therefore, an investor reading the offer document in this manner would reasonably come to the conclusion that the indicative returns and indicative values under Plan A and Plan B, respectively, were the minimum returns and minimum values.

(c) The offer documents could possibly be read in two ways. One, where the indicative returns are merely indicative and nothing more. Two, where the indicative returns are the minimum or assured returns with the possibility of higher returns but no lower than those indicated.

(d) Reading the two schemes together, it appeared that the intention of Indian Bank Mutual Fund was to inform the investors that the returns were not “assured minimum returns” but merely indicative returns.

(e) The morphing genesis of the offer document in IND JYOTHI Scheme to the IND PRAKASH Scheme was a possible explanation of the unhappy wording in the offer document.

(f) Neither the SEBI nor the Central Government in its appellate order had referred to any particular complaint or complainant. Apart from a vague reference that complaints were received there was no mention of any specific complaint or complaints.

(g) There was no evidence on record to suggest that any member of the public was misled into investing in the Scheme on the belief that he or she was assured of minimum returns.

(h) Because of the ambiguity, as noted above, investors could have been misled and on the other hand, one or some of them were misled. There was no evidence of the latter.

(i) The circumstances did not warrant the issuance of the direction to IBMF to redeem Plan A at prices as “assured” in terms of the offer document and in case of Plan B to pay the cumulative “Minimum” value at the end of the Scheme as on 30.11.1999 The scheme had worked itself out.”

5. The learned Counsel for the appellant contended that the main issue in the present appeal is whether the offer document of “Ind Prakash Mutual Fund” in Plan B offered the investors “indicative returns” or “minimum assured returns” and whether the said Plan B has to be read in conjunction with Plan A of the offer document. He further contended that a conjoint reading of the two plans of the offer document led to a possible ambiguity. It is trite law that in such a case of an ambiguity or confusion in any statute or document, the Court would construe and interpret the same in favour of the investors, similar to a case where an ambiguity is construed in favour of an assessee in relation to the Income Tax Act/proceedings or in favour of the citizen in relation to the fiscal statute. Therefore, the Court would interpret Plan B to mean “Minimum Assured Returns” and not “Indicative Returns” as the investors or a layman would have understood the same to be “minimum returns”.

6. The learned Counsel further relied upon the Press Release dated 15.6.1999 issued by the Respondent No. 1. The Respondent has alleged that the said Press Release was issued by the Respondent under compulsion and force by the Appellant. However the said plea has not been raised by the Respondents in the writ petition or in the reply to the appeal and further it did not challenge the issuance of the Press Release in any Forum or Court on the ground that the same was as a result of coercion, pressure or force by the Appellant. The Respondent has also not placed any documents on the record to show that permission was sought for from the Reserve Bank of India and the said permission was refused. Since the subsequent transferees of the units in Ind Prakash Scheme had purchased/repurchased the same on the basis of the above Press Release issued by Respondent No. 1 they are entitled to the benefit accruing from the representations and assurances made in the above Press Release, along with the original investors.

7. Keeping in view the aforesaid facts and the arguments advanced before us, we are of the view that though the Respondent No. 1 initially wanted to offer “minimum assured returns” to the investors under the Scheme, it was the Reserve Bank of India which did not agree to the same. In fact, it was the Reserve Bank of India which vide its letter dated 19th July, 1991 specifically asked the Respondents Fund to launch a Scheme with “indicative returns” and not “assured returns”. It was only pursuant to this Reserve Bank of India's direction that the Respondents Fund used the term “minimum indicative return”, which was approved by the Reserve Bank of India vide its letter dated 1st January, 1992.

8. Moreover, when one contrasts the language used by the Respondents Fund under the 1990 IND JYOTHI Scheme and the present Scheme, one finds that where the Respondent Fund wanted to offer “minimum assured returns”, it explicitly said so. Consequently, we are of the opinion that the Respondents Fund under the IND PRAKASH Scheme could offer and only offered “indicative” and not “minimum assured returns”. To this extent, there is no ambiguity in the offer document under the Scheme.

9. The interpretation of the offer document that we have accepted is bolstered by the fact that out of a total 1,08,027 investors (52,363 investors under Plan A and 55,664 investors under Plan B) the majority of the investors understood the returns to be “indicative” under the offer document and accepted the indicative returns paid to them without any protest. It is to be noted that 16 complaints referred to by the Appellant at pages 186-187 of the appeal are by secondary investors who had purchased units after issuance of the Press Release dated June 15th, 1999. In our view, the Press Release once again re-iterated that the returns offered under the Scheme were only “indicative” but in the interest of the investors, the Respondents Fund had proposed to meet the unpaid dividend liability provided Reserve Bank of India granted specific permission—which according to the Respondents was refused. Therefore, as in the Press Release there was only a proposal and no commitment to pay any assured returns, in our opinion the 16 complainants cannot derive any benefit from the said Press Release.

10. Further, according to the Respondent Fund in all around 14 original investors had filed complaints in various Forums, but as of today only five complaints are pending in addition to the complaint of Mr. Sahni and family. The five pending complaints other than that of Mr. Sahni and family involve only around 3,500 units in contrast to the six crores sixteen lacs units sold under the Scheme. It is, therefore, apparent that almost every investor understood the Scheme to offer an “indicative return” only. We have also noted the plea of Mr. C.S Vaidyanathan, learned Senior Counsel that the grievance of the intervenor/investors before this Court would be met by making the payment of an ex gratia amount bringing the payment upto the minimum indicative return.

11. Even though we have held that there is no ambiguity in the offer document floated under the Scheme, we are in agreement with the submission of the Appellant's Counsel that in case there is any ambiguity or confusion in the offer document floated by a Mutual Fund, a Court or Tribunal must accept an interpretation that leans in favour of the investor and against the Fund. In our view, adopting such a principle of interpretation would also be in public interest.

12. We are further informed that when the Appellant came into existence, the Respondents Fund vide its letter dated 20th April, 1992 informed the Appellant about the indicative nature and its return under the Scheme. However, the Appellant at that stage did not raise any objection with regard to the language used in the offer document. It is pertinent to mention that the Appellant also never objected in the year 1993 when the Respondent Fund declared a dividend of only 12% as against 15% indicated in its ???er document. Consequently, we are of the opinion that the Appellant ???estopped from now taking the stand that the term “minimum indicati??? urn” means a “minimum assured return” and not an “indicative return”.

13. We also find that the investors under the present Scheme not only received back their principal but also a reasonable overall simple return of approximately 14.32% under Plan A and 12.15% under Plan B under 7½ years of the Scheme period. This return by no standards can be considered as inadequate or unsubstantial even though it may not have matched the return expectation as indicated in the offer document.

14. Consequently, the present appeal being devoid of merits is dismissed but with no order as to costs.

Appeal dismissed.