Premature termination of a statutory investment scheme upheld where the Board acted on relevant financial considerations.

A statutory investment scheme could be terminated prematurely where the scheme itself permitted such action and the power was traceable to the enabling Act. The HC noted that the Board had acted on relevant financial considerations, including market volatility, falling interest rates, and risk of capital erosion, with no extraneous factor shown. It further held that Article 14 was not breached merely because the scheme conferred structured discretion, and that natural justice did not require individual notice to each unit holder in a policy decision affecting large numbers of investors. The plea of promissory estoppel also failed because there was no clear promise to continue the scheme regardless of changed conditions.

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Issues: Whether the premature termination of the Raj Lakshmi Unit Scheme-1992 was without jurisdiction or otherwise illegal, whether clause (xxvii) of the Scheme and section 21(3) of the Unit Trust of India Act, 1963 were unconstitutional, and whether the decision was vitiated by arbitrariness, breach of natural justice, or promissory estoppel.

Analysis: The Scheme itself contained a term permitting premature termination if circumstances so required and if continuation was not in the interest of the unit holders or the Trust. That power was traceable to section 21(3) of the Unit Trust of India Act, 1963, which permitted amendment of a Scheme made under section 21(1). The statutory framework also required the Board to act on business principles with regard to the interests of unit holders, and each unit scheme was self-contained, with its corpus to be kept separate from other schemes under section 22(2). On the materials placed, the Board's decision was taken on the basis of market volatility, falling interest rates, and the risk of erosion of capital, and no extraneous or irrelevant factor was shown. The challenge based on Article 14 failed because a provision is not unconstitutional merely because it confers discretion, if that discretion is structured by the statutory policy. The challenge based on natural justice also failed because the termination was a policy decision affecting a very large number of investors and the Scheme itself contemplated termination on sufficient notice to the Government, not individual notice to each unit holder. The plea of promissory estoppel failed because there was no clear promise to continue the Scheme irrespective of changed conditions, and no sufficient factual foundation was laid to displace the public interest justification.

Conclusion: The premature termination of the Scheme was held to be within jurisdiction, lawful, and not violative of Article 14 or the principles of natural justice; the challenge was rejected.

Ratio Decidendi: Where a statutory investment scheme expressly authorises premature termination and amendment, and the competent Board acts on relevant financial considerations in the interest of unit holders, a court will not interfere in judicial review absent arbitrariness, mala fides, or violation of a constitutional limitation.

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