If you are stuck in such a situation, here is what to do.

Mr. Rohan Kumar, a resident of Nagpur, initiated a redemption of his mutual fund units through the ‘CapitalGainz’ mobile application on the 3rd of this month. A few days later, on the 8th, the app status updated to ‘Completed’, indicating that the funds had been transferred to his registered bank account. However, as of the 10th, Mr. Kumar has not received the credited amount. He contacted CapitalGainz’s customer support, who insisted their records show the transfer was successful. Despite submitting his bank statement as proof of non-receipt, the support team has been unresponsive, causing him significant distress about the safety of his investment.

Advice in such cases

This situation, while alarming, is not uncommon. It constitutes a clear ‘deficiency in service’ by the financial intermediary or the Asset Management Company (AMC). It is crucial to follow a structured legal and regulatory escalation process to ensure the prompt recovery of your funds along with potential compensation for the delay.

Applicable Sections of Law

This issue is primarily governed by consumer and securities law rather than criminal statutes, unless fraud is evident.

• The Consumer Protection Act, 2019: As an investor, you are a ‘consumer’ of financial services. The failure to credit your redemption proceeds in a timely manner is a ‘deficiency in service’, making the service provider liable.
• SEBI (Securities and Exchange Board of India) Regulations: SEBI mandates strict timelines for the payment of redemption proceeds to investors, typically within a few business days (e.g., T+2 for equity funds, T+1 for liquid funds). Any delay is a violation of these regulations.
• Bharatiya Nyaya Sanhita, 2023 (BNS): If there is substantial evidence to suggest a deliberate and dishonest intention to misappropriate your funds, sections related to Criminal Breach of Trust (Section 314 BNS) or Cheating (Section 316 BNS) could be invoked. However, the initial course of action should be through consumer and regulatory channels.

If you are the complainant

If your funds are stuck, you must act methodically:

• Formal Written Complaint: Send a formal email or registered letter to the grievance redressal officer/nodal officer of the investment platform (like ‘CapitalGainz’) and the concerned AMC. Clearly state the issue, redemption details, and attach proof (screenshots, bank statement).
• Escalate to SEBI SCORES: If you do not receive a satisfactory response within a reasonable time, the next step is to file a complaint on the SEBI Complaints Redress System (SCORES) portal. This is a very effective mechanism as AMCs are answerable to the regulator.
• Send a Legal Notice: Through a lawyer, send a formal legal notice to the company, demanding the principal amount along with interest for the period of delay and compensation for mental agony. This often prompts immediate action.
• File a Consumer Complaint: You can file a case before the appropriate District or State Consumer Disputes Redressal Commission, claiming the redemption amount, interest, and compensation for the deficient service.
• Consult with Lawyer: The very basic and important step to start is to talk to a Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in the range of Rs. 10,000 to 50,000 depending on the case. He is helping you in this situation to come out. He is an expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved in 7-10 days.

If you are the victim

As the aggrieved investor, your immediate actions are critical:

• Preserve All Records: Do not delete any communication. Take screenshots of the app showing the completed transaction, save all emails and chat transcripts with customer support, and keep your bank statements ready.
• Maintain a Timeline: Create a chronological record of events: date of redemption request, date of ‘completion’ shown in the app, dates of contact with customer support, and their responses.
• Do Not Panic: Your money is regulated by SEBI and is generally safe. The issue is almost always a procedural or technical lapse. A systematic approach will yield results.

How the police behave in such cases

The police are generally not the first authority to approach for such matters. Since this is a commercial dispute concerning a financial service, the police will likely advise you to approach the appropriate regulatory body (SEBI) or a consumer court. They will only intervene and register an FIR if you can provide strong preliminary evidence indicating a criminal offence like a pre-planned fraud or misappropriation, which is distinct from a service delay.

FAQs people normally have

What evidence is required?

To build a strong case, you must have the following evidence:

• Proof of your investment (Account Statement).
• The redemption request confirmation (email, SMS, or app screenshot).
• Screenshot from the app/website showing the transaction as ‘completed’.
• Your updated bank account statement for the relevant period, proving the amount was not credited.
• All written communication (emails, letters) with the company’s customer support and grievance cell.

How long will the investigation take?

The timeline varies depending on the channel you use:

• SEBI SCORES: Typically, companies are required to respond and resolve the complaint within 21 to 30 days.
• Legal Notice: A response is usually expected within the notice period, which is typically 15 or 30 days.
• Consumer Court: The process can be longer, ranging from a few months to over a year, depending on the complexity and the workload of the commission.

Advocate Sudhir Rao, Supreme Court of India