MUMBAI: The Karnataka high court has set an accelerated timeline to dispose all the six petitions against Franklin Templeton India’s decision to wind up six of its debt schemes. This is to ensure that the crucial refund process for 300,000 investors begins as soon as possible. These petitions were filed earlier in other courts. The Supreme Court ordered their transfer to the Karnataka high court.
Franklin shut down these schemesfor subscription and redemptions on 23 April, citing severe illiquidity and redemption pressures.
The Securities and Exchange Board of India (Sebi) and Franklin have been directed to file their replies to the various petitions within two weeks with the petitioners being asked to submit their rejoinders seven days after that. The capital markets regulator echoes the asset management company’s view that trustees can decide to wind down schemes if they believe it is the interest of unit holders.
The petitioners are contesting that such a decision of winding up cannot be taken without the consent of unit holders, given that there was mismanagement of funds while operating the schemes.
The Gujarat high court-ordered stay on e-voting of Franklin’s proposal to wind up the schemes remains unchanged. Mandatory under Sebi norms, e-voting would have authorised either the trustees of Franklin or Deloitte to monetise the underlying assets of the schemes for the winding up process.
Franklin had argued in its plea in Supreme Court that it was critical that the unitholders’ meeting and e-voting be allowed to proceed in accordance with the mutual fund regulations to ensure small investors are paid at the earliest. It had added that the stay was delaying the return of monies to unitholders of the schemes, causing them hardships.