Supreme Court to hear Franklin Templeton plea on June 19

Suresh P Iyengar Mumbai | Updated on June 18, 2020

The apex court held that the objective was to refund the excise duty paid on genuine manufacturing activities

Plea seeks to lift Gujarat High Court stay on e-voting to close 6 debt schemes

The special leave petition of Franklin Templeton Mutual Fund in the Supreme Court against the Gujarat High Court stay order on e-voting to close six debt schemes will come up for hearing on Friday.

The fund house has appealed to the Apex Court to vacate the stay order so that it can proceed with e-voting, sell the assets held by the six debt schemes, and distribute the money to investors.

Meanwhile, the ‘patent appeal’ of capital market regulator SEBI in the Gujarat High Court seeking a larger bench in the case will be taken up for hearing next week, sources said.

The patent appeal means filing an appeal against an order of single judge to another bench of the same Court.

SEBI, which was dragged into the case by a group of investors, said the High Court had erred in its interpretation that the unit holders’ consent is needed before the winding up decision. The impugned order passed by the single judge is illegal, arbitrary suffers from excessive jurisdiction and is required to be quashed and set aside, said the SEBI petition.

Earlier this month, hearing a petition filed by a group of investors, Justice Gita Gopi said considering the facts of the case and by way of ad-interim relief, the operation and implementation of the notice regarding E-voting and Unit-holder's Meeting send through e-mail shall remain stayed.

Moreover, the order said the respondent, SEBI, has ordered forensic auditing of the accounts of the Franklin Templeton Asset Management Company and to submit the report thereof.

Arguing on behalf of investors, Mihir Thakore, Senior Counsel and Paritosh Gupta, advocate, pointed out that when the majority of trustees decide to wind up or prematurely redeem their units, the trustees have to obtain the consent of the unit-holders but in this case no such consent has been obtained.

It was also submitted that a scheme of a mutual fund may be wound up only after repayment of the amount due to the unit holders, which has also not been followed, he said.

Incidentally, Franklin Templeton has processed the payment of ₹103 crore received from Vodafone Idea Cellular to investors holding units in the segregated assets of the six debt schemes that were closed.

Franklin Templeton Mutual Fund received an interest payment of ₹103 ₹crore for its investment in ‘8.25% Vodafone Idea Ltd’ on June 12. The money is now distributed to investors in proportion to their holdings in the plans of the segregated portfolio.

Published on June 18, 2020

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