Karnataka HC takes up petitions on winding up of Franklin Templeton schemes

The Karnataka High Court on July 7 issued formal notices to the Union government, the Securities Exchange Board of India and Franklin Templeton group of companies on litigations related to the winding up of Franklin Templeton Mutual Fund’s six debt schemes, transferred to it from three different high courts.

The Supreme Court, in its June 19 order had transferred the cases pending in the high courts of Delhi, Gujarat and Madras, to the High Court of Karnataka with a request to the Chief Justice to hear the matters himself in a Division Bench, and decide within three months.

A Division Bench comprising Chief Justice Abhay Shreeniwas Oka and Justice Ashok S. Kinagi, in a video-conference hearing, asked all the parties to file their responses by July 22 and rejoinders to the responses by July 29.

Noticing that the records of the petitions in the High Court of Madras has not yet been received, the Bench issued direction to its Registrar (Judicial) to communicate with the Registrar-General of the High Court of Madras for immediate transfer of all records pertaining to the case.

While multiple petitions were filed before three High Courts on the winding up of the six debt schemes, the High Court of Gujarat, in the first week of June, had stayed the process of e-voting, which is the first step to get the unit holders’ nod to proceed with the winding up abruptly announced by the fund house in April this year. The e-voting window was scheduled to be open from June 9 to June 11.

In an earlier proceeding before the High Court of Delhi, the SEBI had said that a forensic audit had been ordered based on the complaint received on May 25, 2020 against the Franklin Templeton Trustee Services Pvt. Ltd. and another group company.

The petitioners had questioned the legality of the process of winding up of the schemes while making various allegations, including that the fund house had failed to adhere to several rules.

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