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The pending matters have been directed to be heard and decided by a Bench headed by the Chief Justice of the Karnataka High Court within three months.
The Supreme Court last week directed the transfer of all petitions related to the winding up of six Franklin Templeton India debt schemes from various high courts to the Karnataka High Court within 15 days. (Franklin Templeton Trustee Services Pvt. Ltd. v. Areez Pirozsha Khambatta & Ors.)
The order passed on June 19 by a Bench of Justices Arun Mishra and Abdul Nazeer also states that all the pending matters must be heard and decided by a Bench headed by Chief Justice of the Karnataka High Court Abhay Shreeniwas Oka within three months.
The matters that have been transferred include the Securities and Exchange Board of India (SEBI) appeal currently pending before the Gujarat High Court.
Last week, the Apex Court heard Franklin Templeton’s plea for consolidation of several petitions filed by investors before the High Courts of Madras, Delhi and Gujarat.
During the hearing, the Bench had orally observed that it was incorrect on the part of the firm to wind up funds during the COVID-19 pandemic.
Earlier in June, the Gujarat High Court had put on hold Franklin Templeton MF’s e-voting process for winding up of the six mutual fund schemes. The plea by Franklin Templeton also challenges the stay granted by Gujarat High Court on the e-voting process.
Franklin Templeton, India’s ninth-largest fund house, had in April notified its investors that it was winding up the Franklin India low duration fund, dynamic accrual fund, credit risk fund, short term income plan, ultra-short bond fund and income opportunities fund, worth nearly Rs 28,000 crore.
Almost three lakh investors are set to be affected by Franklin Templeton’s decision to wind up its debt mutual fund schemes. The company had cited lack of liquidity in the bond market due to COVID-19 for its decision.
Senior Advocate Harish Salve, appearing for Franklin Templeton, had submitted that the crashing of values during the pandemic was the primary reason for winding up. He submitted that the company would answer all queries from investors if the multiplicity of litigation comes to an end.
Senior Advocate Mukul Rohatgi, appearing for an investor who had heavily invested in the schemes, had termed the wind up as a "scam."
[Read the order]