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The Karnataka high court on Saturday ruled that Franklin Templeton India’s decision to wind down its suite of six debt schemes required a simple majority consent of unit holders. (Photo: Bloomberg)
The Karnataka high court on Saturday ruled that Franklin Templeton India’s decision to wind down its suite of six debt schemes required a simple majority consent of unit holders. (Photo: Bloomberg)

Franklin Templeton Mutual Fund may appeal in Supreme Court, seeks directions to return cash to investors

Franklin Templeton Mutual Fund may appeal in the Supreme Court over the order by Karnataka high court on winding up of the six debt schemes.

Franklin Templeton Mutual Fund may appeal in the Supreme Court over the order by Karnataka high court on winding up of the six debt schemes. In a letter to the investors of the six troubled debt schemes, Sanjay Sapre, President, Franklin Templeton Asset Management (India) wrote "While we are still in the process of studying the order, basis our initial review, we believe it may be necessary to appeal aspects of the order in the Hon’ble Supreme Court." The letter mentioned to seek appropriate directions from the court to return cash of over 5,200 crore received from four out of the six debt schemes to the investors. "It will also be our endeavor to seek appropriate directions from the court regarding return of cash of over 5,200 crore currently accumulated in the four cash positive schemes, and with regard to any additional cash we may receive while the matter remains under the consideration of the Hon’ble Court," said the note.

The Karnataka high court on Saturday ruled that Franklin Templeton India’s decision to wind down its suite of six debt schemes required a simple majority consent of unit holders.

The court ordered that trustees should not take any action on the winding up of the six schemes till a simple majority consent of unit holders is obtained. This means that for any further winding up actions, they would need a consent of unit holders.

However, considering that the Supreme Court is on vacation, the operation of the order has been stayed for six weeks to give time to Franklin Templeton India to appeal the order. Till then status quo on refund, redemptions should be maintained, the Karnataka high court ruled.

Earlier this year in April, Franklin Templeton Mutual Fund decided to wind up its six schemes, namely, Franklin India Low Duration Fund, Franklin India Dynamic Accrual Fund, Franklin India Credit Risk Fund, Franklin India Short Term Income Plan, Franklin India Ultra Short Bond Fund and Franklin India Income Opportunities Fund which were cumulatively holding assets worth 26,000 crore then.

Aggrieved by this decision, some investors moved the courts in June.

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