The Supreme Court on Thursday asked Franklin Templeton Mutual Fund to initiate steps within one week for calling a meeting of unit holders to seek their consent for closure of six mutual fund scheme and said there will be no redemption of units by investors till further orders.
The top court also agreed to hear an appeal filed by Franklin Templeton against the Karnataka High Court order which stopped the fund house from winding up its debt fund schemes without prior consent of the investors.
A bench of Justices S Abdul Nazeer and Sanjiv Khanna observed that the issue is big and people wanted a refund.
It said that without prejudice to the rights of any party, trustees are allowed to call a meeting of unit holders to seek their consent for approval and in this regard steps be taken within a period of one week.
Advocate Pratap Venugopal, appearing for Securities and Exchange Board of India (SEBI), submitted that the market regulator has no role in the winding up process but had written to Reserve Bank of India in this regard.
The bench posted the matter for further hearing next week and directed that all cross appeals be placed on record.
On October 24, the Karnataka High Court had said that the decision of the Franklin Templeton Trustee Services Private Limited to wind up six schemes cannot be implemented unless the consent of the unit holders is obtained.
The six schemes are Franklin India Low Duration Fund, Franklin India Ultra Short Bond Fund, Franklin India Short Term Income Plan, Franklin India Credit Risk Fund, Franklin India Dynamic Accrual Fund and Franklin India Income Opportunities Fund.
Franklin Templeton MF closed these six debt mutual fund schemes on April 23, citing redemption pressure and lack of liquidity in the bond market.
Till November 13, the six schemes received total cash flows of Rs 9,682 crore from maturities, pre-payments and coupon payments since April 24, 2020.