Thread by @barandbench

Karnataka HC will today pass its verdict in a batch of pleas challenging the winding up of 6 debt Schemes of Franklin Templeton.

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The petitions challenging the winding up of debt schemes were transferred from the Delhi High Court, the Gujarat High Court, and the Madras High Court.

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The Court had began hearing the submissions of parties from August 12 and closed the hearing on September 24.

As the Court was bound to dispose of the matter within three month as per the Supreme Court direction, the hearings were taken up on Saturdays as well as other holidays.

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In a letter released on September 28, FT had informed investors that the Karnataka High Court had finished hearing all the arguments and that, it was awaiting the judgement of the Court.

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On October 5, the HC had posted pleas relating Franklin Templeton debt schemes to a later date as Franklin International had filed two additional affidavits.

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A Bench comprising of Chief Justice Abhay Shreeniwas Oka and Justice Ashok S Kinagi is expected to arrive shortly.

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The Court officer has informed that the Bench will arrive at 11:15

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In April, Franklin Templeton had announced its decision to wind up 6 of its debt schemes citing low liquidity. Nearly 3 lakh investors were affected by this sudden decision of FT.

The Bench has arrived.

Bench: 1. Regulations 39 to 40 are VALID.
2. For winding up, trustees have to get the obtain the consent of the investors.
3. Trustees of FT have violated mandatory provisions of SEBI.

Bench: No Interference is required in the decision of winding up of debt schemes by the FT Trustee. However, the Trustees should obtain consent of investors.

Breaking: No Interference can be made in the decision of Trustee to wind up the 6 schemes. However, consent from unit holders as per regulations to be obtained. Hence, we restrain FT Trustee not to proceed WITHOUT obtaining consent of unit holders.

Bench: We deem it appropriate to stay the operation of the judgment for a period of 6 weeks. None of the Respondents will take any steps on the basis of the notices issued by FT in April.

Bench: During the said 6 weeks, there will be no redemptions by investors. The Trustee and FT are directed not to make more borrowings, causing more liabilities.

After pronouncement of order, the Bench rises.

No interference in decision of Franklin Templeton trustees to wind up 6 debt schemes: Karnataka High Court; judgment stayed for 6 weeks

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