Franklin Templeton urges Gujarat HC to lift stay on e-voting

AHMEDABAD: Franklin Templeton has approached the Gujarat high court requesting it to lift the stay ordered on its scheduled e-voting among unitholders on the further course of winding up of its six fixed-income schemes worth Rs 28,000 crore.
On June 3, Justice Gita Gopi stayed the company and its trustee’s programme of organizing an e-voting by unitholders between June 9 and 12. The very next day, Franklin Templeton Trustee Services Private Limited requested the stay be vacated on the grounds that if the e-voting is stopped, it will cause grave harm and prejudice to more than three lakh unitholders of these schemes, including small/retail investors.
In its application, the company has submitted that stay on e-voting would only delay the process of returning the money to numerous investors and they would be deprived of an expeditious return of their investments. The company asserts that the notice for e-voting was issued in accordance with Mutual Funds Regulations. It claimed that the Covid-19 pandemic and the resultant lockdown led to the crisis and the final decision to wind up these six debt funds.
The company has contended that the petitioners, the promoters of Rasna group, misled the high court by conveying incorrect facts. It said that no such meeting has been proposed to dispose of assets as claimed by the original petitioners – Areez and Persis Khambhatta and Khambhatta Trust.
Franklin Templeton has also contended in its application that the Securities and Exchange Board of India (Sebi) has already ordered a forensic audit in this matter. Once Sebi completes its audit, it will decide upon the future course of action. In such a scenario, the petitioner cannot ask the high court to conduct a parallel inquiry on the same set of allegations. “This will completely undermine the role of Sebi and is contrary to the provisions of the Sebi Act under Sections 15Y and 20A,” the application reads.
The company further argues that the notice was issued in consultation with Sebi and to maximize unitholders’ participation. The unitholders will have the option to decide by means of a simple majority whether to appoint a trustee or let Deloitte Touche Tohmatsu India LLP to realize the assets of the schemes for the purpose of distribution to unitholders.
The case is to come up for hearing before the HC on Monday.