Bengaluru, Oct 25 (PTI) The Karnataka High Court has stopped Franklin Templeton Investment from winding up its debt fund schemes without prior consent of the investors.
A Division bench of Chief Justice Abhay S Oka and Justice Ashok S Kinagi on Saturday passed the order while hearing a petition by the investors challenging Franklin Templeton's decision to wind up its schemes.
The six schemes in question 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 had contended that the winding up of the schemes was in accordance with the SEBI's guidelines.
However, the Court was not convinced and directed the investment company to seek the approval of the investors before moving forward with its decision.
'We hold and declare 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 High Court observed.
The bench restrained the trustees from taking any further steps till consent of the unit-holders is obtained by a simple majority.
The court, however, maintained it was open to accepting the trustees obtaining consent of the unit-holders and taking further steps in accordance with the Mutual Funds Regulations. PTI GMS SS SNE RDM RDM