FTMF: SC upholds e-voting of unit holders, Rs 9,122Cr to be disbursed

The Supreme Court on Friday upheld the validity and results of e-voting of unit holders of six mutual schemes of Franklin Templeton and said Rs 9,122 crore will be disbursed as per its earlier order.

On February 2, the Supreme Court had directed Franklin Templeton Mutual Fund (FTMF) to distribute Rs 9,122 crore among unit-holders of the six schemes that were shut by the mutual fund house in April last year.

The court had said the distribution of funds need to be undertaken by the SBI Mutual Fund and completed within 20 days.

A bench comprising Justices S. Abdul Nazeer and Sanjiv Khanna negated all objections to the e-voting results. The top court noted that the consent of unit holders means consent of majority of unit holders and not just party to the scheme.

The Supreme Court had also clarified that SBI Fund Management and not SBI Mutual Funds, will be responsible for distribution of Rs 9,122 crore to unitholders of the six wound up Franklin Templeton schemes. The top court allowed the SBI Fund Management to become a party in the case. The SBI Fund Management also sought protection from any liability arising from the fund distribution exercise.

The bench clarified that there was a clerical error in the previous order which said SBI Mutual Fund will be the disbursing entity.

The petitioners’ counsel during the hearing raised concerns on the distribution mechanism, and prayed before the top court that fund distribution should be done as per the Net Asset Value (NAV).

The apex court had said the unit holders should be repaid in proportion to their respective share in assets of the scheme and the distribution of funds would be undertaken by the SBI Mutual funds as agreed by both Franklin Templeton Trust and the Securities and Exchange Board of India.

The top court will continue to hear the arguments on other issues on February 17, where it may examine the arguments of unit holders who are dissatisfied with wound-up schemes.

The SBI Funds Management is the asset management company of SBI Mutual Funds, which sought the fund house should bear all expenses in connection with the distribution of funds. SBI Fund Management had moved the top court seeking its approval to disburse the funds among the unit holders of the mutual funds’ schemes and also sought protection from any liability, which could arise out of the distribution exercise.