Franklin Templeton case: SC says objection to e-voting contentious, will deal first

New Delhi, Jan 25
The Supreme Court on Monday said it will first deal with the "contentious" issue of the objection to the e-voting process for winding up Franklin Templeton's six mutual fund schemes, and of distribution of money to the unitholders.

A bench comprising Justices S.A. Nazeer and Sanjiv Khanna orally observed that objections around e-voting is a contentious issue. It scheduled the matter for hearing on February 1 after one of the lawyers cited a media report, which claimed a group of investors of Franklin Templeton Mutual Fund (FTMF) have moved the top court with a plea to declare the recent e-voting conducted by fund house as illegal.

The bench noted: "We will first examine the question of objection to e-voting and disbursal of funds." It also permitted the counsel in the matter to file an application within three days and the response to it should be filed three days after.

The counsel reiterated that it appears that FTMF did not carry out proper voting. After a brief hearing in the matter, the top court adjourned the matter.

The top court had earlier asked the Securities and Exchange Board of India (SEBI) to appoint an observer to overseeing the e-voting process. This voting took place in the last week of December, and it was approved by the majority of unitholders. The court had also directed that the SEBI should file a copy of the final Forensic Audit Report before it in a sealed cover.

The top court, on January 18, had granted three days for filing objections to the e-voting on winding up of six mutual fund schemes of the fund house. The court had also asked fund house counsel if an order could be passed to allow distribution of money to the unitholders.

In an earlier order, the top court had said: "SEBI shall appoint an observer regarding the e-voting of unit holders which is scheduled between December 26 to December 29, 2020. The result of the e-voting would not be announced and would be produced before us in a sealed cover along with the report of the observer appointed by the SEBI."

Franklin Templeton had filed an appeal in the top court challenging the Karnataka High Court order which stopped it from winding up its debt fund schemes without prior consent of the investors.