SC directs Franklin Templeton to not launch debt schemes till conclusion of case before SAT


The Supreme Court on Monday directed Franklin Templeton to not launch debt schemes till the conclusion of the case before the Securities Appellate Tribunal(SAT). The fund house’s senior executive Vivek Kudva and his wife Roopa Kudva, too have told the top court that they would not deal in securities directly or indirectly till the tribunal doesn’t pass its final order in the case.

The Supreme Court has also extended the time to file replies by Securities and Exchange Board of India(Sebi) in both the cases before the SAT by four weeks. It has also directed the tribunal to dispose of the Franklin matter expeditiously.

A Supreme Court bench headed by Justice Abdul Nazeer said, “Public can’t be cheated and public should not be cheated.”

The bench was hearing an appeal filed by Sebi challenging the interim order of the SAT which had stayed the Sebi order that barred the fund house from launching debt schemes for two years. The regulator had also moved against the tribunal’s decision to grant stay to Franklin Templeton’s Asia Pacific (APAC) head, Vivek Kudva and his wife Roopa Kudva, managing director at Omidyar Network India, for indulging in alleged unfair trade practices.

The curbs by Sebi relate to the fund house’s decision to shut down six debt investment programmes in April 2020, a move that resulted in Rs 26,000 crore of investor funds being stuck for up to 10 months.

Senior counsel Harish Salve and Dr Abhishek Manu Singhvi gave the undertaking to the top court on behalf of Franklin. Solicitor general of India Tushar Mehta and advocate Pratap Venugopal appeared for Sebi. Senior counsel Darius Khambata gave the undertaking to the apex court for the Kudvas.

The tribunal had asked the asset manager to deposit Rs 250 crore into an escrow account and inform the regulator about it. After that, the penalty of Rs 5 crore imposed on Franklin Templeton would be stayed. The SAT had also directed the Kudvas to retain the entire disgorgement amount in an escrow account and also deposit 50% of the penalty amount.

The tribunal had listed both the appeals of Franklin Templeton and the Kudvas against the Sebi order for final hearing on August 30.

The Supreme Court recently held that consent of majority of unit holders was required for winding up of debt mutual fund schemes.

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