New Delhi, Dec 9 (IANS) The Supreme Court on Wednesday asked the Securities and Exchange Board of India (SEBI) to appoint an observer to oversee the e-voting process in connection with Franklin Templeton matter and as an interim relief continued with its previous order to stay redemption by unit holders.
Senior Advocate Meenakshi Arora submitted before a bench of Justices Abdul S Nazeer and Sanjiv Khanna that the SEBI does not have a clear policy for small investors. The bench said that the Karnataka High Court had already addressed the issue.
A counsel representing some unit holders submitted that Franklin Templeton must give them the option of voting on winding up of the schemes through postal ballot or physical appearance. The bench said that it will look into the issue.
The top court had agreed to hear an appeal filed by Franklin Templeton against the High Court order, which restrained it from winding up its debt fund schemes without prior consent of the investors.
Senior Advocate Ravindra Shrivastava contended before the bench that some independent authority must be appointed to oversee the voting at the unit-holders meeting and said the High Court had suggested the appointment of a retired High Court Judge for this purpose.
Senior Advocate Abhishek Manu Singhvi submitted that the SEBI should have an observer in the meeting, as it is a statutory body. Senior Advocate Arvind Datar on the other hand contended that SEBI does not have the expertise to oversee electronic voting.
The bench observed that e-voting needed to be certified with record, and therefore there was a problem in appointing a retired Judge.
Concluding the hearing, the top court asked SEBI to appoint an observer to oversee the voting process and listed the matter for further hearing in the third week of January.
On December 3, the top court had said that the Franklin Templeton issue is big, as it asked the mutual funds company to initiate steps within one week for a meeting of unit holders to seek their consent for closure of six mutual funds schemes.
The top court had asked the market regulator: “If they knew people will withdraw money like anything during Covid-19, why didn’t SEBI do something like the RBI?”
Advocate Pratap Venugopal, representing the SEBI, had said the regulator has no powers in the winding-up process, but it had written to the RBI.
“In the meanwhile, without prejudice to the rights and contentions of all parties, the trustees are permitted to call a meeting of unit holders to seek their consent/approval. Steps in this regard be taken within one week from today. For the time being, there will be stay of redemption payment to the unit holders,” the top court had said in its order.
The High Court had said on October 24 that the decision of the Franklin Templeton Trustee Services Private Limited to wind up six schemes cannot be implemented in the absence of consent from the unit holders.
On April 23, Franklin Templeton had closed these six debt mutual fund schemes citing redemption pressure and lack of liquidity in the bond market.
The six schemes 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.
–IANS
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