Gujarat High Court (HC) on Monday rejected Franklin Templeton Mutual Fund’s (FT MF) appeal to vacate the stay on the e-voting process and said that the stay would be in force till the findings of forensic audit report comes in the public domain.

The e-voting was scheduled to be held on Tuesday (i.e. June 9). FT MF also confirmed that the e-voting will be suspended for now.

“Pursuant to the order dated 8th June 2020 issued by the honourable High Court of Gujarat, the e-voting scheduled for June 9-11, 2020 and unitholders’ meeting on June 12, 2020, related to the schemes under winding up, stands suspended till further communication,” an FT MF spokesperson said.

The HC order read, “It has been rightly submitted by learned senior advocate Mr Thakore that amidst the allegation of mismanagement of funds and fraud, the unit-holders would not be having the opportunity of informed decision making while casting the e-votes for the option given by the applicants.”

Senior counsel Mihir Thakore appeared on behalf of the original petitioners Areez Pirozsha Khambatta and Persis Khambatta, who belong to the business family that runs the popular juice brand Rasna. The petitioners had investments of Rs 6.55 crore.

Later, other investors joined the plea.

The HC order on Monday further said that no winding-up process could be concluded without the consent of the unit-holders, as has been laid down in sub-regulation 15(c) of Regulation 18 of the Regulation.

“The trustee shall have to obtain the prior consent of the unit-holders when a majority decide to windup or prematurely redeem the units,” it read.

Last week, the HC had granted ad-interim relief by staying the e-voting, where unitholders could choose from three options.

They could authorise the trustees to monetise the scheme assets. The trustees would be assisted by the debt capital markets (DCM) team of Kotak Mahindra Bank and supported by the fund house.

The other option was to authorise the audit and consulting firm Deloitte to monetise the scheme assets, assisted by the fund house, which was being advised by DCM of Kotak Bank.

The third option was to opt for ‘No’, rejecting both the authorisation options. However, FT MF in past communications has clarified to investors that ‘No’ would not change the winding-up status of the scheme. Also, they have advised against it as it could delay the scheme asset monetisation process.

News Source: Business Standard


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