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New Delhi, Dec 3 (IANS) The Supreme Court directed Franklin Templeton Mutual Fund (FTMF) to initiate the process of meeting and taking votes of unit-holders, within a week from Thursday, and get their consent on winding up of its six debt schemes.
The apex court said there will be no redemption of units by investors till further orders.
A bench of Justices S. Abdul Nazeer and Sanjiv Khanna observed that the issue is big and people wanted a refund.
The Chennai Financial Markets and Accountability (CFMA), an investor protection body fighting for the cause of the unit-holders, strongly pointed out that the unit-holders have to keep in mind while voting that there could be a write off of Rs 13,000 to up to 20,000 crore out of an AUM of Rs 28,000 crore, if the winding-up is allowed to be proceeded "due to the fraudulent practices" of the FTMF.
"The FTMF is fooling unit-holders and misguiding them by convenient English. But it is still not giving any assurance whether the unit-holders will get 100 per cent of their money back or not," it argued.
The FTMF is willing to repay borrowings from creditors but not the legitimate hard-earned money of the investors, the CFMA said, noting as per the FTMF itself, four out of its six debt schemes are cash positive.
"This has left investors asking why the FTMF proceeded to wind up the schemes. Either their press releases are false, or the unit-holders are being taken for a ride. The facts speak for themselves and it is, therefore, the unit-holders to decide whether they accept a haircut of Rs 14,000 crore on their investments or fight for the recovery of their entire investments," the CFMA stated.
If this (the closure) is allowed, this could set up a bad precedent for the mutual fund industry, the CFMA said, accusing Sanjay Sapre, President of Franklin Templeton Asset Management (India), of "spreading lies and misguiding the unit-holders".
Meanwhile, the stay on redemptions in the mutual fund schemes will continue for now.
The bench posted the matter for further hearing next week and directed that all cross-appeals be placed on record.
--IANS
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