# In the matter of Franklin Templeton Trustee Services Private Limited and Anr. Vs. Amruta Garg And Ors. Etc., Civil Appeal Nos. 498-501 of 2021 with other civil appeal and SLPs

> SC judgment dated 2021-07-14. Citation: TCN-2021-SC-00031. The case involves civil appeals regarding the winding up of six mutual fund schemes by Franklin…

- **Court:** SC
- **Order date:** 14 Jul 2021
- **Citation:** TCN-2021-SC-00031
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/supreme-court-of-india/franklin-templeton-trustee-services-private-limited-and-anr-vs-amruta-garg-and-o-75ca9299

## Summary

### Background

The case involves civil appeals regarding the winding up of six mutual fund schemes by Franklin Templeton Trustee Services Private Limited. The initial order, dated February 12, 2021, interpreted Regulation 18(15)(c) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, directing the winding up of six mutual fund schemes after accepting the poll results. These schemes include 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. The appeals challenge the constitutional validity of Regulations 39 to 42 and their interrelation with Regulation 18(15)(c).

## Facts

Franklin Templeton Trustee Services Private Limited decided to wind up six of its mutual fund schemes due to certain events that, in the opinion of the trustees, required the schemes to be wound up. These schemes included 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. The decision was made based on Regulation 39(2)(a) of the SEBI (Mutual Funds) Regulations, 1996. The High Court interpreted Regulation 18(15)(c) to mean that the trustees must obtain the consent of the unitholders before winding up a scheme. SEBI, the trustees, and the AMC contested this interpretation, arguing that Regulations

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## Issues and analysis

### Issue 1: Whether the decision of the trustees to wind up a scheme under clause (a) to Regulation 39(2) …

**Ratio:** The principle of harmonious construction dictates that Regulation 18(15)(c) should be

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**Reasoning:** The court reasons that requiring prior consent from all unitholders would lead to

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**Interpretation:** Regulation 18(15)(c) requires the trustees to seek consent of the unitholders

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**Application:** The court applies this interpretation to the specific facts of the case,

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## Parties

- **Judges:** SANJIV K…; S. ABDUL…
- **Appellants:** FRANKLIN TEMPLETON…
- **Respondents:** AMRUTA GARG AND…

## Timeline

- **2021-02-12 — Initial…**: Order interpreting Regulation 18(15)(c) and directing the winding up of six mutual fund…
- **2021-07-14 — Final Or…**: Supreme Court's final order interpreting…

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