The Supreme Court on Thursday permitted Franklin Templeton Trustee Services to hold meeting with unitholders of six debt schemes that the company proposed to wind up on April 23 citing difficulties in the bond market due to the pandemic. The apex court also stayed redemption from the schemes till further orders.
A Bench comprising justices Abdul S Nazeer and Sanjiv Khanna, while seeking response from investors, said, “… without prejudice to rights and contentions of all parties, trustees are permitted to call meeting of unitholders to seek their consent/approval. Steps in this regard will be taken within a period of one week. There will be stay on redemptions till then,” the judges said in its brief order.
It said it will have to depend on “wisdom of Sebi” to decide the case even though “Sebi (itself) has a lot to answer. We appreciate unitholders concern. But we will have to rely on Sebi. We cannot take the responsibility, Sebi will have to do so,” Justice Khanna said.
During the hearing, he also observed that “the issue is big. People wanted refund … let Sebi answer … If they knew people will withdraw money like anything during Covid, why didn’t Sebi do something like RBI”?
The Bench also frowned upon the Securities and Exchange Board of India (Sebi) regulations, saying they are not easy to comprehend for the laymen. “Your regulations are so sketchy. All the confusion is because of your regulations. We also interpret these liberally. A layman cannot understand the language of your regulations,” Justice Khanna told Sebi counsel Pratap Venugopal.
Venugopal informed the judges that the regulator had no powers in the winding up process. He also submitted that while the rules and regulations could certainly be written better than what they are now, these rules deal with specialised and complex situations. The SC then posted the case for further hearing next week. —FE
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