In Brief
Franklin Templeton Mutual Fund sought to wind up six debt schemes citing liquidity stress during the COVID-19 pandemic. Unit-holders challenged the winding-up decision, arguing fraud and mismanagement. The Supreme Court held that 'unit-holder consent' under Regulation 18(15)(c) means consent from the majority of unit-holders who actually voted in a poll, not a majority of all unit-holders (which would be impractical for large funds). Finding 95%+ approval from participating unit-holders and no material voting defects, the Court upheld the winding-up and directed orderly liquidation with tranche-wise distribution of funds to unit-holders without waiting for full asset realization."
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