In Brief
The Supreme Court dismissed an application by the Foundation of Independent Financial Advisors (FIFA) seeking payment of commissions to mutual fund distributors from the six Franklin Templeton mutual fund schemes undergoing liquidation. The Court held that once a winding-up notice is published under SEBI Mutual Funds Regulations, the power to deduct recurring expenses—including distributor commissions—ceases. Distributor commission is a contingent recurring liability that arises only during active scheme operations, not after winding-up begins. The Court rejected FIFA's argument that commissions qualified as 'due and payable' liabilities or winding-up expenses, confirming that Rs. 684 crores would be distributed to unitholders without deduction for such commissions.
The lawyer headnote and full judgment text are available to registered users.