Franklin Templeton MF has decided to appeal the Karnataka High Court ruling in the Supreme Court.
Earlier in October, the Karnataka High Court had ruled that the trustees of Franklin Templeton Mutual Fund cannot take any action on the winding up of the six schemes till they obtain a simple majority consent of unit holders.
In a letter to investors, Sanjay Sapre, President, Franklin Templeton MF wrote, "Post the judgement of the Hon’ble High Court of Karnataka, we considered all possible options over the last few weeks to start returning money to unitholders in the shortest possible time in an orderly manner. This included the option of seeking unitholder consent according to the judgment of the Hon’ble High Court. However, after detailed deliberations, we have determined that it will be necessary to seek judicial intervention from the Hon’ble Supreme Court. "
Sapre added that though the schemes could not actively monetize the portfolio, approximately Rs. 5,900 crores is available for distribution in 4 out of these 6 schemes. This shows that the securities held in the funds can be liquidated at a fair value, if the schemes are allowed to undertake an 'orderly process' of liquidation.
"This is definitely preferable to a distress sale of securities (at steep discounts) that would occur if a rush of redemptions forces an emergency liquidation of the securities at prices far below their realizable value under normal market conditions," wrote Sapre.
