In the High Court of Karnataka at Bengaluru

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In the High Court of Karnataka at Bengaluru IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24 TH DAY OF OCTOBER, 2020 PRESENT THE HON’BLE MR. ABHAY S. OKA, CHIEF JUSTICE AND THE HON’BLE MR. JUSTICE ASHOK S. KINAGI WRIT APPEAL NO. 399 of 2020 (GM-RES) C/w W.P.Nos.8644/2020, 8748/2020, 8545/2020 IN W.A.No.399/2020 (GM-RES) Between : Securities Exchange Board of India Having its office at SEBI Bhavan Panchavati 1 st Lane, Gulbai Tekra Road Ahmedabad – 380 006 (Formally having its office at Sakar-1 Ground Floor, Opposite:Nehru Bridge Gandhigram Railway Station Ashram Road, Ellisbridge Ahmedabad – 380 009) ... Appellant [By Shri Tushar Mehtha, Solicitor General of India/Senior Advocate, along with Shri Pratap Venugopal, Shri Nithin Prasad, Shri Vidur Nair and Shri T. Suryanarayana – Advocates of M/S King and Partridge - through Video Conferencing] 2 And : 1. Franklin Templeton Trustees Services Pvt. Ltd Having its Registered Office at Indiabulls Financial Centre, Tower-2 12 th and 23 rd Floor, Senapati Bapat Marg Elphinstone (W) Mumbai – 400 013 2. Franklin Templeton Asset Management (India) Pvt. Ltd Having its office at: Indiabulls Financial Centre, Tower-2 12 th and 23 rd Floor, Senapati Bapat Marg Elphinstone (W) Mumbai – 400 013 Also having an office at 202 Abhijit-III, Opposite to Mayor’s Bunglow Mithakhali Six Roads, Navrangpura Ahmedabad-380 006. 3. Mr. Areez Phirosha Khambatta Aged 83, Male Having his address at 8th Floor, White House, Panchvati Ahmedabad – 380 006 4. Ms. Persis Khambatta Aged 75, Female Having her address 8th Floor, White House, Panchvati Ahmedabad – 380 006 5. Khambatta Family Trust 8th Floor, White House, Panchvati Ahmedabad – 380 006 6. Franklin Templeton Inc Franklin Resources Inc C/o Corporate Secretary One Franklin Parkway San Mateo CA 94403-1906 3 7. Union of India Through Ministry of Corporate Affairs Serious Fraud Investigation Office Fountain Telecom, 6 th Floor, Building-1 Mahatma Gandhi Road Mumbai Maharashtra – 400 001 (Opp. No.1, 2 and 6 are original Resp.No.2, 3 and 4 in the petition; Opp. No.3, 4 and 5 are the original Petitioners No.1, 2 and 3 in the petition; Opp.No.7 is the original Resp.No.5 in the petition.) ... Respondents (By Shri Harish Salve and Shri Janak Dwarkadas, Senior Advocates, assisted by Ms. Ankita Singhania and instructed by Shri Ashish Bhan, Shri Harsh Pais, Ms. Anuradha Agnihotri, Shri Kunaal Shah, Shri Mohit Rohatgi, Shri Shubhang Setlur, Ms. Sanjam Arora, Shri Anirudh Kapoor, Ms. Chitra Rentala, Shri Rajendra Dangwal, Advocates of M/s Tri Legal for R1 & R2) Shri Adithya Sondhi, Senior Advocate along with Shri Paritosh Gupta, Shri Karan Joseph – Advocates for R3, R4 and R5 Shri K.G. Raghavan, Senior Advocate instructed by Shri Ashish Bhan, Shri Harsh Pais, Ms. Anuradha Agnihotri, Shri Kunaal Shah, Shri Mohit Rohatgi, Shri Shubhang Setlur, Ms. Sanjam Arora, Shri Anirudh Kapoor, Ms. Chitra Rentala, Shri Rajendra Dangwal, Advocates of M/s Tri Legal for R6) Shri M.B. Naragund, Additional Solicitor General along with Shri. M.N. Kumar, CGC for R7). 4 This writ appeal has been filed on the Letters Patent Appeal No.311/2020 filed before the High Court of Gujarat at Ahmedabad against the order dated 08.06.2020 which dismissed Civil Application No.1/2020 filed for vacating the interim relief granted by the Gujarat High Court by order dated 03.06.2020 in the Special Civil Application No.7201/2020 (As stated in Para-3 and 4 in “E” of Part-1 Appeal Memo) Vide order dated 19.06.2020 in SLP 7553/2020 with Transfer Petition (c) Nos.663-664/2020 passed by Supreme Court of India, it is ordered to hear the matter before this Hon’ble High Court by Division Bench (Order dated 19.06.2020 placed at Flag-“A”) “SEBI v. Franklin Templeton Trustee Services Pvt. Ltd. bearing LPA No.311/2020 in SCA No.7201/2020 filed before the Gujarat High Court” IN W.P. No.8644/2020 Between : 1. Mr. Areez Phirozsha Khambatta Aged 83, Male Having his address at 8th Floor, White House, Panchvati Ahmedabad – 380 006 2. Ms. Persis Khambatta Aged 75, Female (Having her address at 8th Floor, White House, Panchvati Ahmedabad – 380 006) 5 3. Khambhatta Family Trust 8th Floor, White House, Panchvati Ahmedabad – 380 006 …Petitioners (By Shri Adithya Sondhi, Senior Advocate along with Shri Paritosh Gupta and Shri Karan Joseph of M/s. Gupta Law Associates Advocates for Petitioners) And : 1. Securities and Exchange Board of India Having its office at Sakar-1, Ground Floor Opposite Nehru Bridge Gandhigram Railway Station Ashram Road, Ellisbridge Ahmedabad – 380 009 2. Franklin Templeton Asset Management (India) Pvt. Ltd Having its office at Indiabulls Financial Centre, Tower-2 12 th and 13 th Floor, Senapati Bapat Marg Elphinstone (W), Mumbai – 400 001 Also having an office at 202 Abhijit-III, Opp. Mayor’s Bunglow Mithakhali Six Roads Navrangpura Ahmedabad – 380 009 3. Franklin Templeton Trustees Services Pvt. Ltd Having its Registered Office at Indiabulls Financial Centre, Tower-2 12 th and 13 th Floor, Senapati Bapat Marg Elphinstone (W), Mumbai – 400 013 4. Franklin Templeton Inc Franklin Resources Inc C/o Corporate Secretary One Franklin Parkway San Mateo CA 94403-1906 6 5. Union of India Through the Ministry of Corporate Affairs Serious Fraud Investigation Office Fountain Telecom, 6 th Floor, Building-1 Mahatma Gandhi Road Azad Maidan, Fort, Mumbai Maharashtra – 400 001 …Respondents (Shri. Tushar Mehtha, Solicitor General of India/Senior Advocate along with Shri. Prathap Venugopal, Shri. Nithin Prasad, Shri Vidur Nair and Shri T. Suryanarayana – Advocates of M/S. King and Partridge for R1 By Shri Harish Salve and Shri Janak Dwarkadas, Senior Advocates, assisted by Ms. Ankita Singhania and instructed by Shri Ashish Bhan, Shri Harsh Pais, Ms. Anuradha Agnihotri, Shri Kunaal Shah, Shri Mohit Rohatgi, Shri Shubhang Setlur, Ms. Sanjam Arora, Shri Anirudh Kapoor, Ms. Chitra Rentala, Shri Rajendra Dangwal, Advocates of M/s Tri Legal for R2 & R3 Shri K.G. Raghavan, Senior Advocate instructed by Shri Ashish Bhan, Shri Harsh Pais, Ms. Anuradha Agnihotri, Shri Kunaal Shah, Shri Mohit Rohatgi, Shri Shubhang Setlur, Ms. Sanjam Arora, Shri Anirudh Kapoor, Ms. Chitra Rentala, Shri Rajendra Dangwal, Advocates of M/s Tri Legal for R4 Shri. M.B. Naragund, Additional Solicitor General along with Shri. M.N. Kumar, CGC for R5 Shri. Puneet Jain, Smt. Revathy Adinath Narde for Applicants in IA-3/2020) 7 This writ petition has been filed praying to (A) quash and set aside the impugned decision, notice dated 23.04.2020 and communication addressed to investors on 23.04.2020 communicating the said decision, issued by Franklin Templeton vide Annexure D and E. (AA) Quash and set aside the notice dated 28.05.2020 regarding e-voting and unit holders meet send through e-mail by R3 vide Annexure K/1 colly to the petition. (B) Declare that regulation 40 to the said regulations is not applicable to the said six Schemes as the initiation of winding up has not been proper and legal. (C) Declare that inaction on part of Franklin Templeton on request for redemptions has been illegal. (D) Direct Franklin Templeton to register the redemption filed by petitioners and other senior citizens at the NAV as on the date the funds were closed and to forthwith release the consequent amounts with such interest, as may be deemed appropriate to this Hon’ble Court. (E) Direct to the respondent board to initiate appropriate proceedings against Franklin Templeton and its responsible officers for the deeds of mismanagement and misdemeanor and for violation of the rules/regulations framed for protection of investors. (F) Direct to the respondent Board to constitute an appropriate body to manage the said funds till the satisfaction of the redemption of the unit holders. (G) State the implementation and operation of the impugned decision, notice dated 23.04.2020 and communication addressed to investors on 23.04.2020 communicating the said decision vide Annexure D and E to the petition. (GG) Pending hearing and final disposal of the present petition, your lordships may be pleased to stay respondent No.3 enclosed as Annexure-K/1-colly to the petition. (H) Pending hearing and final disposal of the present petition, your lordship may be pleased to direct Franklin Templeton to refrain from calling for a meeting purportedly under Regulation 41 (1) of the Regulations. (I) Direct Franklin Templeton, their officers and agents to forthwith register the redemptions filed by the petitioners and other senior citizens at the NAV as on the date the funds were closed and forthwith release the consequent amounts to them. (J) Pending hearing and final disposal of the present petition, you lordship may be pleased to direct R6 to conduct Forensic Auditing of the Accounts of the said Six Mutual Funds and Franklin Templeton and submit reports with its observations before this Hon’ble Court. (K) Grant Ad-interim relief in terms of prayers (F), (G), (H), (I) and (J). 8 IN W.P. No.8748/2020 Between : M/s. Chennai Financial Markets and Accountability Represented by its President Manoj K Sheth Having its registered office at GA Florentina, No.43, 1 st Main Road Gandhi Nagar, Adyar, Chennai – 600 020 …Petitioner (By Shri Nithyaesh Natraj and Shri Vaibhav, Advocates) And : 1. The Securities and Exchange Board of India Southern Regional Office (SRO) 7th Floor, 756-L, Anna Salai Chennai – 600 002, Tamil Nadu Also having their corporate office at Plot No.C4-A, G- Block, near bank of India Bandra Kurla Complex, Bandra East Mumbai, Maharashtra – 400 051 2. Franklin Templeton Asset Management India Pvt.
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