The apex court is hearing pleas, including one filed by Franklin Templeton against a Karnataka High Court order that stopped the fund house from winding up its debt fund schemes without the prior consent of the investors.
Franklin Templeton MF had announced closure of six debt schemes on April 23, 2020, citing redemption pressure and lack of liquidity in the bond market.
Capital market regulator Sebi had subsequently asked the fund house on multiple occasions to focus on repaying the investors at the earliest. These schemes had an estimated Rs 28,000 crore of investors' money.
After the announcement of closure of these six schemes, several investors have filed complaints against the fund house, including with the regulatory authorities and the police, while a few went to courts also.
CFMA said that Franklin Templeton Mutual Fund's abrupt decision to shut down six schemes left more than three lakh unitholders in the lurch and staring at over 50 per cent (nearly Rs 14,000 crore) erosion of their principal amount.
It further claimed that the mutual fund industry is staring at a potential loss of Rs 15 lakh crore (Rs 15 trillion) if other fund houses decide to follow Franklin Templeton's path.
Earlier, CFMA had said it was contemplating filing a class-action suit against the global fund house for recovery of money and to claim damages.
It has accused the fund house and its top management of conspiracy to defraud 3 lakh investors by causing wrongful loss to them and unlawful gain to themselves.
While denying the allegations, the fund house has maintained that there has been "no illegality, wrongdoing or misrepresentation" and that it had followed due process in making investment decisions as well as in the winding up of the schemes.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.