The Karnataka High Court ruled on Saturday that Franklin Templeton Mutual Fund will need to seek approval from unit holders before winding up six schemes with combined assets of some ₹ 28,000 crore ($3.8 billion).
One of the country’s most prominent fixed income fund houses, it shut six credit funds in April citing lack of market liquidity and redemption pressures due to the pandemic.
The funds had large exposures to higher-yielding, lower-rated credit securities.
But some investors challenged the decision in court saying their permission should have been sought.
The High Court in Karnataka where their cases have been heard since June ruled on Saturday that, while not wanting to interfere with Franklin’s decision, it should seek consent of unit holders.
Franklin Templeton in response said in a statement the court had upheld the decision taken by its trustees to wind up the schemes, but had ordered that approval of the unit holders is required.