FRANKLIN TEMPLETON TRUSTEE SERVICES PRIVATE LIMITED AND ANOTHER versus AMRUTA GARG AND OTHERS ETC

Citation: [2021] 14 S.C.R. 573 · Decided: 12-02-2021 · Supreme Court of India · Bench: S. ABDUL NAZEER · Disposal: Directions issued

Cited by 1 judgment(s) · cites 4 · see the full citation network in Lexace

Judgment (excerpt)

A
B
C
D
E
F
G
H
573
FRANKLIN TEMPLETON TRUSTEE SERVICES PRIVATE
LIMITED AND ANOTHER
v.
AMRUTA GARG AND OTHERS ETC.
(Civil Appeal Nos. 498-501 of 2021)
FEBRUARY 12, 2021
[S. ABDUL NAZEER AND SANJIV KHANNA, JJ.]
Securities and Exchange Board of India (Mutual Funds)
Regulations, 1996 – Regulation 18(15)(c), 39(2)(a) – Winding up
of Mutual Fund Schemes – Consent of  unitholders – Held: For the
purpose of clause (c) to Regulation 18(15), consent of the
unitholders would mean consent by majority of the unitholders who
have participated in the poll, and not consent of majority of all the
unitholders of the scheme – In the present case, the objections to
poll results rejected – Unitholders of the six schemes have given
their consent by majority to wind up the six schemes – With the
consent of the parties, M/s. SBI Funds Management Private Limited
appointed to undertake the exercise of winding up, which would
include liquidation of the holdings/assets/portfolio and distribution/
payment to the unitholders – Winding up and disbursements to be
in terms of the directions in earlier orders dtd. 2nd February, 2021
and 9th February, 2021 and paragraph 41 herein – Other aspects
and issues including the questions whether Regulation 18(15)(c)
would apply when the trustee’s form an opinion that the scheme
should be wound up in accordance with Regulation 39(2)(a) and
the contention of the objecting unitholders regarding misfeasance,
malfeasances, fraud and the effect thereof, not examined.
Securities and Exchange Board of India (Mutual Funds)
Regulations, 1996 – Regulation 18(15) (c) – Mutual Fund Schemes
– Winding up of – Consent of  unitholders – Plea of the objecting
unitholders that consent would be binding only on those who have
consented to winding up of the mutual fund schemes and cannot be
imposed on others – Held: Rejected – ‘consent’, in the context of
the clause, clearly refers to ‘consent of the majority of the
unitholders’, and not consent given by individual unitholders who
[2021] 14 S.C.R.573
573
A
B
C
D
E
F
G
H
574
SUPREME COURT REPORTS
[2021] 14 S.C.R.
alone would be bound by their consent, that is, it excludes unitholders
who are not agreeable.
Interpretation of Statutes – Principles of interpretation – Held:
When there is choice between two interpretations, the Court would
avoid a ‘construction’ which would reduce the legislation to futility,
and should rather accept the ‘construction’ based on the view that
draftsmen would legislate only for the purpose of bringing about
an effective result.
Securities and Exchange Board of India (Mutual Funds)
Regulations, 1996 – Regulation 18(15) (c) – Winding up of Mutual
Fund Schemes – Consent of unitholders – Held: Regulation
18(15)(c) mandates and requires consent of the unitholders for
winding up, but does not prescribe any mode or manner for taking
consent – Therefore, by implication, the Regulation gives option of
holding a physical meeting, postal poll or e-poll.
Words & Phrases – “consent” – Securities and Exchange
Board of India (Mutual Funds) Regulations, 1996 – Regulation
18(15) (c) – Held: ‘consent’ in sub-regulation (15) to Regulation
18 refers to affirmative consent to winding up by ‘the majority of
the unitholders’– Conversely, consent is denied when ‘majority of
the unitholders’ do not approve the proposal to wind up the scheme.
Directing winding up and disbursements, the Court
HELD: 1.1 In view of larger public interest, presently this
Court is only deciding the limited aspect of “unitholders’ consent
to winding up” [assuming that Regulation 18(15)(c) would apply
even where the trustees form an opinion that a scheme should
be wound up under Regulation 39(2)(c)], and is persuaded to direct
winding up of the six schemes to ensure disbursement of funds
and liquidation of assets/securities. [Para 4][583-B-C]
1.2 The argument raised by some of the objecting
unitholders that consent would be binding only on those who have
consented to winding up of the mutual fund schemes and cannot
be imposed on others is rejected. The word ‘consent’, in the
context of the clause, clearly refers to ‘consent of the majority of
the unitholders’, and not consent given by individual unitholders
who alone would be bound by their consent, that is, it excludes
A
B
C
D
E
F
G
H
575
unitholders who are not agreeable. To accept the second or contra
view, as pleaded by some of the objecting unitholders, would be
to negate the very object and purpose of clause (c) to sub-
regulation (15) Regulation

Excerpt shown. Read the full judgment & AI analysis in Lexace.