Securities Appellate Tribunal (SAT): A bench of Tarun Agarwala, J. (Presiding officer) and M.T. Joshi, J. (Judicial Member) stayed the impugned order restraining the appellant from launching any new debt schemes for a period of 2 years.

In the instant appeal, the appellant contended that the impugned order was arbitrary and unreasonable as it took into consideration ex post facto event of winding up of the schemes. It further contended that it was necessary to protect the value for unit holders at the time when the Covid-19 pandemic had crept in. Furthermore, indicated towards the amount Rs. 17, 778/- crore that has already been distributed to the unitholders and additional cash of approximately Rs. 1,165/- crore that was currently available with the scheme for further distribution. And that the order restraining from launching any debt scheme for 2 years meant putting a stop on the business activity.

The respondents submitted that the investigations were initiated only after receiving multiple complaints and writ petitions being filed in various High Courts. And that the closure of the debt scheme was a result of the poor performance of the scheme.

The Tribunal considered the fact the appellant was in business for more than 2 decades and some of the schemes have been in existence for more than ten years, and there was no such history of complaints indicating poor management. Therefore, was thus of the opinion that

“…the mere fact that the appellant have chosen to wind up six schemes does not mean that they should be debarred from launching any new debt schemes…”.

And further held that

“…Insofar as the refund of investment management and advisory fees is concerned we find WTM has taken the gross amount as unlawful gains. In our view, prima facie, this appears to be incorrect, in as much as, at best, only profits could be directed to be refunded after deducting the necessary expenses actually incurred by the appellant in managing the schemes…”.

The matter would be listed for admission and for final disposal on August 30, 2021.[Franklin Templeton Asset Management (India) Pvt. Ltd v. SEBI, Appeal No. 443 of 2021, decided on 28-06-2021]

Advocates who represented the parties:

Counsel for the Appellants:

Mr. Janak Dwarkadas, Senior Advocate and Mr. Mustafa Doctor, Senior Advocate with Ms. Ankita Singhania and Ms. Shruti Rajan, Advocates i/b. Ms. Shruti Rajan

Counsel for the Respondents:

Mr. Arvind P. Datar, Senior Advocate with Mr. Pratap Venugopal, Mr. Suraj Chaudhary and Mr. Atishay Jain

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