The Supreme Court on Thursday asked Franklin Templeton Mutual Fund to initiate steps within one week for calling a meeting of unit holders to seek their consent for the closure of six mutual fund scheme and said that for the time being, there will be a stay of redemption payment to the unit holders.

The top court also agreed to hear an appeal filed by Franklin Templeton against the Karnataka High Court order which stopped the fund house from winding up its debt fund schemes without the prior consent of the investors.

A bench of Justices S Abdul Nazeer and Sanjiv Khanna observed that the issue is big and people wanted a refund.

In the meanwhile, without prejudice to the rights and contentions of all parties, the trustees are permitted to call a meeting of unit holders to seek their consent/approval. Steps in this regard should be taken within a period of one week from today, the bench said in its order.

Advocate Pratap Venugopal, appearing for Securities and Exchange Board of India (SEBI), submitted that the market regulator has no role in the winding up process but had written to Reserve Bank of India in this regard.

The bench posted the matter for further hearing next week and directed the Registry to also list all connected/cross special leave petitions filed by the SEBI and other parties.

A spokesperson for Franklin Templeton said that they believe that the Supreme Court order will be helpful in ensuring orderly monetization and distribution of scheme assets.

The spokesperson further said that they will issue the notice for seeking the consent of unit holders shortly and deeply appreciate the support of investors and partners till date and hope to commence distribution of investment proceeds at the earliest.

On October 24, the Karnataka High Court had said that the decision of the Franklin Templeton Trustee Services Private Limited to wind up six schemes cannot be implemented unless the consent of the unit holders is obtained.

The six schemes are Franklin India Low Duration Fund, Franklin India Ultra Short Bond Fund, Franklin India Short Term Income Plan, Franklin India Credit Risk Fund, Franklin India Dynamic Accrual Fund and Franklin India Income Opportunities Fund.

Franklin Templeton MF closed these six debt mutual fund schemes on April 23, citing redemption pressure and lack of liquidity in the bond market.

Till November 27, the six schemes received total cash flows of Rs 11,576 crore from maturities, pre-payments and coupon payments since April 24, 2020.

The cash available stands at Rs 7, 226 crores as of November 27 for the four cash positive schemes, subject to fund running expenses.