Franklin Templeton Case: Madras High Court Hears Plea Stating Economic Offence Wing Not Well-equipped to handle Probe

Franklin Templeton Case: Madras High Court Hears Plea Stating Economic Offence Wing Not Well-equipped to handle Probe

The Madras High Court (HC) in the case titled Premnath Shanker v. State of Tamil Nadu and ors. stated that the probe in the Franklin Templeton case must be conducted by appropriate personnel and considered the expertise of the Economic Offences Wing (EOW).

The HC bench comprising of Chief Justice Sanjib Banerjee and Justice Senthilkumar Ramamoorthy heard a plea raising concerns over the technical expertise of officers manning the EOW, Tamil Nadu, and its' ability to investigate the Franklin Templeton case.

The petitioner contended that the EOW should comprise of officers knowing financial matters including accounting, audits, data analysis, and market conditions, as is the case with the Serious Fraud Investigation Office (SFIO).

Advocate Vaibhav R Venkatesh appearing on behalf of the petitioner argued that the EOW has no financial experts and he added that the process should not be treated as adversarial litigation. The petitioner showed a major concern upon the expertise of the EOW and its ability to manage the probe.

On behalf of the Franklin Templeton Trustee Services, it was urged that the said petition is being misguided and it ought not to be impleaded as a party in the case. It was further submitted that after the Supreme Court's intervention, 5 of the 6 mutual funds of Franklin Templeton has improved considerably in 2021.

It was further submitted that six funds that were wound up to have obtained the consent of the investors to these mutual funds. It was mentioned that the regulatory body - SEBI is overseeing the winding-up process and that a subsidiary of SBI is vetting the same.

The HC noted during the proceedings that almost all States of the country have an EOW and it stated that these are just another name, as our commercial division.

The Court stated, "It appears that despite earlier orders of this Court to ensure that the Economic Offences Wing is manned by trained personnel who have experience in or knowledge of accounting, auditing and market conditions, no attempt has been made to either train personnel or recruit trained personnel or even engage experts or consultants in such regard. There are several auditors and investment managers in the State whose services may be availed of by the State police whether to train a set of personnel or to develop a stream to deal only with economic offences. Such wing may also aid in unearthing or appropriately dealing with many a matter under the Prevention of Corruption Act."

The Court has asked for a report from the Chief Secretary or the Home Secretary of the State for seeking measures introducing a degree of specialization in the EOW specifically for the manner of recruitment or even engagement as consultants.

The HC stated that it will monitor the situation, whether SEBI, EOW, or ED is inquiring.

The objections were raised by Franklin Templeton, and it urged that the Top Court had been monitoring the matter.

Chief Justice Banerjee, stated that Franklin Templeton can approach the Supreme Court if aggrieved by the HC's order. The HC added both the ED and the SEBI be impleaded as parties to the case in order to ensure that there is no parallel investigation by the ED and the EOW.

While adjourning the said matter, Chief Justice Banerjee stated that "Parallel agencies sometimes cut into each other, number 1. Number 2, which is the more important, practical aspect - we subject the accused to two sets of hounds… investors will get nothing."

The matter is posted after four weeks for further hearing.