A prima facie case of fraud justifies an ongoing investigation, irrespective of prior repayments or regulatory observations.

This Criminal Original Petition is filed to call for the records relating to First Information Report in Crime No. 12 of 2020, dated 23.09.2020 pending on the file of the first respondent and to quash the same. 2. The sum and substance of the complaint for the alleged offence under Sections 420, 409 120(b) and 34 of IPC is that, Franklin Templeton Asset Management (India) Private Limited((in short “FTAMIL”) and its Directors hatched a criminal conspiracy to defraud by causing wrongful loss to the investors and unlawful gain to themselves. The criminal law was set into motion by one Premnath K.Shanker and Usha Premnath, who are the respondents 2 and 3 in this quash petition. 3. The gist of the complaint is that, the accused company involved in the Mutual Fund Trade floated units for the investors and in the course of their trade, it had unilaterally wound up six debt schemes, out of eight debt schemes, contrary to the Regulations governing the Mutual Fund Trade. Few days prior to commencement of the winding up process, substantial units has been liquidated by the Directors, causing breach of trust. As far as the defacto complainant concerned, a tune of Rs.49,47,000/~ has been cheated. 4. The first respondent police has taken up the investigation and the investigation is under progress. Meanwhile, certain proceedings been initiated in the High Courts of Madras as well as Karnataka, challenging the decision of the Directors to wind up six schemes. In this connection, the Hon-ble Supreme Court had made certain observations and incidentally, appointed SBI, Funds Management Limited as a Liquidator to liquidate the assets of the company and to distribute it prorata to the unit~holders. 5. The learned Senior Counsel appearing for the petitioners submitted that 109% has been repaid to the unit~holders through the Liquidator. The investment in the Mutual Fund is at the risk of the investors and there cannot be any assured returns for the investors. Due to Covid pandemic, six schemes were closed and wound up, based on the majority decision. There is no element of cheating or breach of trust neither criminal conspiracy involved in this case. Therefore, the complaint is bound to be quashed. 6. The learned Special Public Prosecutor (ED), who has filed a petition in Crl.M.P.No.12392 of 2023 for impleading itself and the same has been allowed by this Court today (i.e.) 23.04.2024, brought to the notice of this Court that few days prior to winding up of six schemes namely, (i)Franklin India Ultra Short Bond Fund; (ii)Franklin India Low Duration Fund; (iii)Franklin India Dynamic Accrual Fund; (iv)Franklin India Credit Risk Fund; (v)Franklin India Income Opportunities Fund; and (vi)Franklin India Short Term Income Plan, the Insiders, who were controlling the affairs of the “FTAMIL” shelled out their holdings approximately to the tune of Rs.40 crores and had also diverted the fund to the tune of Rs.824 crores to dubious companies like, SBFC Finance, whose earlier annual profit was barely Rs.24.4 crores. Since preliminary investigation had revealed violation of PMLA Act, case has been registered in ECIR/MBZO~I/10/2021. Material collected through search and seizure belongs to the following nine persons viz., (i) Franklin Templeton Asset Management India Pvt. Ltd.,; (ii)Franklin Templeton Trustee Services Private Limited; (iii)Sanjay Vishwanath Sapre, Whole time Director FTAMIL; (iv)Jayaram Subramaniam Iyer, Director, FTAMIL; (v)Vivek Kudva, Director, FTAMIL; (vi) Radhakrishnan Venkata Subramaniam, Director, FTAMIL; (vii) Pradip Panalal Shah, Director FTAMIL; (viii) Tabassum Abdulla Inamdar; and (ix) Santosh Das Kamath, MD & Chief Investment Officer disclosed, they fraudulently siphoned the fund of the investors and diverted to the dubious companies. 7. The learned Senior Counsel appearing for the petitioners referring communications between the accused persons as well as certain pleadings before the Hon-ble Supreme Court and the observations m