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TMI Blog2022 (8) TMI 657X X X X Extracts X X X X X X X X Extracts X X X X ..... on 39(2)(b), but was not paid as it was payable in future. Commission payable to mutual fund distributors is in the nature of trail, and therefore, is payment due for the services rendered to the unitholders prior to the winding up. This argument is farfetched and fallacious. The recurring liability is not a present liability, but an obligation which, on satisfaction of certain conditions, may accrue in future. The right to claim commission may not accrue and become due and payable. Distributor commission, as a recurring liability, is not payable if the unitholder(s) redeem the unit. Winding up of the scheme entails similar effects and consequences. As noticed above, it is the asset management company which is entitled to charge fees and expenses in terms of sub-regulations (1) and (2) of Regulation 52. The mutual fund distributors are not entitled to direct payment from the unitholders. Payment to the distributors is made by the asset management company, from the amount that they deduct as a recurring expense in terms of Regulation 52(4)(b). On and after publication of the winding up notice in terms of Regulation 39(3)(b), the trustees and the asset management company cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting results, etc. It is stated by them that this amount is not intended to be charged to the six Schemes in the interest of the unitholders of the Schemes. We have taken the said statement on record. - I. A. NO. 53453 OF 2022 IN CIVIL APPEAL NOS. 498-501 OF 2021 - - - Dated:- 12-8-2022 - S. ABDUL NAZEER And SANJIV KHANNA , JJ. ORDER SANJIV KHANNA, J. This Court, vide order dated 03rd August 2022, dismissed the aforesaid application filed on behalf of the Foundation of Independent Financial Advisors, For short, FIFA while stating that the reasons for such dismissal would follow. The order further directed that Rs. 684,00,00,000/- (Rupees Six Hundred and Eighty Four Crores) be distributed to the unitholders. As a corollary, the stay granted by us vide order dated 12th April 2022, while issuing notice in the application therein, also stood vacated. By the present order, we provide the reasons for dismissal of the captioned application. 2. FIFA claims that independent financial advisors/mutual fund distributors are entitled to payment of commission agreed between them and Franklin Templeton Asset Management (India) Private Limited, which are in the nature of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per the terms and quantum specified in sub-regulation 6 to Regulation 52. Sub-clause (c) to Regulation 52(6) specifies the percentage of total expenses of the scheme which is allowable, varying from 2.5% to 1.75% of the daily net assets. This, in our opinion, would not be a correct interpretation and lead to anomalies and tribulation with adverse consequences for the suffering unitholders, and undo the embargo directing the ceasure of business. Regulations 40 and 52 need to be read harmoniously. When read together, Regulation 52, authorising and specifying the limit of the fees and expenses payable to the asset management company, would apply only when the scheme is in operation, and not after publication of the notice under Clause (b) to sub-regulation 3 to Regulation 39 resulting in ceasure of any business activities in respect of the scheme to be wound up. 5. Regulation 41, which deals with the procedure and manner of winding up, applies once the notice under Regulation 39(3)(b) is published and the unitholders approval under Regulation 18(15)(c) of the Regulations is received. We are not required to interpret sub-regulation 1 to Regulation 41, as we have already interpreted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able in praesenti or in futuro. There must be an existing obligation to pay though the appointed date of payment may not have arrived. Any liability which is not due and payable, in facts and in law, would not be covered by the expression due and payable . See paragraph 78 in the judgment reported as (2021) 9 SCC 606 Clause (b) to Regulation 52(4) refers to recurring expenses, that is, expenses which will recur from time to time. It does not refer to one-time payment which is deferred. The recurring liability is not a present liability, but an obligation which, on satisfaction of certain conditions, may accrue in future. The right to claim commission may not accrue and become due and payable. Distributor commission, as a recurring liability, is not payable if the unitholder(s) redeem the unit. Winding up of the scheme entails similar effects and consequences. 8. As noticed above, it is the asset management company which is entitled to charge fees and expenses in terms of sub-regulations (1) and (2) of Regulation 52. The mutual fund distributors are not entitled to direct payment from the unitholders. Payment to the distributors is made by the asset management company, from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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