The Delhi bench of the National Company Law Tribunal (NCLT) has made history by admitting India's first corporate class action suit under Section 245 of the Companies Act 2013. According to reports from Mint, Informist Media, The Economic Times, and latest developments, this landmark decision came nearly two years after the petition was filed by minority shareholders of Jindal Poly Films Ltd. The tribunal rejected the company's challenge to case maintainability and issued formal notice, allowing the matter to proceed on merits. This marks the first time an Indian company tribunal has formally admitted and issued notice in a corporate class action suit under Section 245 of the Companies Act 2013, representing a significant development for minority shareholder rights in India where such collective legal actions are seldom seen.
The petition, filed in March 2024, accuses the company promoters of siphoning and selling assets at undervalued prices worth over ₹2,500 crore through alleged related-party transactions. As reported by Mint, Informist Media, The Economic Times, and latest sources, the petitioners include minority shareholders Ankit Jain (3.06% stake), Rina Jain (0.94%), and Ruchi Jain Hanasoge (0.99%). The shareholders allege that promoters diverted company assets and sold investments at unfairly low prices, causing losses exceeding ₹2,518.45 crore to public shareholders. The alleged transactions include investments of ₹703.79 crore in group power companies between 2013-2017 at 0% preference shares, followed by undervalued asset sales to promoter-linked entities, particularly to SSJ Trust, an entity reportedly linked to promoter Shyam Sunder Jain. According to Informist Media, the petitioners have specifically sought compensation for the sale of optionally convertible preference shares amounting to ₹22.68 billion and redeemable preference shares amounting to ₹2.50 billion.
Section 245 of the Companies Act 2013, introduced in 2013 following the Satyam scam of 2009, allows shareholders with at least 2% shareholding to file corporate class action suits against fraud, mismanagement, or unfair practices. According to Mint, Informist Media, The Economic Times, and latest reports, the tribunal noted that the petitioners met the minimum 2% shareholding threshold prescribed under Section 245, which was not disputed by the company. The NCLT clarified that it was only required to determine whether a prima facie case existed to justify issuance of notice, not to decide whether the allegations were true. The tribunal observed that India's class action framework under Section 245 has broader scope than similar laws in the US, allowing shareholders to seek relief even if it ultimately benefits the company. As per The Economic Times, the NCLT stated "In the present case we are not convinced on the issue on maintainability raised on behalf of the respondents (Jindal Poly Films). We reject the plea on maintainability." The tribunal emphasized that while it rejected maintainability arguments, the merits of the case remain to be adjudicated independently.
Jindal Poly Films argued that the case was not a proper class action and should be dismissed, claiming the petition was essentially meant to benefit the company rather than shareholders. As reported by Mint, Informist Media, The Economic Times, and latest sources, the company stated that this hearing was only for order on non-maintainability and does not have implications on the merits of the case. The company reiterated that all business decisions were executed under commercial wisdom with necessary approvals and expressed confidence in succeeding on merits. With the petition now formally admitted, the case will move to the merits stage, where both sides will present detailed pleadings and evidence. Legal experts note this ruling enables minority shareholders holding as little as 2% stake to invoke statutory class action remedy against promoter misconduct, and signals increased judicial willingness to entertain collective grievances from minority investors.
Jindal Poly Films shares ended 0.1% lower at ₹402.95 on the National Stock Exchange following the NCLT's admission of the class action suit, as reported by Informist Media. This ruling comes shortly after reports that the Securities and Exchange Board of India (SEBI) was investigating Jindal Poly Films for potential violations of securities laws, as reported by Mint. The company had yet to respond to queries regarding these allegations. The ruling sets a potentially wide-ranging precedent, signaling increased judicial willingness to entertain collective grievances from minority investors and establishing a significant precedent for shareholder rights in India where such suits are rare. According to The Economic Times, "The ruling could have wide ranging implications for the rights of minority shareholders of listed companies in India because class action law suits have been rarely tested in courts and there is limited jurisprudence on the subject." The development represents a critical step forward for corporate governance and minority shareholder protection in the Indian legal framework.
