INDIA Trends and Developments Contributed by: Raghav Seth, Shruti Garg, Pranav Tomar and Shailja Rawal, AZB & Partners
and upheld by the National Company Law Appellate Tribunal (NCLAT). Certain minority shareholders of Jindal Poly Films Ltd (including Ankit Jain, Rina Virendra Jain and Ruchi Jain Hanasoge) collectively held 4.99% of the com- pany’s paid-up share capital. These minority share- holders filed a class action under Section 245 as they were aggrieved with the management of Jindal Poly Films Ltd. They challenged a set of related-party and promoter-linked transactions and alleged that minor- ity shareholders had suffered a loss due to underval- ued sale of equity shares. The minority shareholders sought corrective and compensatory reliefs, including reversal of the undervalued transactions and compen- sation in respect of losses on account of related-party transactions. Jindal Poly Films Ltd challenged the maintainability of the class action petition and asserted that the class action could not be entertained by the NCLT. Jindal Poly Films Ltd’s primary objection was that the peti- tion was a derivative action dressed up as class action petition under Section 245. Jindal Poly Films Ltd invoked the rationale that shareholders do not have rights over the assets of a company. It asserted that the amounts from the transactions reversed by NCLT will ultimately come back to the company (Jindal Poly Films Ltd) rather than to the individual shareholders. Jindal Poly Films Ltd consequently argued that the allegations of the class action petitioners constituted an oppression and mismanagement claim under Sec- tions 241–242 of the Companies Act rather than Sec- tion 245 of the Companies Act. The NCLT rejected this characterisation by its order dated 5 February 2026 and rejected Jindal Poly Films Ltd’s objections on maintainability. While doing so, the NCLT focused primarily on two questions: first, wheth- er the class action petitioners met the prescribed numerical or shareholding threshold; and second, whether the petition pleads a prima facie “opinion” that the affairs of the company are being conducted in a manner prejudicial to the interests of the company or its members. On both counts, the NCLT found that the class action petitioners satisfied the requirements and refused to dismiss the class action at the stage of maintainability.
Jindal Poly Films Ltd also argued that Section 245 of the Companies Act is inherently preventive in nature, applying only to present and continuing conduct. It asserted that Section 245 of the Companies Act cannot be used to challenge past action and does not envisage a challenge to concluded transactions. Rejecting this argument, the NCLT held that Section 245 does not restrict relief to prospective or ongo- ing acts. The NCLT clarified that class action peti- tions under Section 245 of the Companies Act would include past, present and continuing actions since Section 245 envisages claims for damages, compen- sation and “any other remedy”. The NCLT held that this necessarily presupposes the ability to challenge past wrongful acts. Ingredients of a class action under Section 245 of the Companies Act Section 245 of the Companies Act provides a repre- sentative remedy to members, depositors or any class of them, who meet the eligibility thresholds prescribed in the statute and the NCLT Rules. The ingredients are as follows. • Eligibility threshold – in a company having share capital, the statute contemplates applications by both members and depositors. (a) In case of members, an application may be brought by not less than 100 members or such percentage of total members as may be prescribed, whichever is less, or by mem- bers holding not less than such percentage of issued share capital as may be prescribed. Notably, for listed companies, there is an addi- tional requirement that the members hold at least 2% of issued share capital. (b) In case of depositors, the threshold is deter- mined based on both the number of depositors and the proportion of total deposits owed. • Prima facie opinion – this petition is triggered when eligible members or depositors are of the opinion that the management is conducting the company’s affairs in a manner prejudicial to the interests of the company or its members or depositors. Distinction from Section 241 of the Companies Act It is important to appreciate the difference between the class action remedy under Section 245 of the
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