INDIA Trends and Developments Contributed by: Raghav Seth, Shruti Garg, Pranav Tomar and Shailja Rawal, AZB & Partners
action petitioners share a common opinion regarding prejudicial conduct serves a functionally analogous purpose. The application of these principles in India is likely to be tested in the future. A notable convergence between the two systems is the opt-out mechanism. Under the United States framework, all affected persons are automatically included in the class unless they explicitly exclude themselves. Rule 86 of the NCLT Rules provides a comparable mechanism in the Indian context, facilitat- ing broader participation and enhancing the efficacy of class action litigation. A key distinction drawn by the NCLT in Jindal Poly Films is the principle that Section 245 of the Compa- nies Act is a self-contained statutory remedy shaped by the Indian corporate and regulatory context, and that courts cannot mechanically transplant foreign jurisprudence into the Indian framework. While the United States experience remains instructive, the NCLT’s approach signals that the Indian class action regime will develop along its own doctrinal lines. Class action under other statutes While class action proceedings have remained rela- tively uncommon under the Companies Act and before the NCLT, notable developments have emerged in the context of representative actions under the CPC and recognised association under the Consumer Protec- tion Act. Order I Rule 8 of the CPC provides that where there are numerous persons having the same interest in one suit, one or more such persons may, with the per- mission of the court, sue or be sued, or may defend, on behalf of all persons so interested. The rule also permits the court to direct that one or more persons may sue or be sued, or may defend, on behalf of all. This is the CPC’s primary analogue to the “representa- tive plaintiff/class representative” concept. The CPC restricts abandonment, withdrawal and compromise in representative suits by tying those steps to notice obligations, and it provides that a decree passed in such a suit is binding on all persons on whose behalf or for whose benefit the suit is instituted or defended.
Further, Section 91 of the CPC enables suits in respect of public nuisance and other wrongful acts affecting or likely to affect the public. The Advocate General may institute such a suit, or with the leave of the court by two or more persons, even if those persons have not suffered “special damage”. Although not always labelled a “class action” in practice, it is structurally a public-facing representative mechanism because it permits relief for a public wrong without requiring each affected person to sue individually. The Consumer Protection Act, 2019 defines “com- plainant” to include, among other categories, “one or more consumers, where there are numerous con- sumers having the same interest”. It also expressly provides, in Section 35 of Consumer Protection Act, 2019, that a complaint may be filed with the District Commission by “one or more consumers, where there are numerous consumers having the same interest, with the permission of the District Commission, on behalf of, or for the benefit of, all consumers so inter- ested”. This is the statutory backbone for consumer class complaints in India. This mechanism is conceptually closer to a classic class action than many CPC representative suits because consumer litigation frequently concerns standardised products, standard-form contracts or uniform practices affecting large groups. Apart from Section 245 of the Companies Act, Sec- tion 37 of Companies Act also provides that a suit may be filed, or other action taken, under specified prospectus liability provisions by “any person, group of persons or any association of persons” affected by a misleading statement or the inclusion or omission of any matter in the prospectus. This provision is not the same as Section 245 of Companies Act, but it is important because it explicitly recognizes group and association litigation as a mode of enforcing statutory liabilities in the securities-issuance context. Conclusion The admission of the first-ever class action suit under Section 245 of the Companies Act, as seen in Jin- dal Poly Films is an indication of a broader struc- tural evolution within Indian corporate governance. It reflects a gradual, yet discernible, shift towards a
294 CHAMBERS.COM
Powered by FlippingBook