Jindal Poly Films Ltd. Class Action Suit under Section 245 of the Companies Act, 2013 - latest updates - an Overview

 

Jindal Poly Films Ltd. Class Action Suit under Section 245 of the Companies Act, 2013 - latest updates - an Overview

The class action lawsuit filed against Jindal Poly Films Ltd. (JPFL) is a landmark case in Indian corporate law, representing the first instance of a class action suit brought before the National Company Law Tribunal (NCLT) under Section 245 of the Companies Act, 2013.

Core Allegations

The petition was initiated by a group of minority shareholders (initially holding 4.99% share capital) who alleged systematic oppression and mismanagement. The key claims included:

• Undervalued Transactions: The company and its promoters allegedly engaged in related-party transactions, such as the sale of Optionally Convertible Preference Shares (OCPS) and equity shares of subsidiaries (e.g., Jindal Thermal and Jindal Powertech) to promoter-linked entities (including the Shyam Sunder Jindal Trust) at significantly depressed valuations.
• Financial Misappropriation: The petitioners alleged losses exceeding Rs 2,500–2,781 crore due to loan write-offs, consultancy payments to unqualified entities, and the siphoning of funds.
• Shareholder Prejudice: The petitioners argued these actions were prejudicial to the interests of the company and its public minority shareholders.

Procedural History & Status

• Initiation (March 2024): The petition was filed by minority shareholders, led by Ankit Jain, before the NCLT Principal Bench in New Delhi.
• NCLT & NCLAT Rulings (2026):

o  The NCLT rejected the company’s challenge to the maintainability of the petition, affirming that Section 245 covers both completed and continuing transactions.

o  The NCLAT subsequently upheld the NCLT's decision, dismissing the company's appeal and allowing the proceedings to continue.

• Recent Developments (June 2026):

o   Substitution: In March 2026, the lead petitioner, Ankit Jain, exited the proceedings after divesting his shareholding. In May 2026, Monet Securities was substituted as the lead petitioner.

o   Supreme Court Order (June 8, 2026): On the joint request of Jindal Poly Films and the substituted petitioner (Monet Securities), the Supreme Court set aside the NCLT and NCLAT orders and referred the entire dispute to arbitration.

o   Appointment: The Supreme Court appointed Justice Manindra Mohan Shrivastava (retired Chief Justice) as the sole arbitrator, with the seat of arbitration fixed in Delhi.

Significance of the Case

This case has served as a critical test for the effectiveness of Section 245 of the Companies Act, 2013, regarding:

• Minority Shareholder Protection: It highlighted the utility of class action suits as a collective remedy when individual shareholders lack effective means to challenge promoter behavior.
• Arbitrability of Class Action Disputes: The Supreme Court’s recent decision to refer a Section 245 class action dispute to arbitration marks a significant legal shift, effectively halting the tribunal-led process that had been established by the NCLT and NCLAT.

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RBI's Simplification of Foreign Portfolio Investor (FPI) Investment in G-Securities

 

RBI's Simplification of Foreign Portfolio Investor (FPI) Investment in G-Securities

This report is based on the RBI circular RBI/2026-27/97 – A.P. (DIR Series) Circular No. 11 dated June 5, 2026, titled "Investments by Foreign Portfolio Investors in Government Securities – Amendments to the Regulatory Framework". The reforms are aimed at making Indian sovereign debt more attractive to foreign investors and improving capital inflows.

1.    Circular Reference and Legal Background

·   Circular Reference: RBI/2026-27/97 – A.P. (DIR Series) Circular No. 11.

·   Date: June 5, 2026.

·   Effective Date: Immediately from June 5, 2026.

·   Legal Basis: The circular was issued under The Foreign Exchange Management Act, 1999 (FEMA), The Foreign Exchange Management (Debt Instruments) Regulations, 2019, and RBI's Master Direction – Non-resident Investment in Debt Instruments Directions, 2025.

2.    Key Changes Introduced

The changes simplify the regulatory framework, reduce compliance burdens, and enhance post-tax returns for overseas investors.

Change	Details
Removal of Investment Restrictions for FPIs	RBI has withdrawn restrictions on FPIs investing in Government Securities (G-Secs) through the General Route. The limits removed include Short-term investment limits, security-wise investment limits, and concentration limits.
Merger of Investment Categories	The earlier "General" and "Long-Term" investment categories have been merged. This results in a single investment limit for Central Government Securities and State Government Securities (SGSs).
Expansion of Fully Accessible Route (FAR)	The FAR framework, which permits eligible foreign investors to purchase securities without investment caps, has been expanded to include: All new 15-year, 30-year, and 40-year G-Secs, new Sovereign Green Bonds in specified tenors, and certain existing securities.
Tax Relief by Government	Alongside the RBI measures, the Central Government provided tax benefits to significantly enhance post-tax returns. These include Exemption of long-term capital gains tax on G-Secs for foreign investors, and removal of withholding tax on interest earned from such securities.

 3.  Rationale for the Reforms

The reforms are part of a broader package announced on June 5, 2026, aimed at deepening India's bond market.

• Supporting the Rupee: Increased foreign investment is expected to bring stable dollar inflows, supporting the rupee against pressures from rising crude oil prices, foreign equity outflows, and global market volatility.
• Increasing Demand for Indian Bonds: Simplified regulations are intended to attract larger allocations from global bond funds, capitalizing on India's inclusion in major global bond indices.
• Lower Borrowing Cost for Government: Greater demand for G-Secs leads to higher bond prices and lower bond yields, allowing the Government to borrow at reduced interest rates. Markets reacted positively, with benchmark 10-year G-Sec yields declining after the announcement.

4. Impact Analysis

Positive Impact	Possible Risks	Impact on Retail Investors
More foreign investment in the Indian debt market.	Higher dependence on foreign capital.	While the announcement is mainly for FPIs, the resultant increase in liquidity and depth in the G-Sec market can indirectly benefit retail investors.
Better liquidity in Government Securities.	Global risk-off events may trigger sudden outflows.	Retail investors invest through the RBI Retail Direct Scheme, Gilt Mutual Funds, Bond ETFs, and Direct Government Bonds.
Lower borrowing cost for the Government.	Foreign investors may influence bond market volatility. (Sovereign debt investors are noted as generally more stable than equity investors).	The existing RBI Retail Direct platform allows individuals to invest directly without intermediaries.
Support for rupee stability.
Stronger integration with global bond markets.

 5. Key Takeaway

The RBI's June 2026 reforms constitute one of the most significant liberalisations of foreign investment norms in G-Secs in recent years. By removing investment limits and expanding the Fully Accessible Route, and combining these with tax exemptions, India is positioning its sovereign bond market as a more attractive destination for global capital. The expected long-term outcomes are a strengthened rupee, a deeper bond market, and reduced government borrowing costs.