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.
- 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.
