In a landmark ruling under the Companies Act, 2013, the National Company Law Tribunal (NCLT), New Delhi Principal Bench, has admitted what is being regarded as India’s first substantive shareholder class action against Jindal Poly Films Limited and its promoter-linked entities.
By its order dated February 5, 2026, the tribunal dismissed an application filed by Jindal Poly Films challenging the maintainability of the proceedings and held that the minority shareholders had made out a prima facie case under Section 245 of the Act. The bench admitted the main petition and directed issuance of public notice to other shareholders.
The proceedings arise from a petition filed by Ankit Jain and other minority shareholders, who together hold about 4.99 percent of the company’s equity. The petition alleges that a series of related-party and asset transactions resulted in substantial loss of value to Jindal Poly Films and were “prejudicial to the interests of the company and its members”.
Senior partner Vaibhav Kakkar and partner Abhishek Swaroop of Saraf & Partners represented Ankit Jain in the matter.
Allegations and Maintainability Challenge
According to the petitioners, between 2013 and 2017, Jindal Poly Films invested more than INR 703 crore in Jindal Powertech through optionally convertible and redeemable preference shares. These instruments were subsequently sold in March 2022 to promoter-linked entities, SSJ Trust and Jindal Poly Investment, for around INR 105 crore.The petition characterises the consideration as “paltry” when compared to the original investment and alleges that the transaction resulted in massive losses to the company.
The shareholders have also challenged the conversion and write-off of loans advanced to Jindal Thermal, as well as the sale of shares of Jindal Thermal by a subsidiary to a related party, Champak Niketan, at INR 1 per share. A valuation report relied upon by the petitioners had pegged the value of those shares at more than INR 1,200 crore.
On this basis, the petition seeks declarations that the impugned transactions are null and void and claims damages and compensation exceeding INR 2,500 crore.
Jindal Poly Films, through an interlocutory application, sought dismissal of the petition at the threshold, arguing that it was not maintainable under Section 245. The company contended that the reliefs sought were in the nature of a derivative action for recovery of losses suffered by the company and therefore could be pursued only under Sections 241 and 242 of the Act dealing with oppression and mismanagement.
Relying on US jurisprudence, including the Tooley test, the company argued that Section 245 was confined to “class actions” where shareholders seek compensation for themselves, not for the company. It further submitted that the statutory phrase “are being conducted” restricted the provision to ongoing conduct and excluded past and concluded transactions. The company also invoked the principle of reflective loss, asserting that the shareholders had not suffered any independent injury.
Tribunal’s Ruling and Next Steps
Rejecting these submissions, the NCLT held that Section 245 must be interpreted within the Indian statutory framework and legislative intent, and not through the lens of foreign jurisprudence.
The tribunal observed that Section 245 is “a benevolent legislation intended to protect the interest of shareholders and depositors” and that “the scheme of the provision is distinct from the law prevailing in the United States”. It held that “the rigid distinction between derivative action and class action as understood in US law cannot be imported into the Indian statutory framework”.
On the scope of the provision, the bench noted that Section 245 expressly enables shareholders to seek “damages or compensation” for “fraudulent, unlawful or wrongful acts”. “The legislature having consciously used the expression ‘damages or compensation’ clearly indicates that the provision is intended to cover past, present and future acts,” the order said, adding that restricting the provision only to ongoing conduct “would defeat the very purpose of the provision”.
The tribunal also rejected the plea based on reflective loss, observing that Section 245 permits action where the affairs of the company are conducted in a manner prejudicial to “the company or its members”. “Prejudice to the company ultimately affects its shareholders,” the bench noted.
On eligibility, the NCLT recorded that the petitioners held nearly 5% of the share capital and therefore met the statutory threshold of 2 percent prescribed under the NCLT Rules. It further held that the petition disclosed a prima facie case, noting that the respondents had not seriously disputed the factual existence of the impugned transactions, but had confined their challenge largely to their legal characterisation.
At the admission stage, the tribunal clarified, it was required only to form a tentative opinion and not to conduct a detailed examination of evidence.
Taking note of intervention applications filed by other minority shareholders, the NCLT admitted the main petition and directed issuance of public notice in Form NCLT-13 in newspapers and on the company’s website, inviting other eligible shareholders to join the proceedings. The matter has been listed for further hearing on April 2, 2026.
Responding to the order, a spokesperson for Jindal Poly Films Limited said: “Today’s hearing was only for order on non-maintainability of class action suit filed by a minority shareholder before the Hon’ble National Company Law Tribunal (NCLT). This decision rendered today does not have any implications or bearing on the merits of the case as the Hon’ble NCLT is yet to commence hearing in the matter. Jindal Poly reiterates that all business decisions were executed under commercial wisdom with necessary approvals as required under applicable laws. This decision does not entail any findings on the allegations made in the petition and the company is confident of succeeding on merits of the case. The company has not yet received the copy of order and shall consider to file appropriate appeal against this order before higher forum, as may be advised.”
The order marks the first time an Indian tribunal has admitted a large-scale shareholder class action under Section 245 alleging diversion of corporate value through related-party transactions, setting the stage for a detailed examination of the transactions on merits in the coming hearings.
