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Informist, Thursday, Feb. 26, 2026

 

--NCLAT upholds NCLT's admission of class action suit vs Jindal Poly Films 

--CONTEXT:Jindal Poly shrholders filed suit on co's undervalued transactions

 

NEW DELHI – The National Company Law Appellate Tribunal Thursday upheld the order of the Delhi bench of the National Company Law Tribunal admitting class action suit against Jindal Poly Films Ltd. Earlier this month, NCLT-Delhi had admitted the class action suit filed against Jindal Poly Films by its shareholders holding 4.99% of the share capital. They alleged that company transactions were undervalued, resulting in losses exceeding INR 25 billion.  

 

Refusing to reject the shareholders' plea on grounds of maintainability, the Delhi tribunal had said that Section 245 of the Companies Act, 2013 was equipped to encompass concern and questions raised by the petitioners with respect to affairs of Jindal Poly Films. Consequently, Jindal Poly moved the appellate tribunal against admission of the class action suit.

 

Section 245 of the Companies Act, 2013 governs class actions, allowing minority members or depositors to file applications with the National Company Law Tribunal on behalf of a group against a company or its directors and auditors for wrongful acts, seeking remedies like restraining ultra vires actions, voiding misleading resolutions, or claiming damages, with specific thresholds for applicants.

 

Jindal Poly Films argued that the petitioning 5% shareholders cannot run the company and that allegations made by them relate to transactions from earlier years, and hence, the suit against "stale" private transactions was not maintainable. All the relief sought by the minority shareholders in its class action suit would be relief for them alone and lead to increase in their assets, Jindal Poly Films said, seeking a stay on the admission of the class action suit.

 

Jindal Poly Films said if the order of admission of class action suit wasn't stayed, the company would have to issue notices to all its 40,000 shareholders, stock exchanges, and the market regulator and invite objections from them. This would have large ramifications for the company, which would result in irreparable reputation and market harm, Jindal Poly Films said. 

 

The company argued in its petition that minority shareholders couldn't use a class action suit as a substitute for filing an oppression and mismanagement complaint, where the latter would have a greater threshold for filing the petition. According to the minority shareholders' allegation, if the issue related to bad governance, there were other options but not a class action suit, said the petitioner. 

 

Ankit Jain and other shareholders had moved the Delhi tribunal against the transactions undertaken by Jindal Poly Films, which allegedly stripped the company off valuable assets and resulted in monetary losses to minority shareholders. Jindal Poly Films sold some of its investments at hugely undervalued or scrap rates to SSJ Trust, an entity of Jindal Poly Films' Promoter Shyam Sunder Jindal, said the petitioners.

 

The shareholders had moved the Delhi tribunal seeking to reverse the actions of the management of Jindal Poly Films that resulted in the sale of optionally convertible preference shares and redeemable preference shares to the promoter trust, SSJ Trust, and arm, Jindal Poly Investment. Further, the petitioners sought that the management compensate Jindal Poly Films for the loss of INR 22.68 billion on the sale of optionally convertible preference shares and provide proportionate compensation to the petitioners. A similar order was sought for compensation of the company with respect to loss of INR 2.50 billion on sale of redeemable preference shares and give proportionate compensation to the petitioners as well. 

 

The Delhi tribunal had said that allegations raised by the company shareholders were yet to be adjudicated on merits and should be independently dealt with. Jindal Poly Films and related parties were entitled to deny and defend all the allegations on merit, it said.

 

At 1114 IST, shares of Jindal Poly Films were down 3.2% at INR 617.45 on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Tanima Banerjee

 

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