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Informist, Tuesday, Jun. 9, 2026

 

--SC refers dispute between Jindal Poly Films, shareholders to arbitration 
--SC sets aside admission of class action suit against Jindal Poly Films 

 

NEW DELHI – The Supreme Court has set aside the admission of a class action suit against Jindal Poly Films filed by its shareholders holding 4.99% of the share capital, rejecting India's first admission of a class action suit against a company. The apex court has referred Jindal Poly and its shareholders to arbitration with the consent of the parties and appointed retired chief justice of the Madras High Court, Manindra Mohan Shrivastava, as the sole arbitrator, who will decide upon the disputes expeditiously. The seat of arbitration will be Delhi and the arbitrator may decide upon his own fee in consultation with the parties. 

 

Shareholders of Jindal Poly had alleged that the company's transactions were undervalued, resulting in losses exceeding INR 25 billion. The shareholders had moved the Delhi bench of the National Company Law Tribunal against the transactions undertaken by Jindal Poly Films, which allegedly stripped the company of 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, the shareholders had said. 

 

On Feb. 26, the National Company Law Appellate Tribunal had dismissed Jindal Poly's appeal against the Delhi tribunal's order to admit the class action suit against the company. In May, the Delhi tribunal had also allowed the substitution application of Monet Securities Pvt. Ltd. for taking the case forward against Jindal Poly Films. Ankit Jain, the original petitioner of this suit, had sold his shares in Jindal Poly Films to Monet Securities, which acquired around 5% stake in the company and filed a substitution application. Consequently, Jindal Poly Films made Monet Securities one of the respondents in its challenge to the class action suit.  

 

Monet Securities said that on a review of the nature of the disputes and considering efficacy of the remedy, the matter would be better suited to adjudication through arbitration. Jindal Poly Films said it had no objection if proceedings initiated by the shareholders were disposed of and the disputes were referred to an arbitrator appointed by the apex court. 

 

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 shareholders had 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 them. A similar order was sought for compensation of the company with respect to a loss of INR 2.50 billion on sale of redeemable preference shares and to give proportionate compensation to the shareholders as well. 

 

Jindal Poly Films had earlier argued that the petitioning 5% shareholders couldn't run the company and that the 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 the class action suit would be relief for them alone and lead to an increase in their assets, Jindal Poly Films had said, seeking a stay on the admission of the class action suit.

 

The company had 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. 

 

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 concerns and questions raised by shareholders with respect to affairs of Jindal Poly Films. The tribunal had said that allegations raised by the shareholders were yet to be adjudicated on merit 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. Consequently, Jindal Poly had moved the appellate tribunal against admission of the class action suit, which also rejected its plea. 

 

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.

 

At 1301 IST, shares of Jindal Poly Films Ltd. were up 4.0% at INR 663.60 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 Avishek Dutta

 

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