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Informist, Wednesday, May 13, 2026

 

--Jindal Poly Films moves SC against NCLT's admission of class action suit 

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

 

By Surya Tripathi

 

NEW DELHI – Jindal Poly Films Ltd. has moved the Supreme Court against the Delhi bench of the National Company Law Tribunal's Feb. 5 order admitting a class action suit against the company filed by its shareholders holding 4.99% of the share capital. On Feb. 26, the National Company Law Appellate Tribunal had dismissed Jindal Poly's appeal against the Delhi tribunal's order. Shareholders of Jindal Poly had alleged that the company's transactions were undervalued, resulting in losses exceeding INR 25 billion.   

 

Earlier this month, 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 on the class action suit.

 

Ankit Jain and other shareholders had moved the Delhi 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 said.

 

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 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 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 increase in their assets, Jindal Poly Films said, seeking a stay on the admission of the class action suit.

 

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. 

 

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. 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. 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 1336 IST, shares of Jindal Poly Films were down 1.1% at INR 703.70 on the National Stock Exchange.  End

 

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

 

Edited by Avishek Dutta

 

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