Minority Shareholders Win Landmark NCLT Order in Class Action Against Jindal Poly Films
In a historic first for India’s corporate legal landscape, the National Company Law Tribunal (NCLT) has admitted a class action lawsuit filed by minority shareholders against Jindal Poly Films Ltd (JPFL) and its directors, including Chairman Sitaram Jindal. The suit alleges serious corporate governance violations and fund siphoning.
Key Takeaways
- The NCLT admitted India’s first-ever corporate class action suit under Section 245 of the Companies Act.
- Minority shareholders (holding 10% stake) accuse JPFL directors of governance lapses and siphoning funds.
- The tribunal found a prima facie case and set the next hearing for 22 April.
The Groundbreaking Order
The NCLT’s principal bench, led by President Justice (retd) Ramalingam Sudhakar and Technical Member Avinash K Srivastava, passed the order on 22 January. It marks the first time the tribunal has allowed a class action proceeding since the provision was introduced in the 2013 Companies Act.
The minority shareholders, who collectively hold 10% of JPFL’s share capital, had originally moved the tribunal in 2022. Their petition alleges that the company’s directors violated corporate governance norms and siphoned off company funds. A specific charge is the non-disclosure of related party transactions and the failure to seek shareholder approval for them.
Legal Basis and Next Steps
In its order, the NCLT stated the shareholders had successfully made out a prima facie case against JPFL and its board. Crucially, the tribunal confirmed the petitioners had complied with all procedural requirements of Section 245, which empowers shareholders to file such suits.
The NCLT has directed JPFL and its directors to file their reply to the allegations within four weeks. The case will be heard next on 22 April.
About the Company
Jindal Poly Films Ltd, part of the BC Jindal Group, manufactures polyester and metalized films. Following the news, the company’s shares were trading at ₹1,032.05 on the BSE, showing a marginal gain of 0.5%.
This case is being closely watched as a test for minority shareholder rights and the enforcement of class action mechanisms in Indian corporate law .
