The Nationwide Firm Legislation Appellate Tribunal (NCLAT) on Friday reserved its order on Jindal Poly Movies Ltd’s attraction difficult the admission of India’s first company class motion go well with filed by minority shareholders, alleging fraudulent conduct by the corporate’s promoters and administration.
The appellate tribunal heard arguments from each Jindal Poly and minority shareholders. It should resolve whether or not to grant a keep on the Nationwide Firm Legislation Tribunal’s (NCLT) 5 February order admitting the category motion and issuing a proper discover.
Jindal Poly has sought an pressing keep, stating that until the NCLT order is placed on maintain, it is going to be required to ship communications to just about 40,000 shareholders, in addition to to the inventory exchanges and the market regulator. The corporate mentioned this might trigger irreparable reputational and market hurt.
The Delhi bench of the NCLT had admitted the petition filed by minority shareholders, marking the primary time an Indian firm tribunal formally issued discover in a company class motion beneath Part 245 of the Firms Act, 2013, practically two years after the case was filed.
The case was initiated in March 2024 by minority shareholders Ankit Jain, Rina Jain and Ruchi Jain Hanasoge, who collectively maintain a 4.99% stake within the firm.
They allege that over ₹2,500 crore was siphoned off via undervalued asset gross sales and related-party transactions involving promoter-linked entities.
Difficult the NCLT order, Jindal Poly argued that the category motion go well with was not maintainable and that Part 245 can’t be used as an alternative to an oppression and mismanagement petition beneath Sections 241–242 of the Firms Act, which requires the next shareholding threshold. Based on the corporate, the problems raised relate to governance considerations that ought to have been pursued via different statutory cures.
The corporate additionally submitted that minority shareholders had earlier initiated proceedings towards a bunch entity earlier than one other bench of the tribunal and later filed the current class motion petition.
Part 245 was launched in 2013 following the Satyam scandal, primarily based on suggestions of the J.J. Irani Committee, to strengthen minority shareholder safety. It permits shareholders holding at the very least a 2% stake in a listed firm to collectively search cures for alleged fraud, mismanagement or unfair practices.
Based on the petition, Jindal Poly invested about ₹703.79 crore between 2013 and 2017 in group energy firms—Jindal Powertech and Jindal India Thermal Energy—via 0% desire shares.
In FY21, these firms secured debt waivers totalling over ₹7,000 crore, thereby enhancing their valuations. The shareholders allege that Jindal Poly later bought its stake at deeply undervalued costs to promoter-linked entities, leading to losses exceeding ₹2,500 crore to public traders.
The tribunal’s resolution will decide whether or not the NCLT’s admission order stands or is stayed. If no keep is granted, the category motion will proceed on deserves, in what’s being intently watched as a major improvement for minority shareholder rights in India.
