CLASS ACTION SUIT BY ANKIT JAIN, A MINORITY SHAREHOLDER AGAINST JINDAL POLY FILMS LIMITED. ANKIT JAIN Vs JINDAL POLY FILMS LIMITED

 CLASS ACTION SUIT BY ANKIT JAIN, A MINORITY SHAREHOLDER AGAINST JINDAL POLY FILMS LIMITED.

ANKIT JAIN Vs JINDAL POLY FILMS LIMITED

WHO FILED THE CASE?

The petitioners are a group of minority shareholders led by Ankit Jain.

The class is said to represent a very large number of shareholders — ~45,000 according to Jain’s claim.

India's first class action suit under Section 245 of Companies Act 2013.

This is significant because Section 245 had been largely dormant for more than 8 years; this case is being seen as a landmark or test case.

FACTS OF THE CASE

The petition is filed under Section 245 of the Companies Act, 2013, which provides for class-action suits (i.e., collective action by shareholders) in cases of mismanagement or prejudicial conduct.

SERIOUS FINANCIAL MISMANAGEMENT AND RELATED-PARTY TRANSACTIONS

The plaintiffs allege serious financial mismanagement and related-party transactions that have harmed the company and its minority shareholders.

HUGE INVESTMENTS IN GROUP COMPANY

JPFL made large investments (~₹703.79 crore) in Jindal Powertech (a group company) via preference shares, despite Jindal Powertech reportedly making sustained losses.

OCPS WERE ISSUED AT A HIGH DISCOUNT

Optionally Convertible Preference Shares (OCPS) worth ~₹440.2 cr were sold to the SSJ Trust (a promoter-linked trust) for around ₹66.03 cr.

RPS WERE ISSUED AT A HIGH DISCOUNT

Redeemable Preference Shares (RPS) worth ~₹263.59 cr were sold to Jindal Poly Investment for ~₹39.53 cr

ALLEGED LOSS TO JPFL IS AROUND Rs 2500 Crores

The petitioners estimate the loss to Jindal Poly Films (and thereby its public shareholders) at around ₹2,500+ crore.

COUNTER BY JINDAL POLY FILMS LTD

Jindal Poly Films has challenged the maintainability of the class action petition. They argue that the claims go beyond what Section 245 allows.

SOME IMPORTANT LEGAL ISSUES IN THIS CASE

THE CASE IS ACTIVELY ENQUIRED BY NCLT , NEW DELHI

Section 245 applies to ongoing misconduct, and the alleged transactions are past, concluded acts that were approved by shareholders.

The defined 'class' of shareholders is not homogenous.

KEY TAKEAWAYS

The case is closely watched as it will likely set a major precedent for the interpretation and scope of Section 245, clarifying how class action remedies can be used by minority shareholders in India.

If successful, this case could empower minority shareholders in India and lead to more collective legal actions against promoter-driven misconduct.

The NCLT's final decision is still awaited and will be highly influential in shaping India's corporate governance and minority shareholder rights.

R V SECKAR FCS,LLB 79047 19295