The recent Jindal Poly Films minority shareholders’ class action lawsuit is a rare case of admission by an Indian tribunal against a listed entity under Section 245 of the Companies Act 2013.
While the law became applicable almost a decade ago, several hurdles remained. For example, at the admission stage, a lack of clarity regarding eligibility and maintainability limited the effective invocation of the provision.
Ankita Singh, founder of Sarvaank Associates, said there are several other systemic issues, such as high numerical thresholds for admission and the absence of a formal litigation funding framework. “Until the cost of entry is lowered and the ‘Certification’ process is streamlined, class actions will remain a tool available only to the most resilient and well-resourced minority groups,” Singh added.
According to Singh, the provision was a dormant remedy for too long, eclipsed by the more familiar ‘Oppression and Mismanagement’ framework. The good news is that by clearing the maintainability hurdle, the Tribunal signalled it will no longer allow technical objections, such as the distinction between derivative and class actions, to block minority shareholders from seeking accountability for alleged related-party overreach.
What did Abeezar Faizullabhoy say?
Abeezar Faizullabhoy, senior partner at CMS INDUSLAW, said Section 245 prescribes strict eligibility thresholds and does not permit waiver, unlike Section 241, making compliance a necessary but not sufficient condition for admission.
“Beyond numerical eligibility, courts are required to satisfy themselves on issues such as good faith, the appropriateness of collective action, and whether the grievance is capable of being pursued individually.” He added that the Jindal Poly Films decision is significant in clarifying that satisfying thresholds must be accompanied by a prima facie case.
There are two essential requirements for a class action suit to get admitted by a tribunal under Section 245; One is the statutory threshold requirements under the NCLT norms, and the second is that the court must be satisfied that there is a prima facie basis.
What’s the process for listed comapnies?
For listed companies in India, admission of a class action lawsuit requires members having at least 2% stake in the company. In Jindal Poly’s case, the minority group, led by Ankit Jain, held almost 5% of the issued share capital.
One recent class action suit case that did not pass the courts’ muster was against ICICI Securities in 2024 for its delisting and merger with the parent ICICI Bank. About 100 minority shareholders alleged an unfair share swap ratio, undervaluation, and lack of transparency. The minority group, led by Manu Rishi Guptha and Quantum Mutual Fund, claimed that the stock valuation was based on outdated reports from 2023. The case was filed under the provisions of Section 245 and 230.
The NCLT dismissed the petition as the mandatory 10% shareholding threshold was not met under Section 230(4) and the decision was also upheld by NCLAT in March 2025. Two months later, the Supreme court also dismissed the petitioners’ plea, saying that the company had got approval from the majority of public shareholders for the merger. The apex court also noted that the petitioners continued to trade shares during the dispute, which undermines claims that the process was unfair.