In a significant development for corporate governance and minority shareholder rights in India, the national company law tribunal (NCLT) has admitted a class-action lawsuit filed by minority shareholders of Jindal Poly Films, seeking damages exceeding ₹2,500 crore for alleged wrongful conduct by the company. The ruling, which came on 5 February 2026, represents one of the rare instances where such a mechanism has been invoked against a listed company in India, potentially setting important precedents for shareholder activism and corporate accountability.
The NCLT's principal bench in Delhi, headed by its president justice Ramalingam Sudhakar and technical member Ravindra Chaturvedi, rejected the company's objections regarding the maintainability of the suit and directed that the class- action petition under Section 245 of the Companies Act, 2013, be proceeded with. While the tribunal has not yet ruled on the substantive merits of the case, it held that the petition raises a prima facie case of alleged prejudicial conduct by the company's management that warrants detailed adjudication.
In its order, NCLT stated: "In the present case we are not convinced on the issue on maintainability raised on behalf of the respondents (Jindal Poly Films). We reject the plea on maintainability. Nevertheless, it is made clear that these questions raised are yet to be adjudicated on merits and the same shall be independent from the observation raised herein. The respondents (Jindal Poly Films) are entitled to deny and defend all the allegations on its merits."
The tribunal confirmed that the petitioners, who collectively hold around 5% of the company's share capital (specifically 4.99%), meet the statutory threshold required to initiate class-action proceedings. As per the provisions governing class- action lawsuits, a public notice will now be issued, allowing other minority shareholders to join the suit alongside the original petitioners.
Allegations Against Jindal Poly Films
The petition, filed by a group of minority shareholders led by Ankit Jain, alleges that Jindal Poly Films undertook a series of related-party transactions that stripped the company of valuable assets and transferred them to promoter-linked entities at significantly undervalued prices. The shareholders claim these transactions resulted in substantial monetary losses to the company and its public shareholders, totalling more than ₹2,500 crore.
According to the petition, the alleged wrongful transactions include:
A loss of over ₹2,200 crore from the sale of optionally convertible preference shares (OCPS) and redeemable preference shares (RPS) in group power companies. The petition alleges these shares were sold to SSJ Trust—an entity controlled by promoter Shyam Sunder Jindal—at what was described as 'scrap value' or at grossly undervalued prices.
• A ₹135 crore loss from the undervalued sale of shares of Jindal Thermal.
• A ₹128 crore loss from the advancement of loans to Jindal Thermal.
Additionally, the minority shareholders have alleged that the company unfairly wrote off loans and made consultancy payments to unqualified entities, with all improper transactions aggregating more than ₹2,700 crore, according to some reports.
The petition names several members of the promoter family, along with current and former directors of the company, as respondents in the case.
The petitioners have sought comprehensive relief from the tribunal, including:
• Reversal of the allegedly wrongful transactions or, alternatively, compensation for losses exceeding ₹2,500 crore (with some reports indicating damages claimed at ₹250.42 crore in certain filings).
• Application of 12% annual compounding interest on all determined losses from the date the losses occurred.
• Restraining the company from transferring assets of its related entities.
• Disciplinary action against the independent valuer for allegedly providing misleading valuations.
• Barring the management from taking any action that could harm public shareholders or diminish the company's value.
• Action against directors and other related parties for alleged fraudulent and wrongful conduct.
Jindal Poly Films has vehemently denied all allegations, asserting that all business decisions were made with due commercial prudence and requisite approvals under applicable laws. The company has challenged the lawsuit on multiple grounds, arguing that the minority shareholders wrongly invoked the class action mechanism under Section 245 of the Companies Act.
The company's primary legal arguments centered on maintainability:
First, Jindal Poly Films contended that the petition did not qualify as a class action because the alleged losses were suffered by the company itself, not directly by individual shareholders. Under established corporate law principles, the company argued, such claims must be pursued either as a derivative action or as an oppression and mismanagement petition, both of which involve higher thresholds and limited remedies.
Second, the company submitted that the transactions in question were past and concluded and, therefore, fell outside the scope of Section 245, which the company claimed was limited to preventive relief.
However, NCLT rejected these arguments. The tribunal held that Section 245 is not limited to preventive relief and expressly allows shareholders to seek compensation and damages for alleged wrongful acts, including past transactions. The tribunal further held that Section 245 permits shareholders to bring a collective action even where the alleged harm is to the company itself, not only to individual investors.
Immediately following NCLT's decision, Jindal Poly Films escalated the matter to the National Company Law Appellate Tribunal (NCLAT). On 6 February 2026, just one day after NCLT order, the company's legal counsel, Manu Singhvi, approached the NCLAT seeking an urgent hearing before a bench headed by chairperson Justice Ashok Bhushan and technical member Barun Mitra.
In his submissions to the appellate tribunal, Singhvi emphasized that the matter involved a rare class action suit initiated under Section 245 of the Companies Act by minority shareholders of a prominent listed company. He highlighted that NCLT's order admitting the suit had already resulted in a fall in the company's share price and had impacted "45,000 shareholders."
Taking note of these submissions, the NCLAT agreed to hear Jindal Poly Films' appeal on the following Monday, indicating the urgency and significance attached to the matter.
The class action lawsuit unfolds against the backdrop of ongoing regulatory scrutiny. A few months prior to NCLT ruling, the Securities and Exchange Board of India (SEBI) had collected evidence about investment write-offs made by Jindal Poly Films and general financial mismanagement. According to reports, SEBI's investigation focused on potential violations of the rights of minority shareholders and the securities market at large under various provisions, including The SEBI Act, Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations and Listing Obligations and Disclosure Requirements (LODR) Regulations.
The parallel SEBI investigation adds another layer of complexity to the legal challenges facing Jindal Poly Films and underscores the seriousness of the allegations raised by minority shareholders.
Impact on Share Price and Shareholders
The developments have taken a significant toll on Jindal Poly Films' stock performance. Since the beginning of 2025, the company's share price has lost more than half of its value, falling to nearly ₹400 on the BSE. The admission of the class action lawsuit by NCLT further contributed to the decline, as acknowledged by the company's counsel in the NCLAT proceedings.
According to the company's financial statement for the September quarter, Jindal Poly Films had reported a consolidated net loss of almost ₹10 crore on revenue from operations of over ₹410 crore, reflecting the financial pressures facing the business.
Implications for Corporate Governance in India
Legal experts have emphasized that NCLT's decision could have wide-ranging implications for the rights of minority shareholders of listed companies in India. Class action lawsuits have been rarely tested in Indian courts, and there is limited jurisprudence on the subject, making this case potentially precedent-setting.
The tribunal's decision to allow the class action marks a significant moment for minority shareholder activism in India. It signals that the judiciary is willing to provide a platform for collective shareholder grievances, even against prominent listed companies, and that Section 245 of the Companies Act can be effectively utilised as a tool for shareholder protection.
The ruling also clarifies important aspects of Section 245, particularly that:
The provision is not limited to preventive relief but extends to compensatory damages for past wrongful acts.
Shareholders can bring collective actions even where the primary harm is to the company itself, rather than requiring direct individual losses.
These interpretations could embolden other minority shareholders facing similar situations to pursue class action remedies, potentially reshaping the landscape of corporate accountability and governance in India.
Jindal Poly Films is part of the BC Jindal group and is engaged in the business of manufacturing various packaging films and non-woven fabrics. As a listed company, it has a broad shareholder base that has been affected by the company's recent financial performance and the controversies surrounding its related-party transactions.
Following the issuance of public notice, other minority shareholders will have the opportunity to join the lawsuit, potentially expanding the scope and scale of the litigation. NCLT has moved the matter for a formal hearing on its merits, initially scheduled for 2 April 2026, though this timeline may be affected by the pending appeal before the NCLAT.
The NCLAT's decision on whether to stay NCLT proceedings or allow them to continue will be crucial in determining the immediate trajectory of the case. The appellate tribunal's ruling could also provide important guidance on the interpretation and application of Section 245 class action provisions.
The Jindal Poly Films case represents a watershed moment in Indian corporate law, testing the boundaries of minority shareholder rights and the effectiveness of class action mechanisms under the Companies Act, 2013. As the litigation progresses through both NCLT and NCLAT, it will be closely watched by corporate governance experts, investor advocates and the business community at large.
The outcome of this case could have far-reaching implications for how listed companies conduct related-party transactions, how minority shareholders can seek redress for alleged corporate wrongdoing and how tribunals interpret and apply shareholder protection provisions. Regardless of the ultimate verdict on the merits, NCLT's willingness to admit the class action lawsuit sends a strong signal about the judiciary's commitment to protecting minority shareholder interests and ensuring corporate accountability in India's capital markets.
As the case unfolds, all stakeholders—from investors to regulators to corporate boards—will be watching closely to understand the evolving legal framework for minority shareholder activism and the standards of conduct expected from companies and their promoters in managing related-party transactions.
