含羞草社区

The (NCLT) in Delhi recently admitted 含羞草社区 first major shareholder class action under section 245 of the Companies Act, 2013, reviving a remedy unused for nearly a decade. The ruling, on 5 February 2026, marks a shift from mere recognition of group shareholder rights to real enforcement, especially in promoter-led governance structures.

The petition by minority holders in Jindal Poly Films Limited (JPFL) alleges value diversion of about INR25 billion (USD300 million) through related party deals that moved company assets at deep discounts to promoter-linked entities.

Forensic report drives section 245 claim

The claim relies on an independent forensic report that traces a pattern: sales by JPFL to promoter affiliates soon after those affiliates secured substantial concessions from lenders. Per the petition, those transactions improved the investees’ balance sheets at the expense of the listed company and its public shareholders.

A parallel probe by the Securities and Exchange Board of India (SEBI) corroborated this, finding proof of large-scale misuse of corporate funds, diversion of value to promoter-linked interests, and disclosure and compliance lapses. According to the SEBI, transfers were staggered over long periods and routed through multiple entities to conceal their cumulative effect on shareholder value.

JPFL’s defence framed the petition as a derivative action in class-action clothing, insisting that any loss from the transfers was suffered by the company, rather than by shareholders individually. Invoking the Delaware-origin “Tooley Test”, JPFL argued that a class action is maintainable only where shareholders suffer an injury distinct from the corporations.

The fall in share price was, JPFL argued, classic “reflective loss” flowing from corporate asset depletion, and if at all actionable, only under the oppression and mismanagement provisions in sections 241-242.

NCLT broadens section 245 relief

The NCLT, however, declined to import this distinction into Indian law. Treating section 245 as a “positive enactment”, the bench held that the provision must be interpreted on its own terms rather than through the lens of foreign jurisprudence. Observing that the legislature intended section 245 to carry a wider remedial scope than that suggested by JPFL, it held that the provision protects against conduct that is prejudicial to the company or its members, and prejudice to both need not be simultaneously established for the action to lie.

The NCLT also rejected a reading limiting relief only to ongoing conduct on the basis that such a view may risk insulating past transactions from scrutiny despite continuing ill effects. The tribunal also confirmed the lower invocation threshold applicable to listed companies: the petitioners’ 4.99% holding sufficed to maintain the action.

The ruling carries immediate implications for corporations and stakeholders. Related party transactions must now meet arm’s length standards in substance as well as form, i.e. valuations must be robust and defensible, and board deliberations contemporaneously documented.

Legacy disposals that seemed procedurally compliant may now invite retrospective challenge and need targeted internal reviews to assess vulnerability under an energised class-action regime.

Given the recognition implied of co-ordinated minority action as a legitimate means of joint redress, companies will need to anticipate organised minority action and factor such possibility into governance and communications strategies.

Section 245 expands liability exposure

In light of the heightened exposure, key management may need to reassess indemnity, and directors’ and officers’ insurance coverage.

The petition also seeks to extend scrutiny to professionals whose advice allegedly misled stakeholders, suggesting section 245 might be deployed against actors beyond company management, such as auditors and valuers, if their conduct contributes to shareholder harm. If proceeding in parallel, regulatory inquiries and shareholder litigation create a dual risk environment as findings emerging from one may directly inform claims in the other.

With the National Company Law Appellate Tribunal (NCLAT) dismissing the appeal against the NCLT order, this marks a key turning point in Indian corporate law and a gradual emergence of section 245 as a credible collective enforcement tool for group shareholders.

This also conclusively signals a move towards stronger checks and clearer accountability in listed firms, a development that companies and advisers must now reflect in their risk matrices.

Hiral Gupta is a partner and Subhalaxmi Sen is a senior associate at Bharucha & Partners