In what could mark the end of India’s first corporate class action suit, the Supreme Court has referred the dispute between minority shareholders and Jindal Poly Films Ltd to arbitration after both sides agreed to a consent order on 8 June.
The case, which alleged siphoning of over ₹2,500 crore through undervalued transactions involving promoter-linked entities, was widely seen as a landmark test of India’s class action framework under the Companies Act. Legal experts and boardrooms viewed it as a potential precedent for the future of minority shareholder activism in India.
A bench of Justices Prashant Kumar Mishra and Atul S. Chandurkar on Monday set aside the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) orders that had admitted and upheld the class action petition under Section 245 of the Companies Act, 2013.
The top court appointed former Chief Justice Manindra Mohan Shrivastava as the sole arbitrator to adjudicate the dispute between the two parties.
"As of date, the matter is under sub-judice. Therefore, no financial implications, if any, cannot be ascertained at this stage," the company said in a statement on the exchanges.
The dispute was originally initiated by minority shareholder Ankit Jain and his family members in March 2024. However, the case took a dramatic turn in recent months after Jain sold his stake in the company and sought to withdraw from the proceedings. Monet Securities Pvt. Ltd was subsequently substituted as the petitioner and later consented to the matter being referred to arbitration.
The case had attracted significant attention because it was the first corporate class action petition to successfully cross the maintainability stage before the NCLT in India.
Jain, who along with other petitioners, held about 4.99% stake in Jindal Poly Films. The shareholders alleged that more than ₹2,500 crore had been siphoned from the company through undervalued asset sales and related-party transactions involving promoter-linked entities.
According to the petition, Jindal Poly invested about ₹703.79 crore between 2013 and 2017 in group power companies Jindal Powertech and Jindal India Thermal Power through preference shares. The petitioners alleged that after these companies benefited from debt waivers exceeding ₹7,000 crore, the investments were subsequently transferred at undervalued prices to promoter-linked entities, resulting in substantial losses to public shareholders.
The petition estimated the total loss to the company at more than ₹2,500 crore.
The matter remained before the NCLT for nearly two years as the tribunal examined whether it satisfied the threshold requirements for a class action under Section 245. On 5 February 2026, the NCLT admitted the petition and issued notice, marking the first time an Indian company tribunal formally allowed a corporate class action to proceed under the provision.
The order was later upheld by the NCLAT on 26 February 2026, strengthening the case's significance as a potential milestone in Indian corporate governance jurisprudence.
However, the Supreme Court’s latest order has fundamentally altered the course of the proceedings. The court noted that the substituted petitioner was not the original petitioner before the NCLT and had recently been brought on record. It further recorded the parties’ submission that the dispute would be better suited for adjudication through arbitration and accepted the jointly signed consent terms.
Section 245 was introduced through the Companies Act, 2013, following the Satyam scandal, to strengthen minority shareholder protection and provide a mechanism for collective shareholder action. While class action remedies are widely used in jurisdictions such as the US, they have rarely been tested in India.
