SC brings curtain down on India’s first class action suit, refers Jindal Poly dispute to arbitration

The Supreme Court has referred the dispute between minority shareholders and Jindal Poly Films Ltd to arbitration after both parties agreed to a consent order on 8 June, effectively bringing an end to India's first corporate class action suit. The case, which alleged the siphoning of over ₹2,500 crore through undervalued transactions involving promoter-linked entities, was a landmark test of India's class action framework under the Companies Act. The bench of Justices Prashant Kumar Mishra and Atul S. Chandurkar set aside the orders from the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) that had admitted the class action petition. The top court appointed Manindra Mohan Shrivastava, a former chief justice of the Madras High Court, as the sole arbitrator. The dispute was originally initiated by minority shareholder Ankit Jain in March 2024, but Jain later sold his stake and sought to withdraw from the proceedings. Monet Securities Pvt. Ltd was subsequently substituted as the petitioner and consented to the matter being referred to arbitration. The case had attracted significant attention as it was the first corporate class action petition to successfully cross the maintainability stage before the NCLT in India. 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. 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, 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. 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.

(Source：Livemint)