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The Section 245 class action provision under the Companies Act, 2013 has moved from a dormant statute to a live courtroom proceeding in less than three months. In Ankit Jain & Ors. v. Jindal Poly Films Limited & Ors., CP No. 58/245/PB/2024, the National Company Law Tribunal Principal Bench in New Delhi admitted India’s first substantive shareholder class action on 5 February 2026. The National Company Law Appellate Tribunal upheld that admission on 26 February 2026. The case has since taken on three additional dimensions that no analytical commentary has yet engaged with at depth. The Securities and Exchange Board of India has filed an intervention application to bring its October 2025 investigation findings on record. The original petitioners have divested their entire shareholding in the listed company. The purchaser of those shares has applied for substitution. The matter is listed for hearing on 30 April 2026. For listed-company boards in India, the Section 245 class action has stopped being a doctrinal conversation and has become an operational benchmark.
Key Takeaways
- The NCLT admitted India’s first substantive Section 245 class action on 5 February 2026 in CP No. 58/245/PB/2024, filed by minority shareholders Ankit Jain, Rina Jain, and Ruchi Jain Hanasoge holding a combined 4.99% stake in Jindal Poly Films Limited.
- The NCLAT, in Company Appeal (AT) No. 47 of 2026, dismissed the company’s appeal on 26 February 2026, holding that Section 245 covers past and concluded transactions where damages or compensation are sought under Section 245(1)(g).
- SEBI filed an intervention application in March 2026 to place its investigation findings on record, quantifying shareholder losses at INR 760.12 crore plus INR 24.25 crore arising from undisclosed promoter-linked entity transactions.
- Lead petitioner Ankit Jain has divested his shareholding; the purchaser has filed a substitution application, raising an unresolved question on whether continuous shareholding is required through final adjudication.
- The next hearing on 30 April 2026 will likely engage with the substitution application, the SEBI intervention application, and a parallel intervention application filed by another minority shareholder.
Where the Section 245 Class Action Stands
The petition was filed in March 2024 and listed before the NCLT Principal Bench in New Delhi as CP No. 58/245/PB/2024. The petitioners, Ankit Jain, Rina Jain, and Ruchi Jain Hanasoge, collectively held 4.99% of the issued share capital of Jindal Poly Films Limited at the time of filing, satisfying the 2% threshold for listed companies under Section 245(3) of the Companies Act, 2013. The challenge concerned three categories of past transactions: the sale of redeemable preference shares and optionally convertible preference shares; the write-off of a loan or trade advance to a group power company; and the sale of a subsidiary’s investment to promoter-linked entities. Reliefs sought included declaratory orders that the impugned transactions were null and void, and damages of approximately INR 2,518.45 crore.
Jindal Poly Films Limited filed an interlocutory application IA No. 132/2024 challenging maintainability. After arguments concluded on 20 November 2025, the NCLT, comprising Justice Ramalingam Sudhakar (President) and Shri Ravindra Chaturvedi (Member, Technical), delivered the impugned order on 5 February 2026. The bench dismissed the maintainability challenge, admitted the petition under Section 245, and directed public notice to all approximately 40,000 public shareholders under Rule 87 of the NCLT Rules, 2016. The company’s appeal to the NCLAT in Co. Appeal (AT) No. 47 of 2026 was dismissed on 26 February 2026 by the bench of Justice Yogesh Khanna (Member, Judicial) and Shri Ajai Das Mehrotra (Member, Technical).
Three procedural events have followed. SEBI moved an intervention application that was set for advance service on 7 March 2026. The NCLT issued notice on that application on 9 April 2026. At the same hearing, the bench was informed that the original petitioners had divested their entire shareholding, that the purchaser of those shares had filed a substitution application, and that another minority shareholder had filed a separate intervention application.
The Three Transactions and the Numbers
The challenged transactions span 2019 to 2022 in their formal execution but trace back to investments and loans made between FY 2013-14 and FY 2023-24. Jindal Poly Films, alongside Jindal Photo, formed Jindal India Powertech Limited in 2007 as a joint venture for power sector investments. According to SEBI’s investigation findings cited in its intervention application, INR 690.27 crore in loans and investments routed to Jindal India Powertech between FY 2013-14 and FY 2016-17 were subsequently written off, partially restored through conversion into zero per cent redeemable preference shares at allegedly inflated valuations, and ultimately sold to entities linked to the promoter group at undervalued prices.
SEBI has quantified the cumulative shareholder loss from this sequence at INR 760.12 crore. A further INR 24.25 crore loss is alleged from transactions involving an undisclosed promoter-linked entity referred to in the application as Champak. The petitioners’ broader claim of approximately INR 2,518.45 crore extends beyond SEBI’s narrower quantification because it includes additional value-erosion claims at the shareholder level and reflective losses argued at the company level.
The petitioners’ case relies materially on an independent forensic report. The pattern alleged is one of staggered transactions structured to obscure cumulative impact. Sales by Jindal Poly Films to promoter affiliates were timed shortly after those affiliates obtained substantial concessions from lenders, with the proceeds improving the affiliates’ balance sheets at the alleged expense of the listed entity and its public shareholders. SEBI’s parallel investigation corroborates this characterisation and adds violations of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 to the substantive allegations.
What the NCLT and NCLAT Settled at the Threshold
Three doctrinal questions were argued at the admission stage and decided against the company. Each ruling now operates as guidance for every Section 245 petition that follows.
The first was whether Section 245 covers past or concluded transactions or only ongoing conduct. Jindal Poly Films argued that the phrase “are being conducted” in Section 245(1) restricts the provision to acts in praesenti and excludes transactions that had already been completed. The NCLT rejected this reading. It held that Section 245(1)(g), which expressly enables claims for compensation or damages, presupposes the ability to challenge past acts because compensation cannot be sought without a completed wrong. The NCLAT confirmed this reading, observing that the statutory language extends to wrongful acts or conduct and to any likely act, covering both completed and prospective conduct.
The second was whether US class action jurisprudence, particularly the Tooley test that distinguishes between direct shareholder injury and derivative injury to the company, should be imported to limit the scope of Section 245. The NCLT declined. It treated Section 245 as a benevolent statutory enactment to be interpreted within the Indian framework. The rigid distinction between class and derivative actions under US law was held to have no application to the statute as enacted by Parliament.
The third was whether the matter should have been pursued under Sections 241-242 of the Companies Act, 2013 dealing with oppression and mismanagement, rather than Section 245. Both forums treated the question as a non-issue at the admission stage. The reliefs sought, including declarations of voidness and damages on behalf of the company under Section 245(1)(g), were held maintainable under Section 245 even where overlap with Sections 241-242 might exist. The petitioners were treated as agitating rights of the entire class of minority public shareholders, which they could not have pursued in their own right.
The cumulative effect is that Section 245’s threshold scrutiny has now been substantially clarified. Future petitioners do not need to litigate these three doctrinal questions afresh, although the merits stage remains unaddressed.
SEBI’s Intervention: The Parallel Track Risk
SEBI’s intervention application alters the case architecture. The regulator’s October 2025 investigation findings are sought to be brought on record before the NCLT, alleging financial mismanagement, opaque related-party transactions, and violations of the SEBI (LODR) Regulations, 2015 and the SEBI (PFUTP) Regulations, 2003. SEBI is represented by Senior Counsel Mr. Sunil Fernandes.
The intervention does several things at once. Procedurally, it gives SEBI standing as an intervener in a Section 245 proceeding for the first time, creating a precedent for parallel-track risk in shareholder collective actions. Evidentiarily, SEBI’s quantification and findings provide regulatory corroboration for the petitioners’ case, although the NCLT has not yet formally admitted these findings. Strategically, it signals that securities regulators will not treat shareholder class actions as private litigation isolated from regulatory enforcement; the two paths can run in parallel and inform each other.
For listed companies and their boards, the implication is that disclosures, investigation responses, and Section 245 defences must be coordinated. Findings made in a SEBI investigation are now likely to migrate into Section 245 proceedings via intervention applications, and Section 245 admission orders may inform regulatory enforcement priorities. The defensive posture must anticipate both forums simultaneously, and the timing and content of stock exchange disclosures must be calibrated against both the regulatory timeline and the Section 245 procedural calendar.
The Locus Question After Petitioner Divestment
The most analytically open question in the case is whether a Section 245 petition survives the divestment of the original petitioners after public notice has issued.
Ankit Jain and his family divested their entire JPFL shareholding before the 9 April 2026 hearing. The purchaser of those shares has filed a substitution application seeking to step into the petitioners’ position. The NCLT has sought responses from other parties on whether any objection exists, and will independently examine the legality of permitting a new shareholder to join the proceedings midway. The question will likely come up at the 30 April 2026 hearing.
Section 245 itself does not expressly address divestment by the originating petitioners. The architecture of the provision suggests that once public notice has issued under Rule 87 of the NCLT Rules, 2016, the petition becomes representative of a class. The question is whether that class can be reconstituted with a new lead petitioner who acquired shareholding only after the proceedings commenced. Three lines of reasoning are available.
One line treats the Section 245 petition as quasi-representative once public notice has issued, drawing on the Order I Rule 8 of the Code of Civil Procedure, 1908 framework where the suit continues despite changes in the named representative. A second line, drawing on US-style continuous holding doctrines, would require the petitioner to have held shares at the time of the impugned conduct and through the proceeding, which would defeat substitution by a post-filing purchaser. A third line treats the substitution as a procedural rather than substantive question, asking only whether the purchaser meets the 2 per cent threshold and the Section 245(4) good-faith pre-conditions.
The NCLT’s eventual ruling on this question will set the procedural template for every future Section 245 case where defendants attempt to defeat the proceeding by inducing or facilitating petitioner exit. Boards advising on Section 245 strategy now face a forward-looking question about whether share-purchase strategies during litigation will withstand scrutiny.
What Section 245’s Practical Architecture Now Looks Like
The Jindal Poly Films litigation has revealed a procedural framework that has only been theoretically described until now. The admission stage requires the NCLT to be satisfied of the threshold under Section 245(3), the good-faith pre-conditions under Section 245(4), and a prima facie case on the substantive allegations. The public notice phase under Rule 87, using Form NCLT-13, makes the proceeding genuinely representative by inviting other shareholders to join. The post-notice phase, where the case currently sits, allows for intervention applications by regulators and other shareholders.
The reliefs available under Section 245(1)(a) to (g) include declarations of voidness, restraining orders, and damages on behalf of the company. The damages remedy is structurally derivative because recovery flows to the company rather than to individual petitioners, with the petitioners acting as agents for the wider class. This structural feature distinguishes Section 245 from US-style class actions and aligns it more closely with derivative suits in other common law jurisdictions.
Section 245 also reaches beyond the company and its directors. Sub-section (1)(g) and the broader class architecture permit relief against auditors, valuers, and any other person involved in the affairs of the company. The Jindal Poly Films petition has not yet expanded to professional advisors, but the architecture of Section 245 leaves that door open.
What Listed-Company Boards Must Reset Now
The Jindal Poly Films litigation should prompt every listed-company board to review four areas of governance immediately.
The first area is the related-party transaction governance trail. The petitioners’ case is built on staggered RPTs whose cumulative effect was alleged to be obscured. Boards should ensure that audit committee minutes record the rationale for approving each RPT, that valuation reports are obtained for any sale to promoter-linked entities, and that cumulative effect is disclosed under SEBI (LODR) Regulation 23 even where individual transactions fall below materiality thresholds.
The second area is the documentation hygiene of independent director review. Section 245 admission requires only a prima facie case and the satisfaction of pre-conditions. A documented record of independent director scrutiny, dissent where appropriate, and independent valuation will materially affect the prima facie test in any future petition.
The third area is the SEBI investigation defence posture. The Jindal Poly Films case demonstrates that SEBI investigation findings can travel into a Section 245 proceeding via intervention. Companies under regulatory scrutiny should assume that any findings will be available to private petitioners. The disclosure and defence strategy should anticipate that the same set of facts will be litigated in two forums simultaneously.
The fourth area is the directors and officers (D&O) insurance review. Class action exposure under Section 245 is potentially significant in quantum, and most D&O policies were drafted before Section 245 emerged as a live remedy. Coverage review should specifically address Section 245 defence costs, settlement exposure, and the interaction with parallel SEBI proceedings.
Beyond these four, boards should examine internal forensic readiness. The petitioners’ case in Jindal Poly Films relies on an independent forensic report. Companies should anticipate that future Section 245 petitions will be supported by similar reports, either commissioned by activist shareholders or produced by short sellers and proxy advisors. The existence of a contemporaneous internal forensic record and a documented response framework will materially affect litigation outcomes.
Looking Ahead
The 30 April 2026 hearing is the immediate marker. The NCLT will likely take up the SEBI intervention application, the substitution application by the purchaser of Ankit Jain’s shares, and the separate intervention application by another minority shareholder. Whatever the bench rules on these procedural questions will shape the case template for the next several years.
Beyond procedure, the merits adjudication is the larger jurisprudential question. Section 245(1)(g) damages, when finally awarded by the NCLT in a substantive ruling, will create the first concrete framework for class action damages in Indian company law. Whether that framework is calibrated to manageable quantum or unbounded in scale will determine whether Section 245 produces a sustainable enforcement regime or a flood of speculative petitions.
The Section 245 class action has now moved from dormant statute to active jurisprudence in a single case. Every listed-company board in India should treat the Jindal Poly Films litigation as the operating template against which their governance practices will now be measured.
Frequently Asked Questions
What is a Section 245 class action under the Companies Act, 2013?
A Section 245 class action is a representative shareholder proceeding before the National Company Law Tribunal under Section 245 of the Companies Act, 2013. It permits a prescribed number of shareholders or depositors to file a single petition on behalf of a class where the affairs of a company are conducted in a manner prejudicial to the company or its members. Reliefs include declarations of voidness, restraining orders, and damages on behalf of the company. The threshold for a listed company is 2 per cent of the issued share capital, or 100 members, or 5 per cent of the total members, whichever is less.
When was the first Section 245 class action admitted in India?
The National Company Law Tribunal Principal Bench in New Delhi admitted India’s first substantive Section 245 class action on 5 February 2026 in Ankit Jain & Ors. v. Jindal Poly Films Limited & Ors., CP No. 58/245/PB/2024. The National Company Law Appellate Tribunal upheld this admission on 26 February 2026 in Company Appeal (AT) No. 47 of 2026. Although Section 245 was notified on 1 June 2016, no class action had been admitted on the merits at the threshold stage until the Jindal Poly Films order.
Can past or concluded transactions be challenged under Section 245?
Yes. The NCLT and NCLAT both held in the Jindal Poly Films litigation that Section 245 covers past or concluded transactions. The NCLT relied on Section 245(1)(g), which permits damages and compensation claims and presupposes the ability to challenge completed acts. The NCLAT confirmed that the statutory language including “wrongful act or conduct” and “any likely act” extends to both past and prospective conduct.
How does Section 245 differ from Sections 241-242 of the Companies Act, 2013?
Sections 241-242 provide for oppression and mismanagement proceedings, while Section 245 provides for class action proceedings. The two regimes can overlap in subject matter but differ in form and remedy. Section 245 permits collective action on behalf of a class and damages on behalf of the company, while Sections 241-242 generally focus on protecting member interests against oppressive conduct. The NCLT in the Jindal Poly Films case confirmed that overlap between the two does not bar a Section 245 petition from being maintained.
What role can SEBI play in a Section 245 class action?
SEBI may file an intervention application before the NCLT to place its investigation findings on record in a Section 245 proceeding. The Jindal Poly Films litigation is the first case where SEBI has formally sought intervention, and the NCLT issued notice on this intervention on 9 April 2026. SEBI’s intervention does not displace the petitioners but creates a parallel track of regulatory engagement that supplements the private collective action.
Does a Section 245 petition survive divestment by the original petitioners?
The question is unresolved as of 28 April 2026. In the Jindal Poly Films litigation, the original petitioners have divested their shareholding and the purchaser of those shares has filed a substitution application. The NCLT will examine the legality of substitution at the next hearing on 30 April 2026. Section 245 does not expressly address divestment, but the public notice phase under Rule 87 of the NCLT Rules, 2016 makes the proceeding representative of a class, supporting the argument that the petition can continue with substituted petitioners who meet the threshold and pre-conditions.
This analysis was prepared by the Candour Legal team. Candour Legal is a full-service Indian law firm with offices in Ahmedabad, Mumbai and New Delhi, advising on corporate governance, shareholder disputes, securities law, and Companies Act compliance. The firm publishes analytical commentary on developments in Indian law at candourlegal.com.
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