Shyam Jindal and Subhadra Jindal are trustees of the Shyam Sunder Jindal (SSJ) Trust, a promoter group trust linked to the BC Jindal Group, a films-to-power group. Besides Jindal Polyfilms, the group has several companies such Jindal Poly Investment, Jindal Powertech, Jindal Thermal, Concatenate Advest Advisory, among others.
The case is the first time that Section 245 of the Companies Act, 2013, which allows shareholders or depositors holding at least 2% of a company’s shares to collectively take action against fraud, mismanagement, or unfair practices by promoters, is being used in a legal challenge.
The key difference from Section 241 is the threshold of shareholding of shareholders: under Section 241, it is usually 10% or more. In other words, Section 245 protects shareholders with a smaller holding.
Globally, class action lawsuits are widely used in the US, Canada, and UK, and in a more limited way in countries like France, Germany, and Japan. In India, while Section 245 is now being tested, minority shareholders previously filed complaints under Section 241.
The Jindal Poly Films case marks the moment Section 245 has become a credible legal instrument from a dormant provision, said Gaurav Dayal, executive partner at Lakshmikumaran & Sridharan Attorneys. “For nearly a decade, it remained largely theoretical. The outcome will either empower minority shareholders to claim damages or limit future collective shareholder litigation in India.”
The case began in March 2024, when three shareholders Ankit Jain (3.06% shares), Rina Virendra Jain (0.94%), and Ruchi Jain Hanasoge (0.99%) approached the National Company Law Tribunal (NCLT), Delhi. In the last hearing on 11 September, the NCLT sought notes on US class action law and adjourned the matter to 8 October for conclusion of arguments.
In an unrelated development, the offices of BC Jindal group in Delhi and Hyderabad were searched late in September over suspected violations of the Foreign Exchange Management Act in some overseas investments.
Intra-group deals
According to the petition seen by Mint, shareholders alleged that promoters and directors caused wrongful losses exceeding ₹2,500 crore by selling key investments at heavily undervalued rates to SSJ Trust, linked to promoter Shyam Sunder Jindal.
A maze of group companies and trusts were used to move money and assets and deliver wrongful gains to the BC Jindal group promoters, it adds. At the centre of this is the SSJ Trust, which controls several group companies.
The petition alleges that between 2013 and 2017, Jindal Poly Films invested around ₹703.79 crore in Jindal Powertech and its subsidiary Jindal India Thermal Power through 0% preference shares. Both companies were controlled by the same promoter family via the SSJ Trust. Both the buyer companies were in poor financial health.
Later, in 2020-21, Jindal Powertech and Jindal Thermal entered into debt settlement agreements with banks, resulting in the waiver of over ₹7,000 crore in debts and significantly improving the companies’ valuation. Jindal Poly Films itself funded these repayments with fresh loans of over ₹400 crore.
Soon after, Jindal Poly Films sold its entire investment in Jindal Powertech at a heavily undervalued price:
- optionally convertible preference shares (OCPS) worth ₹440.2 crore were sold to SSJ Trust for just ₹66.03 crore, and
- redeemable preference shares (RPS) worth ₹263.59 crore were sold to Jindal Poly Investment for ₹39.53 crore.
The plea alleges that in doing so, the promoters deprived Jindal Poly Films and its minority public shareholders of the benefit of a fair value and to ensure continued promoter control over Jindal Powertech.
“The loss caused to the company by the sale of OCPS and RPS is estimated at ₹2,518.45 crore ( ₹2,268.03 crore plus ₹250.42 crore), with the corresponding benefit accruing to the promoter entities,” the petition states.
The petitioners are claiming damages and compensation against the directors, promoters, and key managerial personnel.
The lawsuit mainly targets Shyam Sunder Jindal, Subhadra Jindal, and Bhavesh Jindal, along with certain company directors, including Sonal Agarwal, Sanjeev Aggarwal, Rathi Binod Pal, Sanjeev Saxena, Devinder Kumar Rithaliya, Vijender Kumar Singhal, as well as the company’s current CEO Vinod Kumar Gupta and former non-executive director Punit Gupta.
Keenly watched
Experts said minority rights among Indian companies will be reinforced with this case and top management will need to be sensitised. “We need engagements not just before annual general meetings but throughout the year. Firms need to understand the growing importance of minority shareholders,” said the senior executive of a Mumbai-based energy firm, who requested anonymity.
Section 245 was introduced following the J.J. Irani Committee (2005) recommendations and in the wake of the Satyam scam (2009) to strengthen investor protection and accountability. Despite being notified in 2013, it remained largely dormant due to procedural hurdles and lack of awareness until the Jindal Poly Films case revived it.
Legal partners say the case is likely to push companies towards more transparency, independent valuations, and scrutiny in promoter-related transactions.
“Organizations should adopt stricter protocols to ensure valuation processes are transparent, approved by independent directors, and subject to scrutiny. Enhanced transparency is particularly critical in transactions involving promoter-controlled entities,” said Samiron Borkataky, partner at Kochhar & Co, who handles disputes related to shareholder matters.
The market regulator, Sebi, protects minority investors through Listings Obligations and Disclosure Requirements, the Takeover Code, insider trading rules, majority-of-minority approvals, grievance redressal, and proxy advisory frameworks.
Lawyers attribute the rise of minority shareholder activism in India to stronger legal safeguards, greater awareness, and professionalized investing.
“The new generation of investors are not legacy stakeholders. They are professionals, venture capitalists, or retail investors who actively track governance trends, regulatory filings, and market signals,” said Aditya Bhattacharya of King Stubb & Kasiva. “Minority shareholders today are strategic, not powerless.”
The legal counsel for the petitioners declined comment since the case is before NCLT. “I will be unable to comment on the specific facts of the case, since the matter is currently sub-judice,” said Vaibhav Kakkar, Senior Partner at Saraf and Partners.
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