In a rare occurrence, the National Company Law Tribunal (NCLT) has admitted a class action lawsuit filed against Jindal Poly Films by minority shareholders who approached the court claiming Rs. 2,500 crore of damages for wrongful actions undertaken by the company, as per an order seen by ET.
NCLT clarified that it had not decided on the merits of the case but rejected arguments of Jindal Poly Films, its promoters and management that the class action lawsuit was not maintainable.
As per the class action lawsuit provisions, a public notice will now be issued and other shareholders can join the list of original minority shareholders who had filed the suit.
The ruling could have wide-ranging implications for the rights of minority shareholders of listed companies in India because class action lawsuits have been rarely tested in courts and there is limited jurisprudence on the subject, legal experts said.
“In the present case we are not convinced on the issue on maintainability raised on behalf of the respondents (Jindal Poly Films). We reject the plea on maintainability.” NCLT ruled.
“Nevertheless, it is made clear that these questions raised are yet to be adjudicated on merits and the same shall be independent from the observation raised herein. The respondents (Jindal Poly Films) are entitled to deny and defend all the allegations on its merits. We do not rule anything on facts for the present,” noted NCLT’s order.
A group of minority shareholders led by Ankit Jain have claimed wrongful transactions undertaken by the company resulted in monetary losses to minority shareholders.
“Today’s hearing was only for order on non-maintainability of class action suit filed by a minority shareholder before the Hon’ble NCLT,” said a spokesperson for Jindal Poly Films.
ET had reported on 28 November that capital market regulator securities and exchange board of India was investigating potential securities laws violations by Jindal Poly Films.
Law firm JSA is representing Jindal Poly Films and Saraf and Partners is representing the minority shareholders.
Further arguments on the merits of the case are now scheduled for 2 April.
Source: Economic Times