NCLAT Dismisses Jindal Poly Films' Appeal Challenging Maintainability Of Minority Shareholders' Class Action Suit
The National Company Law Appellate Tribunal (NCLAT) on Thursday dismissed an appeal filed by Jindal Poly Films Limited challenging an order of the National Company Law Tribunal that had allowed a class action petition under Section 245 of the Companies Act, 2013 to proceed against the company.
The appeal was heard by a bench comprising Judicial Member Justice Yogesh Khanna and Technical Member Ajai Das Mehrotra, which declined to interfere with the NCLT's findings and dismissed the matter at the threshold.
The appeal arose from an order passed by the NCLT, Delhi Bench, which rejected preliminary objections raised by Jindal Poly and held that the class action petition filed by certain minority shareholders under Section 245 was maintainable. The NCLT had concluded that the petitioners satisfied the statutory thresholds and that the allegations disclosed issues warranting adjudication on merits.
The shareholders had alleged acts prejudicial to the interests of members and the company, and sought collective reliefs as contemplated under Section 245, including directions against the company's management.
Before the NCLT, and subsequently in appeal, Jindal Poly argued that this class action petition was not maintainable. The company contended that the petitioners had failed to meet the mandatory requirements under Section 245, including eligibility thresholds. It was further argued that the petition was misconceived, lacked specific pleadings demonstrating prejudice to members as a class, and was an abuse of the process intended to exert pressure on the management.
The company maintained that permitting the petition to proceed would have serious reputational and commercial ramifications, and therefore sought dismissal of the proceedings at the preliminary stage.
On the other hand, the shareholder-petitioners maintained that they fulfilled the numerical and shareholding requirements prescribed under Section 245. They argued that the petition disclosed substantive allegations of conduct prejudicial to the interests of the company and its members, and that such issues could only be examined after a full hearing.
They contended that the NCLT had rightly limited itself to examining maintainability at the threshold stage and had not entered into the merits of the dispute.
After hearing the matter at length, the NCLAT refused to interfere with the NCLT's order. The Appellate Tribunal dismissed the appeal, thereby allowing the Section 245 class action proceedings to continue before the NCLT.