Jindal Poly Tells NCLAT Class Action Order Hit Share Price, Seeks Interim Relief

The National Company Law Appellate Tribunal (National Company Law Appellate Tribunal) on Monday part-heard Jindal Poly Films Limited's plea for interim relief in its appeal against the admission of a shareholder class action, after the company told the tribunal that the NCLT order had adversely affected its share price. The tribunal will continue hearing the appeal tomorrow.

The appeal arises from an order passed on February 5 admitting a class action filed by three minority shareholders holding 4.99% of the equity of Jindal Poly Films Limited.

The shareholders have alleged that undervalued sales of optionally convertible preference shares and redeemable preference shares in Jindal Powertech, loans advanced to Jindal Thermal, and undervalued equity transfers caused losses exceeding Rs 2,500 crore to the company and its public shareholders.

The matter was heard by a bench comprising Judicial Member Justice Yogesh Khanna and Technical Member Ajai Das Mehrotra.

Senior Advocate Abhishek Manu Singhvi, appearing for Jindal Poly, challenged the maintainability of the Section 245 petition. He argued that the dispute concerns company-specific and in personam claims and does not involve class-wide wrongs contemplated under the provision.

The company submitted that the petition is in substance a derivative or oppression and mismanagement dispute under Sections 241 and 242 of the Companies Act. It argued that the class action route was invoked to bypass higher statutory thresholds.

Jindal Poly also submitted that the admission of the class action has already caused reputational and market harm. It pointed to a fall in the company's share price after the NCLT order.

"The company suffered, and, my lord, the whole thing already tanked. Between Friday and now, he has already caused a huge net worth loss to me," he said.

The company further relied on Section 245(4), arguing that the NCLT failed to form a proper prima facie opinion before admitting the class action and directing issuance of public notice.

The NCLAT did not grant any interim relief on Monday and will continue hearing the appeal tomorrow.