Supreme Court Refers Jindal Poly Films Minority Shareholder's Class Action Dispute To Arbitration

The Supreme Court on Monday referred to arbitration a class action dispute brought by minority shareholders of Jindal Poly Films Ltd. over alleged undervalued related-party transactions.

In doing so, it set aside NCLT and NCLAT rulings that had permitted the shareholders' Section 245 class action petition to proceed.

A bench of Justices Prashant Kumar Mishra and Atul S. Chandurkar passed the order in an appeal filed by Jindal Poly Films against an NCLAT judgment dated February 26, 2026.

The parties jointly requested that the dispute be referred to arbitration. They also placed draft minutes of a consent order before the Court.

Accepting the parties' consensus, the Court appointed Justice Manindra Mohan Shrivastava, former Chief Justice, as the sole arbitrator. It fixed Delhi as the seat of arbitration. The Court clarified that all contentions of the parties would remain open for consideration before the arbitrator.

“The parties have left the choice of Arbitrator upon the Court. We appoint Justice Manindra Mohan Shrivastava, Retd. Chief Justice as the Sole Arbitrator, who shall decide upon the disputes expeditiously. The seat of arbitration shall be Delhi and the Learned Arbitrator may decide upon his own fee in consultation with the parties. Needless to add, the order dated 05.02.2026, passed by NCLT and the Impugned Order passed by the NCLAT, which pertained to maintainability before NCLT, are set aside. All contentions of the parties are kept open,” the Court noted.

Jindal Poly's appeal arose from an NCLT Principal Bench order dated February 5, 2026. The tribunal had rejected the company's objection to the maintainability of a class action petition filed under Section 245 of the Companies Act and directed issuance of a public notice to shareholders. The NCLAT subsequently upheld that order and dismissed the company's appeal.

According to the NCLAT judgment, the dispute stemmed from a petition filed by minority shareholders, including Ankit Jain, who collectively held 4.99% of Jindal Poly Films' share capital.

The shareholders alleged that the company and its promoters undertook undervalued related-party transactions involving investments in group entities Jindal Powertech and Jindal Thermal. They claimed the transactions caused substantial losses to the company and public shareholders, while promoter-linked entities benefited at the expense of minority investors.

Among other allegations, the shareholders contended that investments made by Jindal Poly Films in Jindal Powertech and Jindal Thermal were sold to promoter-linked entities at significantly undervalued prices. They also questioned the write-off of loans and other transactions involving the group companies, alleging that the transactions resulted in losses running into thousands of crores of rupees.

While dismissing Jindal Poly Films' appeal, the NCLAT had held that Section 245 was broad enough to cover completed transactions and not merely continuing acts. The appellate tribunal observed that “the transactions which can be impugned are not limited to being continuing in nature but also include the transactions already concluded.”

The NCLAT had also held that “the provisions of Section 245 enable Petitioners, stock holders to initiate proceedings for the benefit of the company also.”

With both sides agreeing to resolve the dispute through arbitration, the Supreme Court disposed of the appeal.