1. Facts of the Case
The petitioners were shareholders of Jindal Poly Films Ltd., collectively holding 4.99%
of the share capital. They filed a petition under Section 245 alleging that certain
transactions involving OCPS and RPS issued/sold to SSJ Trust and Jindal Poly
Investment were prejudicial to the company and its shareholders.
They sought compensation/damages and other appropriate reliefs under Section 245.
2. Arguments of Respondents
The respondents argued that:
The petition was not maintainable under Section 245.
The matter should instead be dealt with under Sections 241–242 relating to
oppression and mismanagement.
The transactions were past/concluded transactions, and therefore could not be
challenged under Section 245.
The petition was essentially a derivative action on behalf of the company.
3. Issue
Whether a shareholder class action under Section 245 can be maintained in respect of
past/concluded transactions, and whether the availability of the remedy under Sections
241–242 prevents a shareholder from filing a Section 245 petition.
4. NCLTs Decision
The NCLT rejected the maintainability objections and allowed the petition to proceed.
It held that:
Past or concluded transactions can be challenged under Section 245; the
provision is not restricted only to future or continuing transactions.
The availability of a remedy under Sections 241–242 does not automatically bar
a petition under Section 245.
The petitioners 4.99% shareholding satisfied the applicable threshold.
Foreign/US concepts of direct or derivative actions cannot be mechanically
applied instead of the Indian statutory framework under Section 245.
5. Important Point
The NCLTs order was only on maintainability. It did not finally decide that the
OCPS/RPS transactions were fraudulent, illegal or wrongful. The matter was allowed to
proceed further after issuance of notice.
Key Learning
Section 245 is not limited to future transactions. A qualifying shareholder can bring a
class action concerning past/concluded transactions, and the mere availability of an
oppression and mismanagement remedy under Sections 241–242 does not
automatically prevent a Section 245 petition.
Easy memory line:
Ankit Jain = Section 245 + 4.99% shareholders + past transactions allowed + 241–242
not an automatic bar + only maintainability decided.