This piece was originally published on Chambers & Partners at: Dispute Resolution 2026 – India | Global Practice Guides | Chambers and Partners

Introduction – protecting interests of a “class” in India

A class action is a form of representative litigation in which one or more people litigate on behalf of a wider group whose claims share a common interest. The eventual decision in a class action ultimately binds (or otherwise affects) the whole group rather than only the named parties. The model of class action is typically justified where separate cases would be impractical, would risk inconsistent outcomes, or would make enforcement economically irrational for individual claimants.

India permits class-action style proceedings, but it does so through specific statutory and procedural “representative” mechanisms rather than through a single, general-purpose class action regime of the kind associated with the United States of Americas’ federal or state-specific procedures.

Public interest litigation (PIL) in India is not, in strict procedural terms, a “class action suit”, even though a successful PIL often produces class-wide or public-wide benefits. The primary difference is that a class action is ordinarily a private law vehicle designed to resolve many similar individual claims through a representative plaintiff, with procedural safeguards such as court permission, notice and binding effect on the represented class. By contrast, a PIL is a public law writ proceeding brought under the Constitution of India, 1950 (typically under Article 32 before the Supreme Court, or Article 226 before a High Court) to vindicate constitutional or legal duties, commonly against the state or public authorities. PIL is driven more by standing and public interest considerations than by class representation mechanics.

In the private law sphere, Indian law recognises representative suits under the Code of Civil Procedure, 1908 (CPC) in relation to disputes covering commercial issues such as breach of contract or tortious claims. Group complaints relating to breach of Indian consumer laws are also recognised under the Consumer Protection Act, 2019. Class actions in relation to investor or corporate governance issues is recognised under Section 245 of the Companies Act, 2013 (the “Companies Act”).

This article focuses on Section 245 of the Companies Act, which was enacted over a decade ago but has remained virtually untested and unused. A recent investor-led dispute concerning allegations of fraud and diversion in a public listed company brought Section 245 of the Companies Act back from the abyss. We discuss the recent developments in class action jurisprudence under Section 245 of the Companies Act and how such proceedings are powerful tools to agitate shareholder/investor grievances in companies plagued with mismanagement or misgovernance.

The Jindal Poly Films judgment

The decision in Jindal Poly Films Ltd v Ankit Jain, 2026 SCC OnLine NCLAT 178, marks the first instance in India in which the National Company Law Tribunal (NCLT) has admitted a class action petition under Section 245 of Companies Act. NCLT’s order admitting the class action petition was challenged in appeal and upheld by the National Company Law Appellate Tribunal (NCLAT).

Certain minority shareholders of Jindal Poly Films Ltd (including Ankit Jain, Rina Virendra Jain and Ruchi Jain Hanasoge) collectively held 4.99% of the company’s paid-up share capital. These minority shareholders filed a class action under Section 245 as they were aggrieved with the management of Jindal Poly Films Ltd. They challenged a set of related-party and promoter-linked transactions and alleged that minority shareholders had suffered a loss due to undervalued sale of equity shares. The minority shareholders sought corrective and compensatory reliefs, including reversal of the undervalued transactions and compensation in respect of losses on account of related-party transactions.

Jindal Poly Films Ltd challenged the maintainability of the class action petition and asserted that the class action could not be entertained by the NCLT. Jindal Poly Films Ltd’s primary objection was that the petition was a derivative action dressed up as class action petition under Section 245. Jindal Poly Films Ltd invoked the rationale that shareholders do not have rights over the assets of a company. It asserted that the amounts from the transactions reversed by NCLT will ultimately come back to the company (Jindal Poly Films Ltd) rather than to the individual shareholders. Jindal Poly Films Ltd consequently argued that the allegations of the class action petitioners constituted an oppression and mismanagement claim under Sections 241–242 of the Companies Act rather than Section 245 of the Companies Act.

The NCLT rejected this characterisation by its order dated 5 February 2026 and rejected Jindal Poly Films Ltd’s objections on maintainability. While doing so, the NCLT focused primarily on two questions: first, whether the class action petitioners met the prescribed numerical or shareholding threshold; and second, whether the petition pleads a prima facie “opinion” that the affairs of the company are being conducted in a manner prejudicial to the interests of the company or its members. On both counts, the NCLT found that the class action petitioners satisfied the requirements and refused to dismiss the class action at the stage of maintainability.

Jindal Poly Films Ltd also argued that Section 245 of the Companies Act is inherently preventive in nature, applying only to present and continuing conduct. It asserted that Section 245 of the Companies Act cannot be used to challenge past action and does not envisage a challenge to concluded transactions. Rejecting this argument, the NCLT held that Section 245 does not restrict relief to prospective or ongoing acts. The NCLT clarified that class action petitions under Section 245 of the Companies Act would include past, present and continuing actions since Section 245 envisages claims for damages, compensation and “any other remedy”. The NCLT held that this necessarily presupposes the ability to challenge past wrongful acts.

Ingredients of a class action under Section 245 of the Companies Act

Section 245 of the Companies Act provides a representative remedy to members, depositors or any class of them, who meet the eligibility thresholds prescribed in the statute and the NCLT Rules. The ingredients are as follows.

• Eligibility threshold – in a company having share capital, the statute contemplates applications by both members and depositors.
  1. In case of members, an application may be brought by not less than 100 members or such percentage of total members as may be prescribed, whichever is less, or by members holding not less than such percentage of issued share capital as may be prescribed. Notably, for listed companies, there is an additional requirement that the members hold at least 2% of issued share capital.
  2. In case of depositors, the threshold is determined based on both the number of depositors and the proportion of total deposits owed.
• Prima facie opinion – this petition is triggered when eligible members or depositors are of the opinion that the management is conducting the company’s affairs in a manner prejudicial to the interests of the company or its members or depositors.

Distinction from Section 241 of the Companies Act

It is important to appreciate the difference between the class action remedy under Section 245 of the Companies Act and the oppression and mismanagement remedy under Section 241 of the Companies Act. Although Sections 241 and 245 of the Companies Act may both be invoked in contexts involving alleged managerial or promoter misconduct, they operate differently in both scope and architecture.

Section 241 of the Companies Act provides a remedy against oppression and mismanagement that is typically pursued exclusively by members in their individual capacity, subject to the eligibility threshold. It involves an application made by not less than one hundred members or one-tenth of total number of members. Here, the focus is on protecting members from conduct that is oppressive to members, prejudicial to their interests or contrary to the public interest.

Section 245 of the Companies Act, in contrast, is structured as a collective or representative remedy available to members and depositors, acting as a class. It is triggered where the affairs of the company are being conducted in a manner prejudicial to their collective interests, and it incorporates specific procedural safeguards for class actions, enabling a group to seek relief on behalf of all similarly placed stakeholders.

The reliefs under the two provisions are also distinct. Section 242 read with Section 241 of the Companies Act confers a remedial toolkit to bring the matters complained about to an end. It includes orders that can regulate the affairs of the company, ensure proper conduct, direct purchase of shares, impose restrictions on share transfers or allotments, terminate or modify agreements, remove managerial personnel or directors and grant other just and equitable reliefs. In essence, the idea is to undo past misconduct and put a supervisory/regulatory mechanism in place.

Section 245 of the Companies Act, on the other hand, provides a structured class action framework with enumerated injunctive and declaratory remedies and, significantly, enables claims for damages or compensation. Injunctive and declaratory reliefs (such as restraining ultra vires acts, restraining breaches of the memorandum or articles, and declaring certain resolutions void) can also be issued under Section 245.

The NCLT in Jindal Poly Films Ltd also noted this distinction between the provisions and stated that the availability of Sections 241–242 of the Companies Act does not foreclose a Section 245 application where the eligibility and prima facie requirements are met. The two remedies, though potentially overlapping in their factual predicates, are conceptually and procedurally independent.

Indian v US jurisprudence

The Indian class action framework under Section 245 of the Companies Act invites comparison with the well-established class action regime in the United States of America. Class actions in the United States are maintained through judicial certification, which requires satisfaction of four key prerequisites: (i) numerosity – ie, a sufficiently large class; (ii) commonality – ie, shared questions of law or fact; (iii) typicality – ie, the claims or defences of the representative party are typical of those of the class; and (iv) adequacy of representation. United States jurisprudence on these requirements is extensive.

West v Randall, 29 F. Cas. 718 (C.C.R.I. 1820), one of the earliest class action cases, addressed the necessity of joining all interested parties. Smith v Swormstedt, 57 US 288 (1853), established the foundational principle that where the parties interested in a suit are numerous and the subject matter is common to all, a court of equity may permit a portion of the parties to represent the entire body. In addition, the Tooley test, articulated in Tooley v Donaldson, Lufkin & Jenrette, Inc., 845 A.2d 1031 (Del. 2004), provides the analytical framework for distinguishing between direct and derivative actions, turning on who suffered the alleged harm and who would receive the benefit of any recovery.

The Indian statutory framework under Section 245 of the Companies Act does not adopt the judicial certification approach. Instead, Section 245 prescribes the numerical thresholds as eligibility criteria and requires the NCLT to form a prima facie opinion on the prejudicial nature of the conduct complained about. The United States prerequisites of commonality, typicality and adequacy of representation do not find an express statutory equivalence in Section 245 of Companies Act, although the requirement that the class action petitioners share a common opinion regarding prejudicial conduct serves a functionally analogous purpose. The application of these principles in India is likely to be tested in the future.

A notable convergence between the two systems is the opt-out mechanism. Under the United States framework, all affected persons are automatically included in the class unless they explicitly exclude themselves. Rule 86 of the NCLT Rules provides a comparable mechanism in the Indian context, facilitating broader participation and enhancing the efficacy of class action litigation.

A key distinction drawn by the NCLT in Jindal Poly Films is the principle that Section 245 of the Companies Act is a self-contained statutory remedy shaped by the Indian corporate and regulatory context, and that courts cannot mechanically transplant foreign jurisprudence into the Indian framework. While the United States experience remains instructive, the NCLT’s approach signals that the Indian class action regime will develop along its own doctrinal lines.

Class action under other statutes

While class action proceedings have remained relatively uncommon under the Companies Act and before the NCLT, notable developments have emerged in the context of representative actions under the CPC and recognised association under the Consumer Protection Act.

Order I Rule 8 of the CPC provides that where there are numerous persons having the same interest in one suit, one or more such persons may, with the permission of the court, sue or be sued, or may defend, on behalf of all persons so interested. The rule also permits the court to direct that one or more persons may sue or be sued, or may defend, on behalf of all. This is the CPC’s primary analogue to the “representative plaintiff/class representative” concept. The CPC restricts abandonment, withdrawal and compromise in representative suits by tying those steps to notice obligations, and it provides that a decree passed in such a suit is binding on all persons on whose behalf or for whose benefit the suit is instituted or defended.

Further, Section 91 of the CPC enables suits in respect of public nuisance and other wrongful acts affecting or likely to affect the public. The Advocate General may institute such a suit, or with the leave of the court by two or more persons, even if those persons have not suffered “special damage”. Although not always labelled a “class action” in practice, it is structurally a public-facing representative mechanism because it permits relief for a public wrong without requiring each affected person to sue individually.

The Consumer Protection Act, 2019 defines “complainant” to include, among other categories, “one or more consumers, where there are numerous consumers having the same interest”. It also expressly provides, in Section 35 of Consumer Protection Act, 2019, that a complaint may be filed with the District Commission by “one or more consumers, where there are numerous consumers having the same interest, with the permission of the District Commission, on behalf of, or for the benefit of, all consumers so interested”. This is the statutory backbone for consumer class complaints in India.

This mechanism is conceptually closer to a classic class action than many CPC representative suits because consumer litigation frequently concerns standardised products, standard-form contracts or uniform practices affecting large groups.

Apart from Section 245 of the Companies Act, Section 37 of Companies Act also provides that a suit may be filed, or other action taken, under specified prospectus liability provisions by “any person, group of persons or any association of persons” affected by a misleading statement or the inclusion or omission of any matter in the prospectus. This provision is not the same as Section 245 of Companies Act, but it is important because it explicitly recognizes group and association litigation as a mode of enforcing statutory liabilities in the securities-issuance context.

Conclusion

The admission of the first-ever class action suit under Section 245 of the Companies Act, as seen in Jindal Poly Films is an indication of a broader structural evolution within Indian corporate governance. It reflects a gradual, yet discernible, shift towards a more dispersed shareholding model, akin in certain respects to the United States corporate framework, where companies operate with a wide base of shareholders rather than concentrated promoter control. Correspondingly, there has been a marked increase in awareness among minority shareholders regarding their statutory rights and remedies. This growing consciousness is likely to translate into more active enforcement of governance standards, particularly to ensure that the affairs of a company are conducted strictly in accordance with its Articles of Association and in a manner that is not prejudicial to the interests of the company or its members.