Jindal Poly Films Limited & Ors vs Mr. Ankit Jain & Ors

1

NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH NEW DELHI COMPANY APPEAL (AT) NO. 47 OF 2026 In the matter of: Jindal Poly Films Limited Appellant Vs Ankit Jain & Ors Respondent For Appellant:Dr A.M. Singhvi, Sr Advocate, Mr Ramji Srinivasan, Sr Advocate, Mr Divyam Agarwal, Aniket Aggarwal, Mayank Ratnaparkhe, Priya Chauhan, Kavya Jha, Ayush Yadav, Shefali Monde, Arjun Bhatia, Advocates. For Respondent:Mr. Sunil Fernandes, Sr Advocate, Ms Shankari Mishra, Advocate for R16. Mr Abhijeet Sinha, Sr Advocate with Mr. Bishwajit Dubey, Mr Saikat Sarkar, Advocates for R4 to 6. Mr. Krishnendu Dutta, Sr Advocate with Mr.Shankari Mishra, Ms Niharika Sharma, Mr Harsh Gurbani, Mr Harshit Chauydhary, Advocates for R17. Mr Arun Kathpalia, Sr Advocate and Mr. Abhinav Vasisht, Sr Advocate with Mr. Vaibhav Kakkar, Mr. Abhishek Swaroop, Mr Anupam Prakash, Mr Manav Sharma, Ms Akshita Sachdeva, Ms. Abhilasha Sharma, Ms Diksha, Advocates for R1 to R3. JUDGEMENT

JUSTICE YOGESH KHANNA, MEMBER (JUDICIAL) This appeal challenges the impugned order dated 05.02.2026 passed by

the Ld.NCLT whereby an IA No.132/2024 filed by appellant challenging the

maintainability of Company Petition No.58/2024, filed by Respondent No.1 to 3

before the Ld. NCLT, under Section 245 of the Companies Act, 2013 was

dismissed and consequently the directions were given to issue public notice of

Company Appeal (AT) No. 47 of 2026 2

the Company Petition to all public shareholders of the appellant company in

terms of Rule 87 of the NCLT Rules, 2016.

2. It is the submission of the learned senior counsel for the appellant the

appellant is a public listed company having approximately 40000 public

shareholders and the Respondents No.1 to 3 who had filed the Company Petition

collectively hold only 4.99% of the share capital and that the issuance of notice

has serious repercussion upon the reputation of the appellant company since

the proceedings under Section 245 of the Companies Act, 2013 has wide in-rem

consequences and issuance of public notice has created a situation of panic

amongst its public shareholders, potentially triggering of fall in the share price

of the company; affecting adversely its revenue etc and during the pendency of

the Company Petition before the Ld. NCLT, the appellant's share price had fallen

from Rs 587 on 23.02.2024 to Rs.404/- as on 05.02.2026 i.e. drop of 31% in

value and the notice has caused irreparable loss to reputation and market harm

which cannot be undone. It is the submission of the learned senior counsel for

the appellant the Company Petition is filed only qua three impugned transactions

and all are of years 2019, 2021 and 2022 viz the past transactions, which cannot

be dealt with under Section 245 of the Companies Act, 2013. The said

transactions are as under:-

4.1.1. IMPUGNED TRANSACTION 1: SALE OF RPS AND OPS BY APPELLANT

(i) Between FY 2013 - FY 2017, Appellant invested INR 263.59 crores in Redeemable Preference Shares (RPS) and INR

Company Appeal (AT) No. 47 of 2026 3

440.20 crores in Optionally Convertible Preference Shares (OCPS) of its group company, R-16/ Jindal Powertech.

(ii) R-16/ Jindal Powertech's account was declared NPA on 31 December 2016. Resultantly, by FY 2019, the investments were progressively devalued down to zero in the Appellant's books due to negative net worth and continuous cash losses of R-16/ Jindal Powertech.

(iii) On 29 May 2021, R-17/ Jindal Thermal signed a Master Resolution Agreement with its lenders and settled debt of INR 9,431.49 crores for INR 2,540 crores. On 11 June 2021, R-16/ Jindal Powertech entered into an OTS with its lenders and settled debt of INR 428 crores for INR 103 crores. Consequently, their financial health and the value of the Appellant's investments - was expected to improve.

(iv) However, on 16 March 2023, Appellant sold the OCS investment to SSJ Trust (a promoter group trust) for INR 66.03 crores and the RPS investment to a group company, R-18/ Jindal Poly Investment for INR 39.53 crores.

(v) Contesting Respondents allege that this caused loss of INR 2518.45 crores to Appellant and consequent proportionate loss to public shareholders 4.1.2. IMPUGNED TRANSACTION 2: WRITE-OFF OF LOAN PROVIDED TO R-17/ JINDAL THERMAL: Trade advance of INR 83.85 crores was provided by Appellant to its group company, R- 17/ Jindal Thermal (which operates a power plant) towards purchase of electricity to be generated in the future. This trade advance was converted into a loan in FY 2017. Appellant wrote off the loan in FY 2019. Contesting Respondents allege that this caused loss of INR 127.96 crores to Appellant and consequent proportionate loss to public shareholders. However, despite writing off the earlier loan, Appellant provided fresh loans of INR 150 crores and INR 260 crores to R-17/ Jindal Thermal in FY 2021 and FY 2022respectively.

4.1.3. IMPUGNED TRANSACTION 3: SALE OF INVESTMENT BY APPELLANT'S SUBSIDIARY: By FY 2017, Jindal Films - a wholly owned subsidiary of the Appellant - had acquired 11.41% equity stake in R-17/ Jindal Thermal for INR 31.18 crores. In FY 2021, this investment was sold to Champak Niketan - a company majorly owned by Gunjan Trust (a promoter group trust) for merely INR 6.93 crores. Contesting Respondents allege that this caused loss

Company Appeal (AT) No. 47 of 2026 4

of INR 135.34 crores to Appellant and consequent proportionate loss to public shareholders.

3. The learned senior counsel for the appellant argued that Section 245 of

the Companies Act, 2013 cannot be activated for past and concluded

transactions as it uses the word "are being conducted" which means the act

which warrant interference has to be in praesenti and is contrary to the language

of Section 241 wherein the words "have been" and "are being conducted" are

being used' b) the impugned order is passed merely on the threshold and prima

facie opinion irrespective of the fact Section 245 is not applicable to in-personam

proceedings; and c) none of the provisions under Section 245(4) were delved

upon.

4. Section 245 of the Companies Act, 2013 reads as under:-

245. Class action. -- (1) Such number of member or members, depositor or depositors or any class of them, as the case may be, as are indicated in sub-section (2) may, if they are of the opinion that the management or conduct of the affairs of the company are being conducted in a manner prejudicial to the interests of the company or its members or depositors, file an application before the Tribunal on behalf of the members or depositors for seeking all or any of the following orders, namely:

--

(a) to restrain the company from committing an act which is ultra vires the articles or memorandum of the company;

(b) to restrain the company from committing breach of any provision of the company's memorandum or articles;

(c) to declare a resolution altering the memorandum or articles of the company as void if the resolution was passed by suppression of material facts or obtained by mis-statement to the members or depositors;

Company Appeal (AT) No. 47 of 2026 5

(d) to restrain the company and its directors from acting on such resolution;

(e) to restrain the company from doing an act which is contrary to the provisions of this Act or any other law for the time being in force;

(f) to restrain the company from taking action contrary to any resolution passed by the members;

(g) to claim damages or compensation or demand any other suitable action from or against--

(i) the company or its directors for any fraudulent, unlawful or wrongful act or omission or conduct or any likely act or omission or conduct on its or their part;

(ii) the auditor including audit firm of the company for any improper or misleading statement of particulars made in his audit report or for any fraudulent, unlawful or wrongful act or conduct; or

(iii) any expert or advisor or consultant or any other person for any incorrect or misleading statement made to the company or for any fraudulent, unlawful or wrongful act or conduct or any likely act or conduct on his part;

(h) to seek any other remedy as the Tribunal may deem fit. (2) Where the members or depositors seek any damages or compensation or demand any other suitable action from or against an audit firm, the liability shall be of the firm as well as of each partner who was involved in making any improper or misleading statement of particulars in the audit report or who acted in a fraudulent, unlawful or wrongful manner. (3) (i) The requisite number of members provided in sub-section (1) shall be as under:--

(a) in the case of a company having a share capital, not less than one hundred members of the company or not less than such percentage of the total number of its members as may be prescribed, whichever is less, or any member or members holding not less than such percentage of the issued share capital of the company as may be prescribed, subject to the condition that the applicant or applicants has or have paid all calls and other sums due on his or their shares;

Company Appeal (AT) No. 47 of 2026 6

(b) in the case of a company not having a share capital, not less than one-fifth of the total number of its members.

(ii) The requisite number of depositors provided in sub-section (1) shall not be less than one hundred depositors or not less than such percentage of the total number of depositors as may be prescribed, whichever is less, or any depositor or depositors to whom the company owes such percentage of total deposits of the company as may be prescribed.

(4) In considering an application under sub-section (1), the Tribunal shall take into account, in particular--

(a) whether the member or depositor is acting in good faith in making the application for seeking an order;

(b) any evidence before it as to the involvement of any person other than directors or officers of the company on any of the matters provided in clauses (a) to (f) of sub-section (1);

(c) whether the cause of action is one which the member or depositor could pursue in his own right rather than through an order under this section;

(d) any evidence before it as to the views of the members or depositors of the company who have no personal interest, direct or indirect, in the matter being proceeded under this section;

(e) where the cause of action is an act or omission that is yet to occur, whether the act or omission could be, and in the circumstances would be likely to be--

(i) authorised by the company before it occurs; or

(ii) ratified by the company after it occurs;

(f) where the cause of action is an act or omission that has already occurred, whether the act or omission could be, and in the circumstances would be likely to be, ratified by the company. (5) If an application filed under sub-section (1) is admitted, then the Tribunal shall have regard to the following, namely:--

(a) public notice shall be served on admission of the application to all the members or depositors of the class in such manner as may be prescribed;

Company Appeal (AT) No. 47 of 2026 7

(b) all similar applications prevalent in any jurisdiction should be consolidated into a single application and the class members or depositors should be allowed to choose the lead applicant and in the event the members or depositors of the class are unable to come to a consensus, the Tribunal shall have the power to appoint a lead applicant, who shall be in charge of the proceedings from the applicant's side;

(c) two class action applications for the same cause of action shall not be allowed;

(d) the cost or expenses connected with the application for class action shall be defrayed by the company or any other person responsible for any oppressive act.

(6) Any order passed by the Tribunal shall be binding on the company and all its members, depositors and auditor including audit firm or expert or consultant or advisor or any other person associated with the company.

(7) Any company which fails to comply with an order passed by the Tribunal under this section shall be punishable with fine which shall not be less than five lakh rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years and with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees.

(8) Where any application filed before the Tribunal is found to be frivolous or vexatious, it shall, for reasons to be recorded in writing, reject the application and make an order that the applicant shall pay to the opposite party such cost, not exceeding one lakh rupees, as may be specified in the order. (9) Nothing contained in this section shall apply to a banking company.

(10) Subject to the compliance of this section, an application may be filed or any other action may be taken under this section by any person, group of persons or any association of persons representing the persons affected by any act or omission, specified in sub-section (1).

Company Appeal (AT) No. 47 of 2026 8

5. Qua contention (a) it was argued the acts complained of were concluded

in the years 2019, 2021 and 2022 and thus the remedy lies elsewhere but not

under Section 245 of the Companies Act, 2013.

It was argued that if one peruse sub-section (1) and more specifically sub

sections (a),(b),(d), (e) and (f) it gives power to the Ld. Company Court to restrain

a continuing act which means such act has to be in present and even sub-

sections (g) and (h) of Section 245 have to be read/interpreted in the light of

Section 245(1) (a),(b),(d), (e) and (f) and further Section 245 cannot be held to be

a substitute for Sections 241-242 of the Companies Act, 2013 as it represents

an action in-rem but whereas Sections 241-242 represents in praesenti actions.

6. Qua contention (b) it was argued the Ld. NCLT had only examined the

threshold viz 4.99% of the shareholders who had filed the Company Petition as

also had looked upon only the prima facie opinion of the shareholders and

nothing else. It is the submission sub-section (1) and (4) of Section 245 of the

Companies Act, 2013 have been completely ignored. The impugned order does

not even examine as to if Section 245 is available for past actions, much less the

issue of good faith of Respondents No.1 to 3 in making application or if the

Respondents No.1 to 3 could have pursued their grievance under Sections 241- 242 of the Companies Act, 2013 and lastly the past acts were allegedly ratified

by the Company and shareholders in the respective AGMs. It was the case of

the appellant the impugned order omitted to examine if the transactions

complained of had actually caused any loss to the appellant company or to its

Company Appeal (AT) No. 47 of 2026 9

reputation or such allegations are merely a reflection of the loss that may have

been caused to the company. It was argued the compensation for reflection loss

cannot be addressed to under Section 245 (supra).

7. To make good his argument the learned senior counsel for the appellant

had referred to the following paras of the impugned order to show as to the

reason to pass such an impugned order: -

41. xxxx...All that is required is shareholding of 2% of total share capital as per Rule 84(3)(ii)(b) of the NCLT Rules 2016 and a justifiable prima facie opinion which we observe there is.

The Respondent are at liberty to refute each and every allegation on merits.

42. We refrain from giving an opinion on this issue at present, as we do not want to pre-judge the legal argument on the factual aspects. The Respondents may have a valid defence. For the purpose of prima-facie case to issue notice, we are of the opinion that the ingredients of Section 245 of the Companies Act, 2013 having been satisfied in this case, there is no necessity to go into various factual aspects of the case, as pleaded by the Respondents to come to a conclusion that there is no case under Section 245 of the Companies Act, 2013. This will amount to prejudging the issues.

Thus it is argued the impugned order is passed only upon the threshold

and upon opinion of 4.99% shareholders and nothing else.

8. The learned senior counsel for the appellant referred to the 57th Report of

the Standing Committee of Finance to show that Ministry of Corporate Affairs

had specifically rejected the proposal to include derivative cause under Section

245 of the Companies Act, 2013. Further it is argued Section 245 (1)(g) is also

not applicable to facts as it entails compensation/damages from and against the

Company Appeal (AT) No. 47 of 2026 10

company but not for the company and whereas entire Company Petition is

clothed with the compensation for the company.

9. We have heard the arguments advanced by the learned counsels from both

sides. We find the Respondents have filed the Company Petition on the ground

the financial transactions mentioned in para 2 above were concealed by its

promoters; undervalued it to their own benefits and consequently the promoter

group violated SEBI (LODR) Regulations. Before examining the issues raised it

would be appropriate to give a chart of related companies before us: -

1. Position of Appellant Companies:

Structure of various promoter group entities of the JPFL

SSJ Trust (Promoter group trust, through its trustees R-4 and R-5) 100%

50.99%

Concatenate Advest Jindal Poly Investment & Advisory Private Finance Co. Ltd.

Limited ("Jindal Poly 73.18% ("Concatenate") Investment") Jindal Photo (R-8) (62.80%) (R-18)

Promoter Entities Limited ("Jindal ) Photo") Bhavesh Trust (R-6) (R-6) 49.93% (8.17%) 47.54%

Jindal India Powertech Jindal Poly Films Consolidated Limited ("Powertech") Limited Finvest (R-7) (R-16) (Appellant) (JPFL) (3.57%)

94.07% Public Shareholders (25.46%) Jindal India Thermal Power Limited Company Appeal (AT) No. 47 of 2026 ("Thermal") (R-17) 11

10. Now what we have gathered from the facts is during the financial years

2013-14 to financial year 2016-17, the appellant company had subscribed to the

following number of Redeemable Preference Shares (RPS) and Optionally

Convertible Preference Shares (OCPS) issued by Respondent No.16 in the

following manner: -

Amounts in FY 2013- FY 2014- FY 2015- FY 2016- Total INR crores 14 15 16 17 (% 167.00 38.50 39.29 18.80 263.59 Redeemable shares (% - 191.20 249.00 - 440.20 Optionally convertible shares) Total 167.00 229.70 288.29 18.80 703.79

11. It is alleged by the Respondents there were 44.02 crores of OCPS with face

value of Rs.10 each and total of 26.35 crores of RPS with face value of Rs.10 each

and the terms of issuance of OCPS were (a) there shall be no dividend payable;

and (b) they shall be convertible into equity shares of Rs.10 each on maturity

after five years, which maturity date was later modified in the year 2019-20 by

Respondent No.16 to 10 years instead of 5 years. Similarly, no dividend was

payable on RPS and were made redeemable with only 10% premium in all, at the

end of 15th year. The rational for these investments was Respondent No.17 was

setting up a power plant and had a cost over-run and it was agreed with the

lenders to finance the increased cost and, therefore, Respondent No.18; the

appellant and one M/s Jindal Power Limited, has stepped in to meet such short

fall(s).

Company Appeal (AT) No. 47 of 2026 12

12. It was argued the appellant then wrote off all the RPS and OCPS in its

books in the year 2018-19 for reasons of negative networth; of continuing cash

loss of Jindal Power Tech Ltd i.e. Respondent No.16. It was alleged despite the

negative networth and continued cash loss and contrary to the commercial

prudence/wisdom the appellant continued infusing more money in Respondents

No.16 and 17, during the financial years 2020-21 and 2021-22 and allegedly a

loan of Rs.106.50 crores was converted to RPS worth Rs.108.77 crores to be

redeemed in the financial year 2021-22 and further a loan of Rs.150 crores and

Rs.260 crores was given by the appellant to Respondent No.17 for payment of

debt to secured financial creditors of Respondent No.17 in the financial year

2021-22.

13. Thereafter on 29.05.2021 Jindal Power-Tech/Respondent No.16 had

entered into OTS with IFCI for Rs.103 crores against the debt of Rs.428.32 crores

and whereas M/s Jindal Thermal/Respondent No.17 signed Master Resolution

Agreement for Rs.2541 crores against the debt of Rs.9431 crores, which resulted

in benefit of the said companies viz Respondents No.16 and 17 to the tune of

Rs.7305 crores. Now the appellant, being the funding entity had clear knowledge

of the benefit and valuation increase which enhanced its net worth as the equity

value per share of Respondent No.18 rose from Rs. -35.07 in the financial year

2020-21 to +49.77 in financial year 2021-22. Likewise for Jindal PowerTech i.e.

Respondent No.16 the carrying value of RPS increased from Rs.717 crores in FY

2020-21 to Rs.1682 crores in financial year 2021-22 resulting in the equity value

Company Appeal (AT) No. 47 of 2026 13

rising from -17.84 in financial year 2019-2020 to +45.13 crores in the financial

year 2021-22.

14. It was also alleged in the financial year 2021-22 the appellant sold the

OCPS to its ultimate parent SSJ Trust for Rs.66 crores whereas the subscription

value of those shares was Rs.440.20 crores and fair market value of the said

shares was Rs.2300 crores approximately. The RPS were sold for Rs.39 crores

to Jindal Poly-Investments but whereas the subscription value of those shares

was Rs.2500 crores. It was also argued an independent valuer was engaged by

the appellant for assessing the price of shares and it assessed it as Rs.1.50 per

shares for OCPS and Rs.1.49 per share for RPS as fair valuation, whereas at the

same time the holding company of the appellant i.e. Respondent No.8 herein

went through a merger wherein valuation of the equity of Jindal Thermal,

Respondent No.17 was shown to be Rs.20.53 per share and further Jindal Poly

Investments viz buyer of RPS, in its annual returns for the financial year 2022-

23 stated that Jindal Powertech i.e. Respondent No.16 issued 81 odd lakh shares

of Rs.10 each at premium of Rs.20 per share to Respondent No.8, thus thereby

causing huge monetary loss to the appellant.

15. Now the sale of OCPS and RPS Investment by the appellant to SSJ Trust

and Jindal Poly Investment and Finance Co Ltd were related party transactions

but no disclosures were made to the Stock Exchanges and only when

Respondents No.1 to 3 had highlighted this, the omission was corrected

describing it as an over sight. It was the contention of the respondents firstly

Company Appeal (AT) No. 47 of 2026 14

the sale transaction was grossly undervalued; purposefully structured in a

manner to bypass the statutory obligations under Rule 23 of the SEBI (LODR)

Regulations 2015 to avoid the materiality threshold prescribed therein. Now had

the transaction been valued correctly the materiality threshold would have

required a mandatory approval of majority of the minority shareholders before

the General Body and thus thereby deliberately undervaluing it the directors of

the appellant company in collusion with independent valuers had caused the

minority public shareholders a grave loss and also purposefully violated law viz

Rule 23 of SEBI (LODR) Regulations, 2015. The relevant portion of which is as

under: -

23. Related party transactions.

(1) to (3) ...........

(4) All material related party transactions and subsequent material modifications as defined by the audit committee under sub-regulation (2)] shall require [prior] approval of the shareholders through resolution and [no related party shall vote to approve] such resolutions whether the entity is a related party to the particular transaction or not:

[Provided that prior approval of the shareholders of a listed entity shall not be required for a related party transaction to which the listed subsidiary is a party but the listed entity is not a party, if regulation 23 and sub-regulation (2) of regulation 15 of these regulations are applicable to such listed subsidiary. Explanation: For related party transactions of unlisted subsidiaries of a listed subsidiary as referred above, the prior approval of the shareholders of the listed subsidiary shall suffice] [Provided further that the requirements specified under this sub-regulation shall not apply in respect of a resolution plan approved under section 31 of the Insolvency Code, subject to

Company Appeal (AT) No. 47 of 2026 15

the event being disclosed to the recognized stock exchanges within one day of the resolution plan being approved;]

16. The respondents thus allege concealment of facts; abuse of position to

make wrongful gains from transactions to the prejudice of the

shareholders/company, which fall within the definition of fraud as is in

Explanation to Section 447 of the Companies Act, 2013. It is argued once it

alleged the shares are being undervalued; the transactions being concealed from

shareholders; wrong information being supplied to Stock Exchanges; it all would

cover the facts within the definition of fraud per Explanation of Section 447 of

the Act and thus only a class suit would be appropriate in these circumstances.

17. We have heard the arguments of both the appellants and respondents in

detail.

18. The issues raised by the Learned Senior Counsel for the Appellant can be

culled into three regions: a) the Petition does not satisfy the test of sub-section

1 of Section 245 as it relates to the continuing acts and not the past acts; b) sub

Section (1) (g) of Section 245 cannot be interpreted to include word "for''; c) the

non-consideration of the statutory ingredients of sub Section 4 of Section 245

read with Rule 87(3)(e) of the NCLAT Rules, 2016.

19. Coming to the alleged non-applicability of sub section (1) of Section 245

we need to examine the ingredients of Section 245. In Section 245, a class action

can be brought by group of shareholders or depositors etc. if they are of the

opinion the management and conduct of the affairs of the company are being

Company Appeal (AT) No. 47 of 2026 16

conducted in a manner prejudicial to the interest of the company or its present

members or depositors. Now, the Learned Tribunal while entertaining a petition

under Section 245 first need to determine whether the quorum of filing of such

Petition; being 2% in this case of a listed company, is satisfied and then would

also look into the prima facie opinion of the shareholders. The facts do show

4.99% of the shareholders were of the opinion that the affairs of the company are

being conducted in the manner prejudicial to its interest and of its members.

20. Now in this appeal the distinction between derivative and class suit is

sought to be argued in the context of maintainability of the Company Petition

under Section 245 of the 2013 Act. Section 245 allows a class of members (which

also includes the class of minority public shareholders, as in the present case to

pursue such actions in relation to the management or the conduct of the affairs

of the company which are prejudicial to the interests of the company or its

members or depositors. A bare perusal of the aforesaid provision clearly

demonstrates the Parliament did not intend to limit class action only to actions

that affect the shareholders but to extend them to even actions affecting the

company. Now Section 245 explicitly contemplates class action being filed for

actions which are prejudicial to the interests of not only the members but also

the company. Although the wording of Section 245(1) is very clear as to the

Parliament's intent, the Appellant has sought to rely on response of the Ministry

of Corporate Affairs to a suggestion of the Standing Committee on Finance on

the Companies Bill 2011. Now the concept of class action was considered in the

context of company law in India by the Report of the Expert Committee on

Company Appeal (AT) No. 47 of 2026 17

Company Law 2005 (also known as the J.J. Irani Committee Report). It observed

that, "A situation may arise whereby the interest of the company may need to be

protected from the actions of the persons in control of the company...For this

purpose, the law should provide for 'class action / derivative suits on behalf of

depositors / shareholders". Clearly, the committee expected institution of a class

action by shareholders / depositors where the company itself was a victim at the

hands of the promoters / management, and its interest was required to be

protected.

21. The view of the committee then translated into the Companies Bill, 2009

and the Companies Bill, 2011 and ultimately in Section 245 of the 2013 Act. The

language of the provision remained identical all throughout being, "...affairs of

the company are being conducted in a manner prejudicial to the interests of the

company...". The only change was in shareholding threshold / right to apply -

Companies Bill 2009 empowered even a single member of a company to initiate

class action. The response of the Ministry of Corporate Affairs to the suggestion

of the Standing Committee refers to para 16.25 of the committee's

earlier report 2009-2010) whereby the Standing Committee only suggested

changes to the class action provision in terms of filing threshold / shareholding

eligibility in view of the opinion expressed by Chambers of Commerce to prevent

misuse of the provision against the company.

22. Further the argument of the Appellant that in terms of Section 245(1) (g),

damages or compensation or any suitable action can only be claimed 'from or

against' the company is also equally flawed. Though the prayer (a) of the

Company Appeal (AT) No. 47 of 2026 18

Company Petition is a declaration sought against the act of the company, but

reliefs under Section 245 of 2013 Act can also be claimed against third parties.

Section 245(1)(g)(i) makes it evident that compensation or damage may be

claimed from or against the company or directors or any other person for any

fraudulent, unlawful or wrongful act or conduct. The usage of the term "or"

makes it clear that relief may also be sought against the directors as well.

Further, Section 245(1)(g)(iii) affords claims for damages or compensation or any

suitable action 'from or against' any expert or advisor or consultant or any other

person for any incorrect or misleading statement to the company or for any

fraudulent, unlawful or wrongful act or conduct. Thus, under Section 245(1) of

the 2013 Act, the Ld. NCLT has very wide powers and reliefs thereunder can be

sought against third parties, including directors and promoters of the company.

In any event, Section 245(1)(h), "to seek any other remedy as the Tribunal may

deem fit", is a residuary provision taking within its ambit the matters which are

not subsumed within other sub-clauses. The Hon'ble Supreme Court in CED vs.

Kantilal Trikamlal, reported in (1976) 4 SCC 643, has held that when an

expression is a residuary one, ejusdem generis would not apply. The reliefs

sought in the Company Petition are also maintainable under Section 245 as it

would not be proper for a shareholder to seek compensation from' the company

when the company itself has been a victim of alleged fraud at the hands of the

promoters and the directors - a situation clearly identified in the J.J. Irani

Committee Report, culminating into the language of Section 245 as aforesaid.

When cash / asset of the company has been siphoned off, it would amount to a

Company Appeal (AT) No. 47 of 2026 19

'double blow' for the shareholders, causing further loss of value of the

shareholding of the shareholders. Therefore, the compensation sought in the

Company Petition is first in the Appellant / JPFL and consequently to the

minority shareholders.

23. Section 245(1)(g) provides for claiming damages or compensation or

demand any other suitable action from or against the company; its directors, the

auditor, any other person, etc. Further, Section 245(1)(h) states the application

may be filed to seek any other remedy as the Tribunal may deem fit. Hence, the

usage of the term 'any other suitable action' or 'any other remedy as the Tribunal

may deem fit' confers widest of rights to the eligible petitioner(s) to seek and

widest of power available to the Ld. NCLT. Notably, in Section 245(1)(g)(iii) the

term unlawful or wrongful act or conduct or any likely act or conduct on his part

makes it evident that the transactions which can be impugned are not limited to

being continuing in nature but also include the transactions already concluded.

In fact, the very relief of damages or compensation, as envisaged itself, takes into

account the past actions. Damages or compensation can only be granted for 'past

and concluded' transactions. The term 'or' between 'wrongful act or conduct and

'any likely act' includes both actions already undertaken or any actions which

are likely to occur. In any event, it has been the stand of Respondent Nos. 1 - 3

that the transactions impugned are not 'past or concluded', as alleged or at all.

The impugned transactions have been systematically orchestrated over a period

of time and executed in a manner that its illegality (undervaluation, etc.) was

deliberately, and with fraudulent motive / purpose, never brought to the

Company Appeal (AT) No. 47 of 2026 20

attention and knowledge of the public shareholders. In the present case, the

impugned transactions were never put before the public shareholders either in

EGM or AGM to seek their approval, at the time when the same was being

undertaken. The promoters and the directors intentionally and systematically

undervalued the transactions to deliberately avoid the shareholders vetting and

prior approval. Per Reg. 23 of SEBI (LODR) Regulations, a related party

transaction above the materiality threshold warrants affirmative prior approval

of the shareholders. Undisputedly, the sale of OCPS and RPS investments to SSJ

Trust (Respondent No. 4& 5/Trustees of SSJ Trust) and Jindal Poly Investment

(Respondent No.18) respectively was a related party transaction. Had the said

transactions been undertaken at its actual value (which as per SEBI

investigation was~ INR 800 crores and as per fair market value ~ INR 2500

crores), it would have required the prior approval of the shareholders. Allegedly

the Appellant and other Respondents i.e., the promoters and directors have, so

to say, made the impugned transactions stale' by their own conduct. Having

allegedly concealed the transactions at the time of commission, the appellant

and other Respondents i.e., the promoters and directors now cannot take benefit

of their own wrongdoings.

24. In any event, at the time of institution of the Company Petition, the

instruments i.e., OCPS and RPS sold to SSJ Trust and Jindal Poly Investment

were yet to be converted and / or redeemed by the said entities. Hence, in terms

of prayer 'a' of the petition, the Ld. NCLT could have passed such orders or

directions declaring the sale as null and void, thereby restoring the investments

Company Appeal (AT) No. 47 of 2026 21

back into the Appellant No.1 Company / JPFL. The question of limitation so

alleged is a mixed question of fact and law. The fact when such transactions

came to the knowledge of the respondents would be a relevant fact. Thus on

maintainability qua sub-section (1) of Section 245, we agree with the Ld. NCLT.

25. Now coming to compliance of Section 245(4) we note it cannot be relied

upon to stall the admission of such an application. Notably, in the facts of the

case, only Section 245(4) (a) (whether applicant is acting in good faith and (c)

(whether the cause of action is one which the member could pursue in his own

right) are relevant. Both the aspects have been comprehensively considered by

the Ld. NCLT in the Impugned Order by referring, in detail, of the entire factual

matrix and the pleadings made before it. Per Section 3(22) of the General Clauses

Act, 1897, a thing shall be deemed to be done in

'good faith' where it is in fact done honestly, whether it is done negligently or not.

The same is evident from the fact that much before filing of the Company Petition,

the Respondent Nos. 1 - 3 herein have been vigilant and cognizant of their rights

by writing several communications to the officials of the Appellant, requesting

for the necessary information and clarifications regarding the impugned

transactions. But upon failure of the Appellant to respond adequately, the

Respondent Nos. 1 to 3 approached FTI Consultants to have a thorough

evaluation done of the transactions on the basis of information collated by them

in the public domain. It was only after FTI Consulting completed its evaluation

and opined the impugned transactions have caused significant erosion of value

of JFPL's shares with loss of almost INR 2500 crores, the Company Petition was

Company Appeal (AT) No. 47 of 2026 22

filed. The above aspects have been considered by the Ld. NCLT in its Impugned

Order itself. As regards 245(4) (c), a bare perusal of the reliefs sought in the

Company Petition, including relief (h), would demonstrate the said reliefs are

maintainable under Section 245. Even assuming there could be some overlap

between the relief sought under Section 241 and Section 245, the Respondent

Nos. 1 - 3 are agitating rights of the entire class of minority public shareholders

of the appellant - which they could not have pursued in their own right. The

impugned transactions have caused loss not only to the Respondent No. 1 - 3,

but to the entire class of minority public shareholders. Further Rule 85 of the

NCLT Rules states the NCLT 'may' look into additional grounds, the Ld. NCLT

has in fact considered the said factors individually and rather set them out

explicitly in. Para 44 of the impugned order is relevant in this context.

26. Prima facie the allegations are of illegal and systematic fraudulent acts

perpetrated by JPFL, its promoters and directors and in undertaking the

impugned transactions have caused significant loss to the entire class of

minority public shareholders of JPFL, including Respondent No. 1 - 3. The

investigation conducted by the market regulator SEBI and by the Directorate of

Enforcement (ED) prima facie establish the 'management and conduct of the

affairs of the company (Appellant / JPFL herein) are being conducted in a manner

prejudicial to the interest of the company itself as well as its members'.

27. Nevertheless the impugned order also considered the factors mentioned in

sub-section (1) and (4) of Section 245 in its paras 6, 31, 35, 41, 42 and 47 and

Company Appeal (AT) No. 47 of 2026 23

further qua Rule 84(3) and Rule 85 of NCLT Rules, 2016 in paras 8, 30 and 44;

as more specifically discussed below:

i. The requirement of minimum number of members as per Section

245(1) read with sub-section 3 and Rule 84(3)(ii)(b):

The Ld. NCLT notes that requirement is minimum of 2% of the share capital as

the Respondent company before the Ld. NCLT was a listed company. The Ld.

NCLT further notes that the petitioners cumulatively hold 4.99% of the share

capital and records its satisfaction in para 8 of the impugned order and again in

para 30 of the impugned order.

ii. The requirement of "opinion" of the applicants that the management

or conduct of the affairs of the company are being conducted in the

manner prejudicial to the interest of the company/member/depositor

[Section 245(1):

The Ld. NCLT notes the chart running into four pages reproduced at page 38 to

41 of the impugned order and submission of the Ld. Sr. Counsel that "there is

direct loss to the petitioners because of the fraudulent actions undertaken by

the Respondents". The Ld. NCLT notes in para 23, 32 and 35 its satisfaction

regarding meeting of this criteria. The Ld. NCLT specifically notes in para 31 that

"These transactions are not denied by Respondent albeit the alleged loss. These

we hold are prima facie opinion to initiate the proceedings. It is always open to the

Respondents to deny the allegation and refute the charge.".

iii. The requirement of "good faith" [Section 245(4)(a)]:

Company Appeal (AT) No. 47 of 2026 24

The Ld. NCLT has reproduced the submissions of the petitioners that the

application has been made bonafide and in the interest of justice for securing

the rights of the shareholders (page 41). The Ld. NCLT notes the petitioners

submissions in para 6 that they have sent various emails to the company which

remained un-responded and finally the company through email dated

23.06.2022 refused to share any document and information. The petitioners

then had got transaction examined and evaluated by FTI Consulting, a globally

reputed audit firm which reported that there has been gross under valuation of

transactions resulting in loss in excess of Rs. 2500 crores. The Ld. NCLT has

also noted in para 6 that these factual issues were "primarily not controverted".

iv. Whether the cause of action is one which the member could pursue

in his own right rather than through an order under Section 245. [Section

245 (4)(c)]:

In para 41 of the impugned order, the Ld. NCLT noted that "Section 245 is a

benevolent legislation to shareholders, depositors against the company and to the

company for various reliefs stated therein and for other relief(s) past, present and

future". It further held in the same para 41 that "the provisions of Section 245

enable Petitioners, stock holders to initiate proceedings for the benefit of the

company also. Merely because there is another option available under Section 241- 242 that cannot dis-credit a case under 245 is met by the Petitioners".

v. Consideration whether the act or omission is yet to occur or has

already occurred where its likely to be ratified. [Section 245(e) and (f)]:

Company Appeal (AT) No. 47 of 2026 25

In para 35, the Tribunal examines the issue whether Section 245 can be used

for past, present and continuing actions and notes that these provisions can be

used to remedy past, present and continuing actions and also notes that "the

provisions of Section 245(h) provide for seeking any other remedy as the Tribunal

may deem fit make its amplitude wide".

vi. Whether the class has so many members that joining them

individually would be impractical, whether there are questions of law or

fact common to the class and whether the representative parties will

fairly and adequately protect the interests of the class. (Rule 85 of the

NCLT Rules, 2016):

In para 24 to 29 of the impugned order, the Ld. NCLT notes that intervention

applications have been filed by other petitioners holding 5.03% of the shares,

wherein they have asserted that "the interveners have chosen not to pursue a

separate legal action to avoid multiplicity of lawsuits". The Ld. NCLT notes in para

44 that "This provision seeks to address the issue where there are numerous or

large number of shareholders and joinder of all of them is impracticable, where the

question of law in relation to such fact is common to the class. The representative

parties will fairly and adequately protect the interest of the class. The

'inconsistency or multiple adjudication can be avoided in a class action, which is

not the case in derivative action. Therefore, this Tribunal under Section 245 has

the power to grant relief to shareholders or depositors or class of them, and that

Company Appeal (AT) No. 47 of 2026 26

can include to the benefit of the Company. We primafacie hold in favour of

petitioners for issuance of notice".

28. The Ld. NCLT in the impugned order has satisfied itself regarding

fulfilment of all requisite pre-conditions under Section 245 read with relevant

Rules. Thus, we are not inclined to interfere in the impugned order and hence

the appeal is dismissed.

29. Pending applications No.1020 and 1021/2026 are also dismissed.

[Justice Yogesh Khanna] Member (Judicial)

[Mr. Ajai Das Mehrotra] Member (Technical)

Dated: 26-02-2026

Bm & R.N.

Company Appeal (AT) No. 47 of 2026