Ankit Jain & Ors. Vs Jindal Poly Films Limited & Ors. (NCLT Delhi)
Introduction: Activating a Dormant Remedy
In the landmark case of Ankit Jain v. Jindal Poly Films Limited (JPFL), the collective shareholder interest under Section 245 of the Companies Act 2013 (Companies Act), as foreseen by the JJ Irani Committee, has finally been invoked. Allegations of financial manipulation are serious. This case entails a Related Party Transaction (RPT), the sale of shares to a promoter’s trust, which has resulted in a loss of INR 2,268 crore and an INR 90 crore write-off of advance. This reflects the serious vulnerability of minority shareholders in the Indian corporate scenario dominated by promoters.
Furthermore, as everyone waits for the final findings of JPFL before the National Company Law Tribunal (NCLT), the issue is important for evaluating whether India’s class action regime can be implemented effectively. This paper argues that before Section 245 of the Companies Act can evolve from a moribund statute to an effective tool of corporate governance, the courts need to cross three sequential hurdles.
First, it has to overcome the procedural obstacle of information asymmetry, which requires petitioners to provide information that is exclusively within the custody of the respondents. Second, it has to clarify the temporal uncertainty in the expression “are being conducted,” which threatens to exclude past, discovered misbehaviour. Third, it has to address the enforcement difficulty of translating a judgment against a promoter-controlled company into some meaningful restitution for the benefit of the shareholders. The main question that arises out of this is as to whether this section remains as ink on the paper or formulates for an effective tool of accountability.
