Section 245 of the Companies Act, 2013 covers the provisions of class action suit. Basically, the provisions of class action suit safeguards the interest of the members/ depositors against the prejudicial/ unlawful/ wrongful conduct of the company/ directors/ any other related person.
Class action suit was notified under company law on 1st June 2016. Class action suit basically empowers members/ depositors to file an appeal before the tribunal in any of the following case-
Any member/ members or depositor/ depositors, on behalf of such members/ depositors, may file a class action suit before the NCLT (i.e., National Company Law Tribunal) for any or all the following-
1. To restrain the company from-
a. Committing an act being ultra vires to the articles/ memorandum of the company;
b. Committing breach of any of the provisions of the articles/ memorandum of the company;
c. Carrying out an act contrary to the provisions of the companies act or any other law;
d. Taking an action contrary to any of the resolution passed by the members;
2. To claim damages/ compensation/ demand any other suitable action from/ against-
a. The company/ its directors for any fraudulent, wrongful or unlawful act/ omission/ conduct.
b. The auditor (including audit firm) of the company for any improper/ misleading statement of particulars made in the audit report or for any fraudulent, wrongful or unlawful act/ omission/ conduct.
c. The expert/ advisor/ consultant/ any other person for any incorrect/ misleading statement made to the company or fraudulent, wrongful or unlawful act/ omission/ conduct.
3. To declare the resolution altering the article/ memorandum of the company as void only in case such resolution was passed either-
a. By the suppression of material facts; or
b. Obtained by misstatement to the members or depositors.
Following table figures out the requisite number of members mandatorily required for filing an appeal under class action suit–
|Particulars||The requisite number of members|
|The company having a share capital||1. Lower of the following-
2. In the case of an unlisted company, member/ members holding not less than 5% of the issued share capital of the company.
3. In the case of a listed company, member/ members holding not less than 2% of the issued share capital of the company.
|The company not having a share capital||At least 1/5th of the total number of members.|
Following table figures out the requisite number of depositors mandatorily required for filing an appeal under class action suit–
|Particulars||The requisite number of depositors|
|Depositor/ depositors willing to file an appeal||1. Lower of the following-
2. Depositor/ depositors to whom the company owes 5% of the total deposits of the company.
Once the class action suit is admitted by the Tribunal, the Tribunal will carry out the following-
|Particulars||Amount of penalty payable|
|The company fails to comply with the order passed by the Tribunal.||Penalty payable by the company-
1. Imprisonment – maximum up to the term of three years; and
2. Fine – minimum amount of INR 25,000 and maximum amount of INR 1 Lakhs.
|Application filed by the members/ depositors is either frivolous (playful) or vexatious (troublesome/ irritating).||Tribunal may reject such an application. Additionally, the tribunal may order such applicant to pay costs/ penalty not more than INR 1 Lakhs to the opposite party.|
(Replace with Amendment)