- Minority shareholders allege Jindal Poly Films case was diverted to arbitration without their consent
- About 40,000 public shareholders were not informed before dispute moved to private arbitration
- Class action accused company of siphoning Rs 2,500 crore via related-party transactions
Minority shareholders in Jindal Poly Films say they were kept in the dark as India's first admitted shareholder class action was abruptly diverted to arbitration, alleging that a sequence of events involving a change in petitioners and a joint legal strategy effectively stripped tens of thousands of investors of a statutory remedy.
In a letter from minority shareholders seen by NDTV Profit, investors representing part of the class say “approximately 40,000 public shareholders” were neither informed nor consulted before the dispute was referred to private arbitration, despite the case having already been admitted by the National Company Law Tribunal and upheld on appeal.
The letter goes further, alleging that the sequence of stake acquisition, substitution and subsequent consent to arbitration “bears the unmistakable hallmarks of a pre-arranged strategy to defeat the class action.”
Jindal Poly Films and Monet Securities are yet to respond to a request for comment.
The class action, filed in 2024, accused the company of siphoning more than Rs 2,500 crore through related-party transactions and alleged governance lapses. The case crossed a major threshold in February 2026 when the NCLT admitted it under Section 245 of the Companies Act, marking the first time such a shareholder class action had proceeded in India.
The admission was upheld by the National Company Law Appellate Tribunal later that month, and the proceedings expanded to include additional minority shareholders and an intervention by the Securities and Exchange Board of India, which had already identified alleged losses to public investors exceeding Rs 760 crore.
The trajectory of the case changed in March. The original petitioner, Ankit Jain, exited the company after selling his stake. Monet Securities, which had acquired shares in the same period, moved to replace him as the lead petitioner and was formally substituted in May.
Within weeks of that substitution, both Monet Securities and Jindal Poly Films jointly approached the Supreme Court, seeking a referral to arbitration. On June 8, a vacation bench allowed the request, set aside the earlier tribunal orders, and disposed of the case without examining the underlying allegations.
For minority shareholders, the abrupt shift has raised fundamental concerns about representation and due process in class actions.
“The company defending the class action and the shareholder prosecuting it suddenly appeared on the same side,” one group of investors said, arguing that the move diverted the matter into a private proceeding “where the vast majority of affected shareholders would have no voice, participation, or remedy.”
At the core of their objection is the nature of a Section 245 claim itself. Once admitted, such proceedings are typically viewed as representative of a wider class of shareholders, rather than a dispute confined to the named petitioner.
Minority shareholders question how a substituted petitioner could agree to arbitration without broader consultation, asking whether a statutory class remedy could effectively be settled through bilateral consent between a company and a single shareholder.
It adds that the shift has effectively converted what was an “in rem” proceeding involving a class of investors into an “in personam” dispute between two parties.
The absence of a merits hearing is another point of contention. Minority shareholders note that the matter was disposed of without consideration of the allegations, SEBI's findings, or submissions made by intervening investors, raising questions about whether the statutory framework provides adequate safeguards once a class action is admitted.
Legal experts say the development highlights a potential gap in India's class action architecture, where the law sets thresholds for filing such claims but offers limited guidance on how they may be settled or withdrawn after admission.
Minority shareholders say they are evaluating their next steps, including possible legal remedies to challenge the arbitration referral or seek protection for the wider class.
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