India's first public shareholder class action suit moved ahead after the National Company Law Tribunal allowed Monet Securities Pvt. Ltd. to replace the original petitioner in the case against Jindal Poly Films Ltd.
The tribunal approved the substitution after original petitioner Ankit Jain exited his shareholding in the company and Monet Securities acquired those shares. The application sought continuity of the proceedings despite the change in the lead shareholder petitioner.
Jindal Poly Films said the tribunal's decision related only to the substitution of the lead applicant and had no impact on the substance of the case.
"Today, the Hon'ble National Company Law Tribunal (NCLT) allowed the substitution of new shareholder as lead applicant after the exit of original lead applicant in the ongoing case. This does not have any implications or bearing on the merits of the case," a Jindal Poly Films spokesperson said.
The company said its business decisions were taken under "commercial wisdom" and with approvals required under applicable laws.
"We wish to reiterate that all business decisions were taken under commercial wisdom with necessary approvals as required under applicable laws. The company remains committed to complying with the required legal and regulatory framework and adhering to the highest standards of corporate governance," the spokesperson said.
Intervention Pleas
Monet Securities argued before the tribunal that the exit of the original shareholder did not end the class action because the issues raised continued to affect public shareholders. The tribunal accepted the submission and allowed the proceedings to continue.
The hearing also saw arguments over 48 intervention applications filed by minority shareholders seeking to participate in the matter.
Senior counsel appearing for Jindal Poly Films opposed the applications and told the tribunal that 27 of the 48 shareholders had already sold their entire holdings in the company. The company questioned whether those shareholders could continue to participate in the proceedings.
Senior advocate Abhinav Vasisht, appearing for minority shareholders, alleged that efforts were being made to acquire shares from public investors to weaken opposition to the class action suit.
Vasisht argued that once a class action is admitted, all public minority shareholders automatically become part of the class unless they choose to opt out. He said shareholders could not be excluded solely because some had exited their holdings.
The tribunal directed Jindal Poly Films to file a detailed affidavit containing the names and particulars of shareholders who had sold their shares.
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