NCLT Issues Notice On SEBI Intervention Plea In Jindal Poly Case

The National Company Law Tribunal (NCLT), New Delhi, has issued notice on an intervention application filed by the Securities and Exchange Board of India (SEBI) in an India's first ever class action against Jindal Poly Films Limited and its promoters, brought by minority shareholders.

In its application viewed by NDTV Profit, SEBI has flagged serious governance lapses and alleged violations of securities laws following a detailed investigation into the company's transactions spanning FY 2013‑14 to FY 2023‑24. The probe was initiated after shareholder complaints highlighted potential misuse of funds and misleading disclosures.

SEBI's investigation focuses on Jindal Poly's continued exposure to the power sector through Jindal India Powertech Ltd, despite disclosures following a 2013–14 demerger that suggested an exit from such businesses. While the listed company transferred its equity stake, SEBI found that Jindal Poly continued financing the power venture through loans and preference share investments worth Rs. 690.27 crore between FY14 and FY17.

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The regulator noted that this entire investment was written off between FY 2016‑17 and FY 2018‑19, only to be partially written back at Rs 35.47 crore in FY 2021‑22. In March 2022, the same preference shares were sold to promoter‑linked entities — SSJ Trust (Rs 66.23 crore) and Jindal Finance (Rs 39.33 crore) — at Rs 1.492 per share, even though identical instruments had been acquired by Jindal Poly at Rs 10.02 per share just seven months earlier.

SEBI has quantified the cumulative loss to Jindal Poly and its shareholders at Rs 760.12 crore, arising from write‑offs, undervalued disposals and conversion of loans into zero‑percent redeemable preference shares at inflated valuations. A further Rs 24.25‑crore loss was flagged due to transactions involving Champak, described as an undisclosed promoter entity.

According to SEBI, the staggered execution of these transactions across multiple years prevented investors from accurately assessing the erosion of shareholder value, leading to alleged violations of PFUTP and LODR regulations. Through its intervention, SEBI has sought to place these findings formally on record before the NCLT while it proceeds with further regulatory action against the company.

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