Section 245 of the Companies Act, 2013 ("the Act") introduced statutory class action to Indian corporate law. For nearly a decade after its enactment, the provision remained largely dormant—a remedy on the statute book that practitioners cited but rarely invoked. The NCLT's admission of the class action in Ankit Jain & Ors v. Jindal Poly Films Ltd. and the NCLAT's refusal to interfere at the threshold stage have altered that perception.
The Numerical Threshold: Members and Depositors
The right to file a class action is not available to a single shareholder. Rule 84 of the National Company Law Tribunal Rules, 2016 specifies the requisite number. For a company having share capital, the application may be filed by at least five per cent of the total number of members, or one hundred members, whichever is less; or by members holding not less than five per cent of the issued share capital in the case of an unlisted company, or two per cent in the case of a listed company. For depositors, the threshold is five per cent of the total number of depositors, or one hundred depositors, whichever is less, or depositors to whom the company owes five per cent of the total deposits.
These thresholds are not merely procedural. They determine whether the Tribunal has jurisdiction to entertain the application at all. A member who holds less than the prescribed percentage and who cannot aggregate with other members cannot invoke Section 245. The Jindal Poly Films application was filed by shareholders holding 4.99 per cent of the share capital—just below the five per cent unlisted threshold—but the NCLT admitted it, and the NCLAT declined to interfere at the admission stage. The precise basis on which the threshold was satisfied is a matter of ongoing jurisprudential development.
The Procedure: Form NCLT-9 and Public Notice
An application under Section 245 must be filed in Form NCLT-9. The application must set out the class of members or depositors on whose behalf it is filed, the act or omission complained of, and the relief sought. A copy must be served on the company, other respondents, and any other person directed by the Tribunal.
Once the application is admitted, the Tribunal may issue a public notice inviting other members or depositors of the same class to join the proceedings. This is the "opt-in" dimension of the Indian class action. The class is not automatically bound; those who wish to be part of the proceedings must come forward. The Tribunal has the power to permit a person to withdraw from the class, and the withdrawal does not affect the rights of the remaining members.
The Reliefs and the Limits
Section 245(1) permits the Tribunal to make an order for relief in respect of a class of members or depositors. The relief may include damages, disgorgement of profits, and any other order that the Tribunal considers just and equitable. The relief is available against the company, its directors, auditors, and any other person who is responsible for the act or omission complained of.
The class action is not a substitute for the oppression and mismanagement jurisdiction under Sections 241 and 242. Section 245 is specifically concerned with wrongful conduct that affects a class of members or depositors, and the relief is class-wide rather than individual. The two provisions are cumulative, not alternative.
The most significant limitation is the absence of a litigation funding mechanism. A class action is expensive, and the members who drive it bear the costs unless the Tribunal orders otherwise. The Jindal Poly Films case has demonstrated that the remedy is viable, but it has not resolved the funding question.
A technically sound class action requires a threshold determination that is carefully documented, a class definition that is precise, and a public notice process that withstands scrutiny.
Call to Action
Anuj Desai & Associates advises shareholders, depositors, and companies on the invocation and defence of Section 245 class actions—from threshold determination and Form NCLT-9 filing to class certification, public notice, and the interaction with Sections 241 and 242. If you are considering a class action or defending one, we can help you build a record that meets the Tribunal's jurisdictional requirements.
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