New Delhi: The Supreme Court on 8 June referred the long-running Jindal Poly Films dispute for arbitration, shutting the door to class action proceedings in the case.
The dispute between the company and its minority shareholders, who allege mismanagement and illegal transactions, has been running for two years. This February, the National Company Law Tribunal (NCLT) finally admitted the shareholders’ petition for a class action lawsuit—making it potentially India’s first.
The Supreme Court’s decision has effectively ended what was shaping up to be the most important test yet of India’s decade-old class action regime.
Introduced with much fanfare in the Companies Act, 2013, class actions were intended to give ordinary shareholders a collective remedy against corporate misconduct. Yet, 10 years after the law came into force, not a single class action has successfully gone to trial.
The collapse of the Jindal Poly Films case raises a broader question: why has a legal mechanism that transformed corporate accountability in many countries failed to take root in India?
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What’s a class action?
A class action, or representative action, is distinguished by the identity of the litigants bringing the suit.
Traditionally, legal cases must be brought by a “legal person”. That can be a natural person, a corporate entity, or a government body. What makes a class action unique is that the plaintiff is defined as a “class” sharing a particular characteristic. Once courts recognise that class, a smaller number of members can sue on behalf of the whole group.
In America, the most visible manifestation of this has been product liability litigation; consumers who bought a defective product can sue for compensation as a class. The mechanism effectively amalgamates thousands of similar claims into a single proceeding.
Class actions in the US are big business. Law firms routinely advertise for plaintiffs, promising potential payouts. The largest settlements can run into billions of dollars.
While class action litigation is younger elsewhere, it has also been adopted enthusiastically in many jurisdictions. In 2022, for instance, 91,000 car owners in the UK received a collective total of more than 200 million pounds from Volkswagen to settle a class action over the company’s attempt to cheat emissions standards.
In India, however, class actions have remained largely invisible.
Missed opportunities
Many legal observers point to the 1984 Bhopal Gas Tragedy case as a missed opportunity. In the US, those affected in a similar way would likely have had a textbook case for a class action suit. India had no comparable mechanism.
The Indian government ultimately sued Union Carbide in American courts on behalf of victims and secured $470 million, with the litigation ultimately resolved in India. However, the amount was widely regarded as inadequate given the scale of suffering and long-term health consequences of the gas tragedy.
On the financial side, calls for stronger shareholder remedies intensified after the Satyam Computers Services scandal. The company collapsed in 2008-09 after revelations that its accounts had been falsified and enormous sums diverted into Hyderabad’s real-estate market; thousands of crores of shareholder value evaporated in months.
Because Satyam was also listed on the New York Stock Exchange, American shareholders quickly filed a class action that was eventually settled for $125 million, alongside a separate $25 million settlement by auditor PriceWaterhouseCoopers.
Indian shareholders, meanwhile, were told by the National Consumer Disputes Redressal Commission that it lacked the infrastructure to handle such a compensation petition. They watched as the company was sold to Tech Mahindra at a fraction of its peak value, with little avenue for redress.
India did not yet have the shareholder class-action mechanism that was later introduced in the Companies Act, 2013.
Shareholder rights
As early as 2005, the J.J. Irani Committee had recommended legalising class actions. The proposal gained urgency after Satyam and other corporate scandals.
In 2013, Parliament passed a new Companies Act. Section 245 created, for the first time, the possibility of shareholder class action lawsuits. The provision was intended to give minority shareholders a collective remedy against management misconduct.
The requirements are strict. For a listed company, plaintiffs must represent at least 100 shareholders or collectively hold at least 2% of the company’s shares. The NCLT must also assess whether the claim is brought in good faith and whether alternative remedies exist.
The class-action provision came into force in 2016. In the decade since, not a single class action has passed through to trial.
Some attempts did gain publicity, though. A shareholder challenge to ICICI’s delisting of its securities arm was ultimately dismissed by the National Company Law Appellate Tribunal in March 2025. In general, however, few cases were brought and none approved.
And then came Jindal Poly Films.
Jindal Poly Film’s long road
Jindal Poly Films is one of India’s largest manufacturers of flexible packaging film, part of a conglomerate founded by B.C. Jindal, brother of Jindal Steel founder O.P. Jindal. The company went public in 2005. Promoters retained nearly three-fourths of the shares, while the rest were held by minority shareholders.
In 2024, some minority investors began to suspect mismanagement. As they examined company transactions, they alleged a pattern of suspicious payments and fiduciary failures.
Among other accusations, the company allegedly paid hundreds of crores to consultants linked to the wider conglomerate without receiving meaningful work in return. It also allegedly loaned large sums to a related power company, wrote off those loans, and then allowed the now-valuable business to be acquired by another Jindal-linked entity at a steep discount.
The company disputes the allegations, which remain unproven in court.
That year, minority shareholders filed a petition before the NCLT seeking approval for what would effectively become India’s first shareholder class action.
After a two-year legal battle, the NCLT admitted the petition in February. The road to trial was not smooth; in April lead plaintiff Ankit Jain sold his entire stake in the company. The buyer, Kolkata investment firm Monet Securities, sought to replace him as lead plaintiff.
Amid questions about whether such a substitution was permissible, the Supreme Court referred the dispute for arbitration, holding in a brief order that the matter would be “better suited” to that forum.
The decision is seen as another blow to class actions in India, whose prospects have dimmed with each passing year without a single case reaching trial.
Many critics blame the structure of Indian class action law itself. Any suit must meet a steep bar at the discretion of the NCLT, and some suits are outright forbidden; shareholders of banking companies, for instance, are explicitly barred from bringing class action suits.
Consumer class actions
Meanwhile, consumer class actions, while common and lucrative in America, remain rare in India.
The Consumer Protection Act, 2019, vested authority for protecting consumers as a class in the Central Consumer Protection Authority (CCPA). Some observers argue this has weakened consumer-led litigation by requiring complainants to satisfy the regulator before action can proceed. Others disagree.
Dr Sushila, an academic specialising in consumer law at National Law University, Delhi, notes that nothing in the law prevents consumers from bringing representative suits themselves. “Such type of cases are filed regularly in housing construction cases,” she told ThePrint.
She does, however, acknowledge that the creation of the CCPA has led to complacency among consumer rights groups. The CCPA has “overshadowed the consumer groups”, she said, arguing that these consumer groups are “also accountable to file class actions. They should continue doing it”.
Filing a consumer class action is often easier said than done. Courts have adopted a restrictive interpretation of class actions, requiring a high degree of commonality among class members before a suit can be accepted.
An important precedent came in the Supreme Court’s 2021 decision in Brigade Enterprises vs Anil Kumar Virmani. Homebuyers sought to bring a representative complaint on behalf of more than 1,100 purchasers who had not received possession of their homes.
The court refused, finding that buyers had purchased different units under different agreements and may have suffered different losses. As a result, the required commonality of interest was absent.
The practical effect has been to require near-identical interests before representative consumer actions can proceed.
Even where suits are possible, funding remains a challenge. Senior corporate lawyers are expensive and, unlike in many foreign jurisdictions, Indian lawyers cannot legally work on contingency fees tied to a share of the recovery.
Class action plaintiffs must, therefore, fund litigation themselves and, because India follows the “loser pays” principle, may also be liable for the opposing side’s legal costs if they fail.
Third-party litigation funding is technically legal and well-established in countries such as the US, where specialist firms finance class actions in exchange for a portion of any award. In India, however, the sector remains largely non-existent.
Unrealised promise so far
A decade after Parliament introduced class actions as a tool to strengthen corporate accountability and shareholder rights, the mechanism remains largely dormant in India.
The collapse of the Jindal Poly Films case, widely seen as the country’s most promising test of the regime, underscores the structural, procedural, and financial hurdles that continue to impede collective litigation.
Strict admissibility requirements, judicial reluctance to certify representative claims, limited funding options and the absence of a robust litigation-finance ecosystem have combined to keep class actions on the margins of Indian law. While the legal framework exists on paper, its practical impact remains elusive.
Unless lawmakers, courts, and regulators address these barriers, class actions may continue to be a largely unrealised promise rather than a meaningful avenue for redress in India.
(Edited by Nida Fatima Siddiqui)