NCLAT upheld the NCLT’s order on February 26 and dismissed Jindal Poly Films’ appeal challenging the maintainability of the class action.

The minority shareholders of Jindal Poly Films have raised concerns over the Supreme Court’s decision to set aside the NCLT and NCLAT orders, dispose of the corporate class action suit by consent and appoint Justice Manindra Mohan Shrivastava (Retd Chief Justice) as sole arbitrator.

The minority investors are currently evaluating the implications of the development and considering their next steps, said a lawyer representing the shareholders.

The country’s first corporate class action suit was disposed of by the Supreme Court earlier this month at the joint request of the company and its substituted shareholder.

The dispute originated from a class action petition filed before the National Company Law Tribunal by minority public shareholders, alleging the siphoning of over ₹2,500 crore through undervalued transactions involving promoter-linked entities by JPFL.

After a protracted legal battle for about two years, the NCLT admitted the petition on February 5 and issued a notice. SEBI intervened in the proceedings to place its investigative report, which confirmed a financial loss of over ₹760 crore to the public shareholders due to opaque related-party transactions, inadequate disclosures and violations of securities laws by JPFL promoters.

SEBI subsequently issued a show-cause notice to the company, directing it to respond to the allegations raised by the minority shareholders.

NCLAT upholds

Meanwhile, the NCLAT upheld the NCLT’s order on February 26 and dismissed Jindal Poly Films’ appeal challenging the maintainability of the class action.

In March, the lead petitioner, Ankit Jain, sold his shareholding and withdrew from the proceedings. Monet Securities, having acquired shares from Jain, stepped in as the substitute petitioner in May.

Sonam Chandwani, Managing Partner of KS Legal & Associates said that the Supreme Court’s decision to decline the class action proceedings and direct the dispute to arbitration undoubtedly comes as a setback for the nearly 44,000 retail shareholders of JPFL.

However, it would be incorrect to assume that all remedies have been exhausted. The judgment alters the forum of adjudication rather than extinguishing the substantive rights of minority investors, she said.

Investor remedies

Retail investors may also consider acting collectively through associations or representative groups to ensure that the costs and complexities of arbitration do not become prohibitive, she added.

Moreover, the jurisdiction of SEBI is distinct from contractual arbitration, and regulatory proceedings cannot be ousted merely because the parties are referred to arbitration, she said.

The biggest challenge for retail investors is likely to be the economics of pursuing claims. The ruling is likely to have wider implications beyond Jindal Poly Films because it raises an important question about whether dispersed public shareholders can effectively vindicate their rights when collective remedies are curtailed and disputes are channelled into arbitration, said Chandwani.

Published on June 11, 2026