India’s first class action suit has hit an unexpected hurdle: Ankit Jain, the lead minority shareholder in the ₹2,500-crore siphoning case against Jindal Poly Films, is looking to walk away. Having sold his shares in the company, Jain, who previously represented a 4.99% minority stake alongside other petitioners, has now moved to exit the landmark legal battle.
Jain’s legal team informed the Delhi principal bench of the National Company Law Tribunal (NCLT) on Thursday that he had divested his entire shareholding and no longer had the legal standing to appear as a petitioner leading the class action. Jain was among the original petitioners, along with Rina Jain and Ruchi Jain Hanasoge, who held a combined 4.99% stake in the company when the case was filed in March 2024.
The tribunal was informed that a new shareholder was willing to step in as a petitioner in place of Jain. The NCLT has sought responses from other parties on whether they had any objection to such substitution. It will also examine the legality of allowing a new shareholder to join midway through the proceedings. The next hearing has been scheduled for 30 April.
Email queries sent to Saraf and Partners, the firm representing Ankit Jain, as well as to Jindal Poly Films and Monet Securities Acquires, which purchased shares from Jain, remained unanswered at the time of publishing.
Twist in the tale
Jain’s exit is a significant development in what is widely seen as India’s first corporate class action suit under Section 245 of the Companies Act, 2013.
Section 245 allows a group of shareholders to file a single case before the NCLT if they believe a company is acting unfairly or causing losses to investors. Shareholders holding at least 2% in a listed company can jointly seek action for fraud, mismanagement or wrongful conduct. The provision was introduced in 2013, following the Satyam scandal, to better protect minority shareholders.
The petition alleged more than ₹2,500 crore was siphoned from Jindal Poly Films through undervalued asset sales and related-party transactions involving promoter-linked entities, causing losses to public and minority shareholders. It also alleged that investments in group power companies were later sold at discounted valuations, causing significant financial damage.
The case was heard for nearly two years before the Delhi bench of the NCLT admitted it on 5 February, marking the first time an Indian tribunal has formally issued notice in a class action under Section 245. The order was subsequently upheld by the NCLAT on 26 February, raising the stakes for the proceedings.
End of the road?
However, Jain’s withdrawal creates a legal complication, casting doubt on whether the landmark case can proceed at this critical juncture. With the NCLT now considering whether a new shareholder can step in as a petitioner, the development adds uncertainty to the proceedings.
According to lawyers, Ankit Jain's exit does not by itself weaken the class action but raises procedural concerns about whether eligible shareholders continue to represent the class.
"Ankit Jain's exit does not automatically weaken or invalidate the class action. The cause of action survives even if the original petitioner withdraws, provided the statutory thresholds for shareholder participation continue to be satisfied," said Prithiviraj Senthil Nathan, partner at King Stubb & Kasiva, Advocates and Attorneys.
Nathan added that the exit primarily creates a procedural issue — whether an eligible shareholder remains to pursue the case. If not, the case's maintainability could be questioned. He also noted that any new shareholder stepping in would face scrutiny over the timing and intent of their shareholding to ensure it is bona fide and not merely strategic.
The case is being watched closely by minority investors and corporate boardrooms as its outcome could set a precedent for shareholder activism in India, where class action provisions have rarely been tested, unlike jurisdictions such as the US.
According to the petition, Jindal Poly invested about ₹703.79 crore between 2013 and 2017 in group power companies Jindal Powertech and Jindal India Thermal Power through preference shares. In FY21, these companies secured debt waivers of more than ₹7,000 crore, which improved their valuations. The shareholders alleged that Jindal Poly later sold these investments at deeply undervalued prices to promoter-linked entities, resulting in losses exceeding ₹2,500 crore to public investors.
“The loss caused to the company by the sale of OCPS and RPS is estimated at ₹2,518.45 crore, with the corresponding benefit accruing to the promoter entities,” the petition stated.
Jindal Poly has maintained that the class action petition is not maintainable and that such provisions cannot be used as a substitute for other legal remedies, which require higher shareholding thresholds. It has argued that the issues raised relate to governance concerns, which should have been pursued through alternative legal routes.