Supreme Court Reserves Order on Minority Shareholders’ Recall Application in Jindal Poly Films Matter

The Supreme Court in the last hearing reserved its order on a Miscellaneous Application seeking recall of its earlier order in the Jindal Poly Films Limited matter, which had disposed of a company petition under Section 245 of the Companies Act, 2013 and referred the underlying disputes between the parties to arbitration.

The application has been filed by minority public shareholders of Jindal Poly Films Limited, who have challenged the earlier disposal of the proceedings and contended that the Section 245 proceedings before the National Company Law Tribunal (NCLT) had already been admitted as a class action involving the company’s non-promoter minority public shareholders.

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A Bench comprising Justice Prashant Kumar Mishra and Justice Atul S. Chandurkar heard the application today.

Appearing for the shareholder-applicants, Senior Advocate Amit Sibal submitted that once the NCLT had admitted the proceedings as a class action under Section 245, the proceedings acquired the character of proceedings in rem, with the non-promoter minority public shareholders forming part of the class. He further submitted that a statutory public notice had been issued following the admission of the petition, making the proceedings binding on the members of the class.

The applicants argued that the Supreme Court, while passing its earlier order referring the disputes to arbitration, had not been apprised that the NCLT proceedings had already been admitted as a class action involving thousands of public shareholders. It was submitted that an individual shareholder or the original petitioner could not, without the requisite authority or permission of the NCLT, consent to the disposal of proceedings involving the entire class.

The applicants also relied upon the statutory framework under Section 245 of the Companies Act, 2013 and Rules 84 and 86 of the NCLT Rules, 2016, which provide for the consolidation of class-action proceedings and appointment of a lead applicant by consensus. The applicants submitted that no such lead applicant had been appointed in the present matter and that members of the class were deemed to form part of the proceedings, subject to the statutory mechanism governing their participation and right to opt out.

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During the hearing, the Bench indicated that the parties could place their respective positions on record through written submissions. The applicants were granted three days to file their written submissions.

The applicants clarified that they were seeking restoration of the appeal and an opportunity to be heard, rather than dismissal of the underlying class-action proceedings. The Bench also indicated that the issue concerning the survival of the Section 245 class action and the effect of the earlier reference of the underlying disputes to arbitration would be considered.

The hearing concluded with the shareholder-applicants reiterating that the earlier order should not operate to dispose of a statutory class action involving minority public shareholders without their participation or consent.

The Supreme Court has reserved its order on the recall application.