The Supreme Court has ended India’s first corporate class action by referring the Jindal Poly Films dispute to arbitration. The move has sparked concerns over whether the rights of nearly 40,000 public shareholders can be affected through a settlement involving a substituted petitioner.
India’s first corporate class action lawsuit under Section 245 of the Companies Act, 2013 has come to an unexpected end after the Supreme Court referred the dispute involving Jindal Poly Films Limited to arbitration.
The development has triggered serious concerns about the future of shareholder class actions and the rights of nearly 40,000 public shareholders who were expected to benefit from the proceedings.
The matter began when minority shareholders of Jindal Poly Films Limited approached the National Company Law Tribunal (NCLT), New Delhi, alleging that more than Rs.2,500 crore had been siphoned away through transactions involving promoter-linked entities at undervalued prices.
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The shareholders claimed that these transactions caused substantial losses to public investors and amounted to serious corporate mismanagement.
After nearly two years of litigation, the NCLT admitted the petition on February 5, 2026. The order was considered historic because it marked the first time that a corporate class action under Section 245 of the Companies Act was formally admitted by an Indian tribunal. The decision was later upheld by the National Company Law Appellate Tribunal (NCLAT) on February 26, 2026, after it rejected Jindal Poly Films’ challenge to the maintainability of the proceedings.
The case gained further significance when the Securities and Exchange Board of India (SEBI) intervened and sought to place its investigation findings on record. According to the material referred to in the proceedings, SEBI’s investigation allegedly found that public shareholders had suffered losses exceeding Rs.760 crore due to related-party transactions, inadequate disclosures and violations of securities laws. The regulator also issued a show-cause notice to the company based on its findings.
However, a major development took place in March 2026 when the original lead petitioner, Ankit Jain, sold his shareholding and withdrew from the proceedings. Subsequently, Monet Securities Private Limited, which had acquired shares from Jain, was substituted as the petitioner in May 2026.
The matter then took a dramatic turn before the Supreme Court. On June 8, 2026, Jindal Poly Films Limited and Monet Securities jointly informed a Vacation Bench comprising Justice Prashant Kumar Mishra and Justice Atul S. Chandurkar that they had agreed to resolve their disputes through arbitration.
Acting on the consent of both parties, the Supreme Court set aside the earlier orders of the NCLT and NCLAT and disposed of the proceedings. The Court appointed former Chief Justice Justice Manindra Mohan Shrivastava as the sole arbitrator to adjudicate the disputes.
The disposal of the case has attracted attention because the Supreme Court did not examine the merits of the allegations, the findings placed by SEBI, or the broader concerns raised by thousands of public shareholders. Instead, the matter was closed on the basis of the parties’ agreement to proceed with arbitration.
Critics of the development argue that a class action under Section 245 is fundamentally different from an ordinary private dispute. Such proceedings are intended to protect the interests of an entire class of shareholders and are therefore considered proceedings in rem, meaning that they affect all members of the class collectively. According to this view, a dispute involving thousands of shareholders cannot ordinarily be converted into a private dispute between two parties through mutual consent.
Concerns have also been raised about the sequence of events leading to the arbitration referral. Monet Securities was not part of the original proceedings and became the petitioner only after acquiring shares from the original applicant. Soon after its substitution, it agreed with the company to seek arbitration.
Critics contend that this move has effectively taken the dispute away from a public judicial forum and shifted it to a private arbitration process in which the majority of affected shareholders will have no direct participation.
The controversy has reignited debate over the effectiveness of India’s shareholder protection mechanisms and the future of class action litigation. Legal observers note that the case had the potential to become a landmark precedent for minority shareholder rights and corporate accountability in India.
With the class action now terminated and the dispute moved to arbitration, questions remain about how the interests of approximately 40,000 public shareholders will be protected and whether similar class actions could face comparable challenges in the future.