Now Reading: SC sends shareholder class action to arbitration in 3 paragraphs
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SC sends shareholder class action to arbitration in 3 paragraphs
The Supreme Court on June 8, 2026, referred a major shareholder class action against Jindal Poly Films to arbitration, quashing two tribunal rulings that had developed the most detailed reading yet of…
The Story in Brief
The Supreme Court on June 8, 2026, referred a major shareholder class action against Jindal Poly Films to arbitration, quashing two tribunal rulings that had developed the most detailed reading yet of Section 245 of the Companies Act. The suit, filed by shareholders holding under 5% stock on behalf of about 40,000 investors, alleged promoter-linked entities acquired preference shares at below fair value, causing losses estimated above Rs 2,500 crore.
Bar and Bench reports the court's three-paragraph consent order overlooked whether a class action binding an undefined group is arbitrable under Indian law. The tribunal had held Section 245 protects the company itself and can unwind concluded transactions. The consent order set aside 90 pages of reasoning without addressing the subject matter arbitrability question or providing a safeguard for the absent class members.
The Indian Opinion
Some will say the Supreme Court merely respected party autonomy. But 40,000 shareholders did not sign an arbitration agreement, two litigants did. A consent decree cannot turn a representative suit into a private fight. The Companies Act lacks a US-style fairness hearing for settlements, leaving the class with no voice. The real test is whether lawmakers now plug this gap or wait for the next case to expose the same flaw.
Source: barandbench.com
This story was synthesised by AI from the source linked above.
