Jindal Poly Films And Shareholders' Battle Continues At NCLT
The company argued that the law allowing class action suits focuses on ongoing matters rather than past acts.
The dispute between shareholders and Jindal Poly Films Ltd. continued at the National Company Law Tribunal in New Delhi on Thursday.
During the third hearing of the class action suit, Jindal Poly Films raised objections on whether the suit could be maintained under the Companies Act, 2013.
The company argued that the law, which allows for class action suits, focuses on ongoing matters rather than past acts. Secondly, Jindal Poly Films explained the difference between representative derivative action and representative class action.
It clarified that a class action suit cannot be filed seeking relief in favour of the company but must be filed against it, benefiting the entire class of shareholders. Thirdly, it expressed concerns about the negative impact of the class action suit on JPFL’s share price and public perception.
The company argued that media coverage and the pending status of the case could further harm it.
On the other hand, the shareholders submitted that a thorough examination of the law is required in this case, and just because the company is interpreting the section differently, that wouldn't make it inapplicable to their situation.
Additionally, the shareholders highlighted the need for an assessment of the compensation sought in their case. They argued that focusing solely on present actions overlooks the broader context and ongoing impact of past actions on the company and its shareholders.
They emphasised that any decision on compensation should take into account the historical background and cumulative effects of past actions.
They expressed concern that resolving such a complex issue solely through a narrow interpretation of the section wouldn't lead to a just resolution.
The next hearing for the case is scheduled for July 11.
Case File
A class action petition was filed by the shareholders of Jindal Poly Films, alleging mismanagement prejudicial to the company and them. They are seeking compensation of approximately Rs 2,800 crore.
A class action suit is akin to a group effort, when many people who have been affected or harmed by the same thing team up to take legal action together.
The shareholders have alleged financial mismanagement and undervalued asset sales by Jindal Poly Films, causing significant harm to the company and its shareholders.
Ankit Jain is leading the group of shareholders. Their lawyers had earlier mentioned in court that around 45,000 shareholders were impacted by this lawsuit. Together, these petitioners owned 4.99% of the shares in Jindal Poly Films.
