Imagine yourself as a modest investor with perhaps 100 shares in a large Indian corporation. You’ve been witnessing executives cashing out while the company collapses, rumors of dubious transactions in board meetings, and monthly stock drops. What are you doing? Give your broker a call. Tweet about it? You would organize other stockholders in the US to file a class action lawsuit. However, in India? It felt like shouting into thin air until lately.
The Indian version of the shareholder rebellion toolbox is found in Section 245 of the Companies Act, 2013. It was alerted back in 2016 and is now awakening from a protracted slumber. This clause allows minority shareholders to unite against the corporation, directors, auditors, or advisors for mismanagement, oppression, or outright fraud.
The Rise of the Little Guy (Finally)
Globally, shareholder agitation is not new; consider hedge funds overthrowing CEOs or Elliott Management upending Twitter. Due to promoter-dominated businesses in which families or founders own 50–70% interests, India fell behind. Investors from minority groups? frequently ignored.
Inspired by the JJ Irani Committee (2005), Section 245 of the Companies Act of 2013 modified that. If the business’s operations are “prejudicial to the interests of the firm, its members, or depositors,” it gives members or depositors (at least 5% voting rights or 100 members) the authority to bring a complaint before the National business Law Tribunal (NCLT).
What is eligible? illegal dealings, mismanagement, oppression, or choices that hurt shareholders. The remedies? remuneration, nullifying resolutions, and even dismissing directors. Everyone is bound by the order: the board, the corporation, and the auditors. What are the consequences of non-compliance? Officers face fines of up to ₹25 lakh and three years in jail.
India’s First Real Shots: Jindal Poly and Beyond
Section 245 was forgotten for eight years. Then followed the historic class action debut in India, Ankit Jain v. Jindal Poly Films Ltd. (2024, NCLT Delhi). Promoters allegedly embezzled ₹2,500 crore through sweetheart agreements with group companies, according to minority shareholders. Under Sections 241–246 read with 245, they asserted oppression. It was a turning point when NCLT acknowledged it.
There are more in the works. The Supreme Court’s 2021 decision to remove Cyrus Mistry from Tata Sons brought attention to Section 241’s remedies for oppression, opening the door for class actions. The 2009 Satyam scandal revealed audit flaws, although there was no class action lawsuit at the time. Now? Due to related-party loans, dividend dilution, and ESG failures, shareholders are testing the waters against listed companies.
​Tata-Mistry (board autonomy) and Jindal Steel (promoter disqualification) are two recent NCLT patterns that indicate an increase in activism. While Section 245 provides teeth, SEBI’s e-voting and governance code enhance voices.
How Section 245 Works (The Nuts and Bolts)
Who is able to file? 5% value held by depositors, stockholders, or more than 100 members.
🔰    Listed corporations have lower thresholds (2% shares or 100 members).
🔰    Unlike class actions in the US, no security deposit is required.
🔰    NCLT venue: NCLAT/SC appeals, fast-track tribunal.
🔰    Relief includes injunctions, damages, and governance corrections. If the business is successful, it pays the bill.
Advantages: No “loser pays” risk, low obstacles, and collective power.
Cons: NCLT backlog; promoters’ influence persists; high criteria discourage small holders. There is no opt-out class, unlike in the US; everyone in
Conclusion: The Shareholder Awakening
A long-overdue weapon for minority shareholders used to promoter supremacy, Section 245 of the Companies Act, 2013 signifies a seismic upheaval in India’s corporate governance landscape. Class actions are no longer theoretical, as evidenced by the historic Jindal Poly Films breakthrough in 2024 and its covert notice in 2016. They are developing into a reliable safeguard against corruption, oppression, and poor management.
However, obstacles still exist: promoter control, obstacles to evidence, and institutional inertia mean that activism is still in its infancy by international standards. Nevertheless, the momentum is unquestionable due to SEBI’s stewardship initiative, growing ESG expectations, and institutional investors speaking up.
The message to businesses is clear: transparency is no longer optional. Section 245 empowers shareholders by making their shares more than just investments—they are a seat at the boardroom table. One class action at a time, India’s corporate democracy is developing. The question is not whether activism will change governance, but rather how soon. The uprising has started, so fasten your seatbelts.
