Two more minority shareholders are seeking to join the class action lawsuit being heard by the National Company Law Tribunal (NCLT) against Jindal Poly Films, a unit of the BC Jindal Group. This comes after a group of shareholders holding 4.99 per cent stake in Jindal Poly Films moved a class action lawsuit against the company in March this year.
As per court documents reviewed by Outlook Business, the applications were filed last month in the NCLT.
The new shareholders are Seetha Kumari, who owns 4.95 per cent stake in the company and Dinesh Kumar Jain who holds 0.01 per cent shares, according to court documents. The two combined hold 4.96 per cent. If their plea is accepted, the group of petitioners in the class action suit together will account for a little less than 10 per cent stake in Jindal Poly Films.
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The class action suit filed against Jindal Poly Films under section 245 of the Companies Act accuses the company of selling optionally convertible preference shares (OCPS) and redeemable preference shares (RPS) to promoter entity SSJ Trust run by Shyam Sunder Jindal at depressed valuations causing a loss to minority shareholders.
A class action lawsuit allows a group of people to file a suit on behalf of others who have suffered similar losses.
The first group of shareholders have alleged that Jindal Poly Films continued to invest in Jindal Powertech in return of OCPS and RPS. This was done despite the investment division of Jindal Poly Films being demerged in 2013–14 with the stated objective of allowing the firm to focus on its core business. This investment, the petitioners allege, was written off from the books of the company and later was sold to the promoter's entity at depressed valuations.
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They have pleaded before the NCLT to declare the contested transactions as void and reverse them to the books of Jindal Poly Films. Alternatively the petitioners want to be compensated for losses amounting to Rs 2,500 crore. They allege that promoter entities gained a similar amount through the sale of shares.
Seetha Kumari, one of the new shareholders seeking to join the petition, alleges she enquired multiple times about the contested transactions but did not receive a satisfactory answer, according to the intervention application seen by Outlook Business.
Jindal Poly Films, in case hearings, has questioned the maintainability of the plea under the Companies Act. The company has dismissed the charges of loss due to past transactions dubbing them ‘fiction’ and argued that the transactions had been approved by shareholders.
A source aware of the case said the court has issued a notice to the company for response to intervention applications. Next hearing in the case is on August 22.
As of June 30, 2024, promoters own about 75 per cent stake in the company whose market cap is at Rs 3,280 crore. Outlook Business has reached out to Jindal Poly Films for comment. The story will be updated if and when there is a response.
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