CLASS ACTION SUIT

S. No.

Checklist Item

Details/Criteria

1

Who Can File?

Members, depositors, or class of them

2

Purpose of Filing?

Allegation of affairs being conducted prejudicial to interests of company, members, or depositors

3

Reliefs That Can Be Sought

a. Restrain ultra vires acts
b. Restrain breach of MoA/AoA
c. Declare void any resolution passed by suppression/misstatement
d. Restrain company/directors from acting on such resolution
e. Restrain acts against the Act or other laws
f. Restrain action contrary to member resolutions
g. Claim damages/compensation
h. Seek any other remedy

4

Liability of Audit Firm/Partners

Jointly liable if involved in fraud/misstatement

5

Minimum Number of Members (for companies with share capital)

In case of a company having a share capital, the requisite number of member or members to file an application under sub-section (1) of section 245 shall be -

(i) (a) at least five per cent. of the total number of members of the company; or

(b) one hundred members of the company,

whichever is less;

or (ii) (a) member or members holding not less than five per cent. of the issued share capital of the company, in case of an unlisted company;

(b) member or members holding not less than two per cent. of the issued share capital of the company, in case of a listed company.

6

Minimum Number of Members (for companies without share capital)

Not less than 1/5 of total members

7

Minimum Number of Depositors

(a) at least five per cent. of the total number of depositors of the company; or

(b) one hundred depositors of the company,

whichever is less; or;

depositor or depositors to whom the company owes five per cent. of total deposits of the company.]

8

Factors Tribunal Must Consider Before Admission

a. Good faith
b. Involvement of other persons
c. Cause of action pursuable individually?
d. Views of uninterested members
e. Act/omission yet to occur – can be authorized?
f. Act/omission occurred – can be ratified?

9

Post Admission Requirements

a. Public notice to class
b. Consolidation of similar applications
c. Selection/appointment of lead applicant
d. Expenses to be borne by company or responsible party

10

Number of Applications Allowed

Only one class action per cause of action

11

Binding Nature of Tribunal’s Order

Binding on company, members, depositors, auditors, advisors, etc.

12

Penalty for Non-Compliance with Tribunal Order

- Fine: Rs 5 lakh – Rs 25 lakh (company)
- Officers: Imprisonment up to 3 years AND fine ?25,000 – ?1 lakh

13

Frivolous/Vexatious Applications

Dismissed with cost up to Rs 1 lakh imposed on applicant

14

Non-applicabilty 

Banking Companies

15

Who Else Can File Application?

Any person/group/association representing affected persons