A class action is essentially an action instituted by a group of persons having the same interest. To avoid multiplicity of proceedings, Section 245(5) prohibits the initiation of two class action applications for the same cause of action. Orders passed by the NCLT under Section 245 are binding on the company, its members and depositors. Another interesting aspect is that while courts have largely crystallised the contours of Section 241 and the reliefs which may granted in such actions, class actions under Section 245 continue to remain unchartered territory. The NCLT’s treatment of these class actions will go a long way in determining whether class actions become the new staple in India.

Source: Economic Times October 17, 2024 03:51 UTC