Class Action: A powerful tool in new Companies Bill  

September 6, 2013

Israni explains the features of the class action lawsuit, a tool commonly used in the West, and what to expect of it

Dr SD Israni

The Companies Bill (the ‘Bill’), 2012, has been passed by both the Houses of Parliament and is now awaiting the assent of the President of India. One of the noteworthy features of the new law is greater accountability of corporate managements and, towards this end, some additional provisions are available to ordinary shareholders who are not part of the promoter group. One of these is Clause 245, which empowers members and depositors, or any class of them, to initiate action against a company, under certain circumstances. This is known as a class action lawsuit.

What is class action?
According to Wikipedia, “In law, a class action, a class suit, or a representative action is a form of lawsuit in which a large group of people collectively bring a claim to court and/or in which a group of defendants is being sued.” This form of collective lawsuit originated in the United States and spread to several European countries. India will become the newest entrant to this system.

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