Step‑by‑step Guide to Bringing a Section 245 Representative Action in India (companies Act)

The Section 245 representative action procedure India provides is one of the most powerful, yet under‑used, remedies available to shareholders and depositors who believe a company’s affairs are being conducted in a manner prejudicial to their interests. Introduced by Section 245 of the Companies Act, 2013, this class action mechanism allows members or depositors to file a collective application before the National Company Law Tribunal (NCLT) seeking orders against the company, its directors, auditors, or advisers.

As renewed practitioner activity and fresh tribunal decisions in 2025–2026 have clarified its scope, industry observers expect a significant uptick in filings, making it essential for in‑house counsel, company secretaries, and corporate claimants to understand exactly how to file a representative action, what documents are needed, and how long the process typically takes.

Overview of the Process and Who It Applies To

Class action suits are expressly permitted in India under Section 245 of the Companies Act, 2013. The provision empowers a specified number of members or depositors, or any class of them, to apply to the NCLT where they believe that the affairs of the company are being conducted in a manner prejudicial to the interests of the company, its members, or depositors. Unlike a public interest litigation (PIL), which addresses broader public wrongs through High Courts or the Supreme Court, a Section 245 application is a private‑law remedy directed at specific corporate conduct and adjudicated exclusively by the NCLT.

The right to apply under Section 245 extends to two categories of applicants. Members (shareholders) may apply in respect of a company having a share capital, while depositors may apply in respect of their deposits with the company. The provision also covers applications against auditors and consultants or advisers of the company, broadening the scope of accountability beyond the board of directors alone.

The remedies a tribunal may grant under the representative suit procedure are extensive. They include restraining the company from committing or continuing an act that is ultra vires or in breach of the memorandum or articles of association; restraining the company from acting contrary to any resolution passed by members; declaring a resolution altering the memorandum or articles as void if it was obtained by fraudulent or oppressive conduct; restraining the company, its directors, or any other person from acting in breach of the provisions of the Act; and directing the company to recover damages or compensation from specified persons for fraud, misfeasance, or other misconduct.

The NCLT may also award costs and pass any other order it considers fit in the circumstances.

It is important to distinguish this mechanism from ordinary oppression and mismanagement petitions under Sections 241–242 of the Companies Act. While those provisions address individual shareholders’ grievances, Section 245 is specifically designed for collective or representative actions, enabling a class of affected persons to seek common relief without each member being separately impleaded. For readers considering related corporate remedies, see also enforceability of shareholders’ agreements in India.

Eligibility and Prerequisites for the Section 245 Representative Action Procedure India

Understanding who can file a Section 245 application is the essential first step. The statute sets out specific numerical thresholds that must be satisfied before the NCLT will admit the application.

Who qualifies as a member or depositor

A “member” is any person whose name is entered in the register of members of the company, or who holds shares through a depository (CDSL or NSDL). A “depositor” is any person who has deposited money with the company in accordance with the provisions of the Companies Act and applicable rules. Both categories carry independent standing to initiate proceedings.

Minimum thresholds and representative adequacy

Section 245 prescribes minimum thresholds to prevent frivolous applications. For a company having a share capital, the application must be filed by a minimum number of members prescribed, typically not less than 100 members or not less than a prescribed percentage of the total number of members, whichever is less. For depositors, a similar threshold applies, not less than 100 depositors or a prescribed percentage of the total depositors. These thresholds are intended to ensure that the application genuinely represents a class rather than an individual grievance dressed as a collective one. Where the applicant class falls below the threshold, the application is liable to be rejected at the admission stage.

Beyond mere numbers, early indications from tribunal practice suggest that the NCLT increasingly examines the adequacy and representativeness of the applicant class. The applicants should demonstrate a commonality of interest, that is, the same alleged conduct affects them in a substantially similar way, and should show that the named representative applicants are competent and willing to conduct the proceedings on behalf of the entire class.

Pre‑filing steps and internal escalation

Before approaching the NCLT, applicants should exhaust internal remedies to the extent practicable. This includes raising the grievance at general meetings, issuing written representations to the board of directors, and pursuing any dispute resolution mechanism specified in the company’s articles of association. While Section 245 does not impose a mandatory pre‑filing notice period in the same way certain other statutes do, demonstrating that internal channels have been explored strengthens the application and addresses any challenge on maintainability.

Where the applicants intend to act through a representative, a board resolution or a resolution of the applicant group authorising one or more named persons to file and conduct the proceedings is advisable. In practice, the NCLT has expected applicants to present clear documentation of how the representative was selected and authorised, including minutes of any meeting at which the decision to file was taken.

Jurisdictionally, the application must be filed before the NCLT bench that has territorial jurisdiction over the registered office of the company. India has multiple NCLT benches across cities, and filing before the wrong bench is a common, and avoidable, procedural error.

Step‑by‑Step Procedure, Section 245 Steps From Investigation to Final Hearing

The following numbered steps set out the practical sequence for filing and prosecuting a Section 245 representative action. Each step identifies who is responsible, what deliverables are produced, and the typical time involved.

Step 1, Conduct a pre‑filing investigation and define the class

The applicants (typically through external counsel) must first identify and document the conduct alleged to be prejudicial. This involves gathering share registers, depositor records, board minutes, audited financial statements, correspondence with the company, and any other material evidencing the impugned acts. Simultaneously, counsel should define the proposed class, specifying the category of members or depositors, the period of membership or deposit, and the common grievance that binds them. The class definition must be precise enough to withstand a challenge on representative adequacy at the admission stage.

Step 2, Issue a pre‑filing demand or notice to the company

Although not strictly mandatory under the statute, issuing a written demand notice to the company before filing is strongly recommended. The notice should identify the impugned conduct, state the relief sought, and provide the company a reasonable opportunity (typically 14–30 days) to respond or remedy the grievance. A well‑drafted notice serves two purposes: it creates a paper trail demonstrating that internal escalation was attempted, and it may prompt a negotiated resolution without litigation.

Step 3, Draft the Section 245 petition and supporting affidavit

The petition (application) should be drafted in accordance with the NCLT Rules, 2016 and should include: a clear statement of facts; identification of the applicants and the class they represent; the specific acts or omissions complained of; the provisions of the Companies Act, memorandum, or articles that have been breached; the reliefs sought (referencing the specific heads of relief available under Section 245); and a verification and supporting affidavit sworn by the lead applicant. The affidavit should annex all key documentary evidence, including the class list, authority to file, share certificates or depository statements, and copies of any pre‑filing correspondence.

Step 4, File the application at the correct NCLT bench and pay filing fees

The petition is filed at the registry of the NCLT bench having jurisdiction over the company’s registered office. Filing can be done through the NCLT’s e‑filing portal or physically at the registry counter. The applicable filing fee must be paid at the time of filing, the fee is determined by the Schedule of Fees prescribed under the NCLT Rules and varies depending on the nature and value of the relief sought. An acknowledgement or diary number is issued upon successful filing.

Step 5, Serve notice on the company, directors, auditors, and other respondents

Once the application is admitted or listed for hearing, the applicants must serve the petition and all annexures on each respondent, typically the company at its registered office, each named director, and any auditor, adviser, or consultant who is a party. Service is usually effected by registered post with acknowledgement due, speed post, or through an approved courier service. The NCLT may also direct publication of the notice in newspapers and on the company’s website where the class is sufficiently large or dispersed, ensuring that absent class members are made aware of the proceedings.

Step 6, Apply for interim reliefs and engage in early case management

If the circumstances demand urgent protection, for example, if the company is dissipating assets or destroying evidence, the applicants may file an interlocutory application seeking interim injunctions, freezing orders, or directions for preservation of evidence. Interim applications are typically heard within weeks of filing, depending on the bench’s listing schedule. At the first effective hearing, the NCLT will also set out a case management timetable, including deadlines for the respondent’s reply, rejoinder (if permitted), document disclosure, and the schedule for final arguments.

Note: Durations are practitioner estimates and vary significantly across NCLT benches. Always verify current listing timelines with the relevant registry.

Required Documents and Information for a Section 245 Application

Assembling a complete and well‑organised documentary record before filing is critical. Incomplete applications are liable to be returned by the NCLT registry or challenged by respondents. The following checklist sets out the core documents needed, along with notes on who issues each document, the required format, and any validity considerations.

Evidentiary standards matter. The NCLT expects documentary evidence to be presented in an indexed and paginated format with a clear table of contents. Where electronic evidence is relied upon (emails, digital records), a certificate under Section 65B of the Indian Evidence Act (now the Bharatiya Sakshya Adhiniyam, 2023) should accompany the exhibit to ensure admissibility. Chain of custody should be documented, particularly for forensic or accounting reports prepared by independent experts.

Applicants should consider preparing a single consolidated evidence binder, with original or certified copies of all documents, at the time of filing. This avoids delays caused by registry objections or respondent challenges to document authenticity. Where documents are in the possession of the company (for example, internal board minutes), an application for discovery and production of documents can be made after the case is listed.

Timeline and Key Deadlines in the Section 245 Representative Action Procedure

One of the most common questions from corporate claimants is how long a Section 245 representative action typically takes. The honest answer is that timelines vary significantly depending on the NCLT bench, the complexity of the case, the number of respondents, and whether interim applications are filed. The table below provides a consolidated timeline from the initial investigation through to final order, synthesising typical practitioner experience.

End‑to‑end, a straightforward Section 245 action may conclude within 12–18 months, while complex multi‑respondent matters with contested interim applications and voluminous evidence can extend to 24 months or more. Readers should note that the NCLAT appellate window is 45 days from the date of the NCLT order, and further appeals to the Supreme Court are possible on questions of law.

The remedies available at the conclusion of the proceedings are those enumerated in Section 245 of the Companies Act: the tribunal may restrain the company from acting in breach of the Act or its constitutional documents; declare void any resolution obtained by fraud or oppression; direct the company, its directors, auditors, or advisers to pay damages or compensation; and pass any consequential directions. The NCLT may also award costs to the successful party.

If a deadline for filing a reply, serving notice, or meeting any tribunal‑imposed milestone is missed, the consequences can be severe, ranging from the matter proceeding ex parte against the defaulting party to adverse cost orders. An application for condonation of delay should be filed promptly, supported by an affidavit explaining the reasons for the delay and demonstrating that no prejudice will be caused to the other side.

Costs, Fees, and Tax Considerations

Understanding the financial exposure of a Section 245 application is essential for any pre‑filing assessment. The following table provides a breakdown of the main cost categories. All figures are indicative ranges, verify exact fees with the NCLT registry and the Schedule of Fees under the NCLT Rules, 2016 before filing.

All amounts are estimates, confirm current figures with the NCLT registry or the applicable fee schedule before committing to filing.

From a tax perspective, any damages or compensation awarded under a Section 245 order may be treated as taxable income in the hands of the recipient, depending on the nature of the award and applicable provisions of the Income Tax Act, 1961. Applicants should consult a tax adviser before commencing proceedings to understand the potential tax treatment of any recovery. The legal costs incurred in prosecuting the action may, in certain circumstances, be deductible as expenditure, but this depends on the applicant’s tax status and the purpose for which the shares or deposits were held.

What Changes in 2026, Procedural and Practice Developments

The period from 2025 to 2026 has seen notable developments in how NCLT and NCLAT benches approach Section 245 applications. Early indications suggest that tribunals are now more willing to admit applications where the class is well‑defined and the impugned conduct is clearly documented, even in cases involving past or concluded acts, a position that had previously been contested. The likely practical effect will be to broaden the scope of actionable grievances under Section 245 beyond ongoing misconduct.

Tribunal practice has also tightened around service and notice requirements. NCLT benches are increasingly directing applicants to serve notice not only by registered post but also electronically (by email to registered email addresses of respondents) and through publication on the company’s website. Applicants should therefore prepare a comprehensive notice plan at the drafting stage and include a proposed notice protocol in their petition.

Industry observers expect that as more applications are admitted and progressed to final hearing, the body of reported orders will provide greater clarity on the evidentiary standards required to establish prejudicial conduct. For claimants, the immediate practical consequence is that applications filed in 2026 should be supported by more granular evidence and more precisely defined reliefs than may have been accepted in earlier years. For respondent companies, the trend signals a need for early and substantive engagement with the proceedings rather than reliance on threshold or maintainability objections alone.

Common Pitfalls and How to Avoid Them

• Vague or overbroad class definition. An ill‑defined class, for example, “all shareholders” without specifying the period or nature of the grievance, invites a challenge on representative adequacy. Define the class by reference to specific dates, share categories, and the common conduct complained of.
• Insufficient notice or service. Failure to serve all respondents correctly, or to follow the tribunal’s publication directions, can lead to adjournments and adverse cost orders. Prepare a detailed service plan before filing.
• Inadequate evidence at the filing stage. Filing a petition supported only by general assertions and without primary documentary evidence (minutes, financial statements, correspondence) weakens the case at the admission hearing. Assemble the evidence bundle before filing, not after.
• Mis‑stated or generic reliefs. Seeking reliefs not available under Section 245, or framing them so broadly that the tribunal cannot identify what specific order is sought, undermines the petition. Map each relief to a specific head under the statute.
• Filing at the wrong NCLT bench. Jurisdiction is determined by the company’s registered office. Verify the registered office address on the MCA portal and confirm which NCLT bench has territorial jurisdiction before filing.
• Ignoring internal escalation evidence. Failing to demonstrate that the grievance was first raised internally (at meetings, through written representations) invites the objection that the applicants have not exhausted alternative remedies.
• Respondent over‑reliance on technicalities. Corporate defendants who focus exclusively on threshold or procedural objections without engaging with the substance of the allegations risk adverse findings if the tribunal overrules the preliminary challenge.
• Late or incomplete disclosure. Both sides should comply strictly with tribunal‑imposed disclosure deadlines. Late disclosure can result in documents being excluded or adverse inferences being drawn.

Conclusion

The Section 245 representative action procedure India recognises is a structured, multi‑stage process that demands careful preparation, precise class definition, and rigorous evidence management from the outset. Whether you are a shareholder group seeking accountability for corporate misconduct or a company responding to a class action notice, the procedural steps, document requirements, timelines, and cost considerations outlined in this guide provide the practical framework needed to navigate the NCLT process effectively. With 2026 tribunal practice continuing to clarify the scope and admissibility of these applications, early engagement with experienced commercial litigation counsel is more important than ever. For related corporate dispute procedures in India, see also how to file for insolvency in India.

Sources

1. India Code, Section 245, Companies Act, 2013
2. National Company Law Tribunal, NCLT Rules, 2016
3. National Company Law Appellate Tribunal (NCLAT), Judgments
4. Ministry of Corporate Affairs (MCA), Notifications and Circulars
5. India Code, Companies Act, 2013 Dissemination Circular