Step‑by‑step Procedure to Bring a Section 245 Representative Action in India (2026)

Section 245 of the Companies Act, 2013 gives members and depositors the right to bring a representative action, often called a class action, before the National Company Law Tribunal (NCLT) when the affairs of a company are being conducted in a manner prejudicial to their interests or to the public interest at large. Understanding the Section 245 representative action procedure in India is essential for in‑house counsel, company secretaries and litigation teams who need to file such an application, or respond to one, correctly and within the tribunal’s expected timelines. This guide sets out the eligibility criteria, required documents, step‑by‑step filing process, costs and key 2026 practice developments so that claimants and defendants can plan with confidence.

Overview of the Section 245 Representative Action and Who It Applies To

Section 245 of the Companies Act, 2013 empowers a prescribed number of members or depositors, or any class of them, to file an application before the NCLT alleging that the management or conduct of the company’s affairs is prejudicial to the interests of the company, its members or depositors. The provision applies to every company incorporated under the Act, though thresholds and procedural particulars differ for listed and unlisted companies.

The remedies available under this provision are broad. The Tribunal may restrain the company from committing or continuing an act that is ultra vires or contrary to law, declare a resolution void, award damages or compensation, direct the company to take corrective steps, or appoint an auditor or advisor to examine specific transactions. A representative action is distinct from an individual shareholder suit or a petition under Sections 241–244 (oppression and mismanagement) because it is brought on behalf of an identifiable class and the relief binds the entire class.

Class action filings in India remained relatively rare between 2013 and 2023, but activity has increased markedly since 2024. Sectors most commonly affected include technology (data‑handling and governance disputes), energy and infrastructure (project‑level misrepresentation to investors), and financial services (deposit‑holder claims against NBFCs). For corporate defendants and their advisors, an early, structured response is equally important, the procedural playbook below applies from both perspectives.

Eligibility and Prerequisites for a Section 245 Representative Action Procedure in India

Who qualifies as a ‘member’ or ‘depositor’

Under Section 245(1), an application may be filed by a member (any person whose name is entered in the register of members, including a beneficial owner recorded by a depository) or a depositor (any person who has deposited money with the company under a deposit scheme). The right extends to any class of members or depositors sharing a common grievance, for instance, all equity shareholders of a particular series, or all depositors under a specific scheme.

Minimum thresholds and representative adequacy

Section 245(3) prescribes numerical thresholds that the applicant class must satisfy. For a company with a share capital, the application must be filed by at least one hundred members of the company, or by a number of members holding at least a prescribed percentage of the issued share capital, whichever is less. For a company without share capital, the threshold is at least one-fifth of the total members. Depositor applications require at least one hundred depositors, or a prescribed percentage of the total number of depositors, whichever is less. The Central Government retains power to prescribe the exact percentages by notification.

Beyond the numerical test, the Tribunal assesses representative adequacy: the applicants must demonstrate that they fairly and adequately represent the interests of the entire class. Early indications suggest that NCLT benches increasingly scrutinise the commonality of the complaint and whether the named applicants have a genuine shared interest that warrants collective adjudication.

Pre‑filing steps

Before approaching the Tribunal, applicants should complete a series of internal governance steps. These include passing a board resolution (where an institutional applicant is involved) or obtaining authorisation from co‑applicants; verifying membership or deposit status through the company’s registrar or depository records (CDSL/NSDL); and, where advisable, issuing a statutory or pre‑action notice to the company requesting corrective action. Although a pre‑action notice is not a statutory precondition under Section 245, it is regarded as best practice and may be taken into account by the Tribunal when assessing good faith and costs.

Step‑by‑Step Procedure: How to File a Representative Action Under Section 245

The following Section 245 steps walk through the process from initial assessment to final hearing. Each step identifies the responsible party, the key documents produced and the typical timeframe. A consolidated timeline table follows the narrative steps.

Step 1, Pre‑filing commercial and evidential triage

The process begins with an internal investigation. In‑house counsel and external advisors assess the merits of the claim, define the class, quantify the alleged prejudice and collect supporting evidence (board minutes, annual reports, share‑register extracts, correspondence, financial statements). Where the claim involves financial irregularities, a preliminary forensic or accounting review is commissioned at this stage. The applicant(s) formalise their authority to proceed, typically through a board resolution (for institutional shareholders) or through executed consents from individual co‑applicants. Time: 1–4 weeks, depending on the complexity of the underlying facts.

Step 2, Draft the application and reliefs sought

External counsel drafts the application in the form prescribed by the NCLT Rules. The application must include a statement of material facts, the grounds on which the class action is brought (referencing Section 245(1)(a)–(f) as applicable), and a clearly articulated list of reliefs. Common reliefs include injunctions restraining the company from acting, a declaration that a resolution is void, an order for damages or compensation, and a direction for the appointment of an auditor or expert to examine specific transactions. The pleading bundle is indexed, paginated and supported by an affidavit verifying the facts.

Step 3, File at the correct NCLT registry and pay prescribed fees

The application is filed at the NCLT bench that has territorial jurisdiction, typically determined by the registered office of the company. Filing may be done physically at the registry counter or through the NCLT’s e‑filing portal, where available. The prescribed court fee is paid at this stage; the fee amount depends on the nature of the relief sought and the value of the claim. A defect‑free filing normally receives a diary number on the same day.

Step 4, Service on the company, directors, auditors and regulators

Once the Tribunal assigns a hearing date, the applicant must serve the application on all respondents, the company, its directors, statutory auditors and, where the company is listed, the Securities and Exchange Board of India (SEBI). Service is generally effected through registered post, speed post, courier or, increasingly, by electronic means (email with delivery receipt). The Tribunal may also direct that notice be published in newspapers with wide circulation or on the company’s website so that the broader class is made aware. The typical window for completing service is 7–30 days from the date of the tribunal’s order, though specific timelines are set bench by bench.

Step 5, Apply for interim relief

If the circumstances demand urgent protection, for example, where directors are disposing of assets, destroying records or diluting shareholdings, the applicant may simultaneously file an application for interim relief. The Tribunal may grant an interim injunction restraining the company from acting, order preservation of documents, or freeze specific bank accounts. An interim hearing is ordinarily listed within 2–8 weeks of filing, though urgent matters may be heard sooner at the Tribunal’s discretion.

Step 6, Case management, class notice protocol and discovery

At the first substantive hearing, the Tribunal typically issues case‑management directions. These may include a protocol for notifying the broader class (opt‑in or opt‑out notice), a schedule for the exchange of pleadings and evidence, directions for document production, and deadlines for filing reply affidavits. Discovery, though not as extensive as in common‑law jurisdictions, may include directed disclosure of board minutes, financial records and related‑party transaction documents. This phase can run from 3 to 12 months, depending on the volume of evidence and the cooperation of the parties.

Step 7, Final hearing, judgment, settlement and enforcement

The final hearing proceeds on submissions and evidence already on record. The Tribunal may hear oral arguments from both sides and from any intervenors (including SEBI, in cases involving listed companies). If the parties reach a settlement before judgment, the terms must be placed before the Tribunal for approval, the Tribunal must be satisfied that the settlement is fair to the entire class. Where judgment is delivered, the order binds all class members and is enforceable as a decree of the Tribunal. Any party aggrieved by the order may appeal to the National Company Law Appellate Tribunal (NCLAT) within 45 days.

Consolidated timeline table

Required Documents and Information for a Section 245 Filing

A complete and well‑organised filing bundle is critical. Defects in documentation are among the most common reasons for registry rejections and adjournments. The table below lists the documents needed for a Section 245 application, along with practical notes on format and sourcing.

Applicants should prepare the filing bundle in both physical and digital format. Digital bundles must be text‑searchable (OCR‑processed PDFs) and bookmarked by document type, this increasingly reflects the standard expected by NCLT benches.

Timeline and Key Deadlines

The total duration of a Section 245 representative action varies widely, from approximately 6 months for straightforward matters that settle early, to 24 months or more for complex disputes involving voluminous discovery and multiple interim applications. The consolidated timeline table in the procedure section above provides step‑by‑step estimates.

Several deadlines are critical and are set by tribunal order rather than statute. The service deadline, the period within which the applicant must serve the application on all respondents, is typically 7–30 days from the tribunal’s direction. The respondent company is ordinarily given 30 days to file a reply affidavit after service, though the Tribunal retains discretion to extend this period. Deadlines for document production, the filing of rejoinders and the completion of evidence are set at case‑management hearings and vary by bench.

Regional variance is significant. The NCLT’s principal benches in Delhi, Mumbai, Chennai, Kolkata, Ahmedabad and Hyderabad maintain different listing calendars and case‑management practices. Applicants and respondents should confirm the specific bench’s scheduling cadence and holiday calendar before committing to internal timelines.

If a deadline is missed, whether for service, filing a reply or producing documents, the affected party must promptly file an application for condonation of delay, supported by an affidavit explaining the reasons for the default. Failure to do so may result in adverse case‑management orders, including the striking out of pleadings or the drawing of adverse inferences.

Costs, Fees and Tax Considerations

The costs of bringing or defending a Section 245 representative action include court fees, professional fees and incidental expenses. The table below provides indicative ranges; all figures should be verified against the current NCLT fee schedule and prevailing market rates before filing.

Applicants should also budget for incidental costs such as certified copies, notarisation, apostilling (where foreign documentary evidence is involved) and travel to the relevant NCLT bench. From a tax perspective, legal fees incurred in prosecuting or defending a class action are generally deductible as a business expense under the Income Tax Act, 1961, provided they are incurred wholly and exclusively for business purposes. Specific tax advice should be obtained, particularly for institutional claimants with cross‑border operations.

What Changes in 2026, Practice and Tribunal Updates

The period from 2024 to mid‑2026 has seen a marked revival in Section 245 activity. Several developments affect how the representative action procedure works in India today.

Stricter class‑definition requirements. Industry observers expect NCLT benches to continue tightening the standard for class definition. Recent tribunal directions have required applicants to demonstrate, at the admission stage, a precise and verifiable class description, supported by depository records or authenticated share‑register extracts. Vague or over‑inclusive class definitions have led to applications being returned for amendment.

Electronic service protocols. Following MCA’s push toward digitisation across company law processes, several NCLT benches now accept or direct service by electronic means, including email with read‑receipt confirmation and publication on the company’s website. Applicants should confirm the specific bench’s practice direction on electronic service before relying on it exclusively.

Increased scrutiny of representative adequacy. The likely practical effect of recent tribunal case‑management orders is that applicants will face closer examination of whether the named representatives genuinely share the class grievance and have the resources and commitment to prosecute the action to conclusion. This development aligns the Indian position more closely with representative action standards in other common‑law jurisdictions.

Tribunal case‑management efficiency measures. Several principal benches have introduced structured case‑management timelines for Section 245 matters, including fixed dates for reply affidavits, evidence completion and final hearing. Early indications suggest these measures are reducing the overall duration of proceedings at cooperating benches, though implementation remains uneven across the country.

Applicants and respondents should check the NCLT and MCA websites for any notifications or practice circulars issued after 20 July 2026 that may affect procedure or thresholds.

Common Pitfalls and How to Avoid Them

• Poorly defined class. A vague or overbroad class description is the single most common ground for an application to be returned or dismissed at the threshold. Define the class by reference to a verifiable criterion (share series, deposit scheme, date range).
• Failure to verify membership or deposit status. Applicants must confirm their standing through current depository records or the company’s register of members before filing, stale holding statements may be challenged.
• Inadequate notice to class members. If the Tribunal directs notice to the broader class and the applicant’s service plan is deficient, the matter may be adjourned or dismissed for non‑compliance.
• Overbroad or contradictory reliefs. Seeking every conceivable remedy without prioritisation signals a lack of focus and can complicate case management. Reliefs should be tailored to the specific prejudice alleged.
• Filing at the wrong NCLT bench. Jurisdiction is determined by the registered office of the company. Filing at the wrong bench causes delay and may require a formal transfer application.
• Under‑estimating the need for expert evidence. Financial, forensic and valuation evidence is often decisive. Commissioning expert reports late in the process can derail the hearing schedule.
• Missing service or response deadlines. Deadlines are set by tribunal order and enforced strictly. Missed deadlines require a condonation application and may attract adverse costs orders.
• Insufficient pre‑action engagement. Although not mandatory, a failure to engage with the company before filing may be viewed unfavourably by the Tribunal when considering costs and good faith.
• Disclosure failures. Both parties must comply fully with discovery and document‑production orders. Non‑compliance can result in adverse inferences or strike‑out of pleadings.
• Ignoring settlement opportunities. The Tribunal may encourage mediation or settlement at any stage. Parties who refuse to engage with settlement without good reason may face adverse costs consequences.

For corporate defendants: respond promptly to the application, challenge representative adequacy and class definition at the earliest opportunity, apply for early case‑management directions to contain the scope of proceedings, and consider seeking a stay or transfer if jurisdictional issues arise. Engaging experienced commercial litigation counsel immediately upon receiving notice significantly reduces exposure.

Sources

1. India Code, Companies Act, 2013, Section 245
2. Ministry of Corporate Affairs (MCA), Notifications and Circulars
3. National Company Law Tribunal (NCLT), Practice Directions and Registry
4. National Company Law Appellate Tribunal (NCLAT)
5. Supreme Court of India, Judgments Portal
6. Gazette of India, Government Notifications