Class Action Suits Under Section 245 of the Companies Act (2026)
What a class action under Section 245 of the Companies Act, 2013 is: who can bring it, the thresholds, the reliefs the NCLT can grant, how it is filed, and why it has stayed largely unused. Last verified October 2026.
Explainer · Company Law · Remedies
A class action under Section 245 of the Companies Act, 2013 lets a group of shareholders or depositors take one company to the National Company Law Tribunal (NCLT) on behalf of the whole class, instead of each person suing alone. They can ask the Tribunal to stop wrongful or illegal conduct and to award damages against the company, its directors, its auditors, and even its advisers. The power is wide, but the entry thresholds are high, which is why the provision has been used so rarely. This explainer sets out who can bring it, the thresholds, the reliefs, and how it is filed. Last verified October 2026.
- What: Section 245 lets members or depositors bring a class action before the NCLT against a company and its officers.
- Who: at least 100 members or 10% of members (whichever less), or holders of 10% of issued capital; similar thresholds for depositors. Not for banking companies.
- Reliefs: restrain ultra vires or illegal acts, void a resolution, and claim damages from the company, directors, auditors and advisers.
- Reality: the high threshold has left the provision largely unused, though recent NCLAT rulings read the admission test more flexibly.
01The problem: one wrong, many victims
When a company acts unlawfully, the harm is often spread thinly across thousands of shareholders or depositors. No single investor may have lost enough to make an individual case worthwhile, yet the total loss can be huge. Left to individual suits, the wrong goes unchallenged.
Section 245 was written to answer this. It lets a qualifying group act for the whole class in one proceeding before the NCLT, so the cost and effort are shared and the company faces a single, representative challenge. It arrived in the Companies Act, 2013 in the wake of corporate scandals where small investors had no realistic remedy.
02What Section 245 allows
Section 245 lets members or depositors apply to the NCLT if they are of the view that the management or conduct of the company affairs is being carried out in a manner prejudicial to the interests of the company, its members or its depositors.
Through a class action they can seek orders to restrain the company from acting beyond its memorandum or articles, to restrain a breach of the Act, to declare a resolution void if it was passed by suppression of material facts or obtained by misstatement, and to claim damages or compensation for any fraudulent, unlawful or wrongful act.
Not for banking companies
Section 245 does not apply to a banking company. For other companies, a class action can be brought by members, by depositors, or by both.
03Who can file: the thresholds
The entry thresholds are the hardest part of a Section 245 action. They are set in Section 245(3).
| Applicant | Threshold |
|---|---|
| Members (company with share capital) | At least 100 members, or at least one-tenth (10%) of the total members, whichever is less; or member(s) holding at least 10% of the issued share capital, with all calls paid |
| Members (company without share capital) | At least one-fifth of the total number of members |
| Depositors | At least 100 depositors, or at least 10% of the total depositors, whichever is less; or depositor(s) to whom the company owes at least 10% of the total value of outstanding deposits |
Read together, the lower of the two member figures controls, so a company with 1,500 members needs 100 supporters, while one with 300 members needs 30. Separately, the NCLT Rules, 2016 set a procedural admission threshold tied to the issued share capital, and the NCLAT in the Jindal Poly Films matter (2026) read this as a 2 per cent of issued share capital test under Rule 84 for admitting a members class action once a prima facie case is shown.
04What the NCLT can order
The NCLT can grant a broad set of reliefs on a Section 245 application:
- restrain the company from doing an act that is ultra vires its memorandum or articles;
- restrain the company from committing a breach of the Act or its own documents;
- declare a resolution void where it was passed by suppression of material facts or by misstatement;
- restrain the company and its directors from acting on such a resolution;
- claim damages or compensation from the company, its directors, its auditors (including the audit firm), and any expert, adviser or consultant for an incorrect or misleading statement or for a fraudulent, unlawful or wrongful act.
The reach to auditors and advisers is notable, because it exposes professionals, not just the company, to liability for a class wrong.
05How a class action is filed
- Confirm the threshold. Make sure the group meets the Section 245(3) numbers (members or depositors), and gather proof of holdings.
- Prepare the application. File the application before the NCLT in the prescribed form under the NCLT Rules, 2016, setting out the class, the wrong, and the reliefs.
- Serve notice to the class. On admission, public notice is given to the class so other members or depositors can join, and duplicate applications on the same cause are consolidated.
- Costs and conduct. The Tribunal considers whether the action is in good faith and manages the conduct of the proceeding for the class.
An NCLT order can be appealed to the NCLAT. For that route, see how to appeal to the NCLAT.
06Why it has stayed largely unused
Despite its wide powers, Section 245 has been used very little. For almost a decade after it came into force, few if any applications crossed the statutory threshold, and commentators have called the provision largely dormant. The high entry bar, the effort of organising a class, and the overlap with other remedies all contribute.
The remedy sits alongside the oppression and mismanagement route, which many aggrieved investors use instead. For that, see minority shareholder rights and remedies. Recent NCLAT rulings reading the admission threshold more flexibly may give Section 245 more life.
07Where Claw fits
Claw is an all-in-one legaltech platform for Indian advocates, law firms, and corporate legal teams, combining AI-based case search, an AI legal assistant (Legal GPT), case management, and compliance automation across all Indian courts and tribunals.
Because Section 245 has been used so little, the few orders that do exist carry weight, and the odds in a new action turn on how the NCLT has read the thresholds and the reliefs. Claw lets you search those orders and the wider 30 crore+ judgments in under 5 seconds, by section, party or advocate, so a thin line of authority is quick to assemble. When an action is live, it tracks the cases, orders and hearings at the NCLT and on appeal across 9,102 courts, benches and forums, so the next date is never a surprise.
Claw does not train its AI models on customer case documents, so a draft application stays private. Create a free Claw account to follow a Section 245 matter and to dig out how benches have applied it. For the wider field, see case search across Indian courts.
08Sources and further reading
- India Code (Companies Act, 2013, Section 245): indiacode.nic.in
- NCLT (rules and cause lists): nclt.gov.in
- Ministry of Corporate Affairs: mca.gov.in
- Claw: clawlaw.in
This explainer is general information, not legal advice. Thresholds and procedure depend on your facts, so check the current Act and the NCLT Rules and take advice from counsel before you act.
09Frequently asked questions
Who can bring a class action under Section 245?
For a company with share capital, at least 100 members or at least 10% of the total members (whichever is less), or members holding at least 10% of the issued share capital with all calls paid. Depositors have a parallel threshold of 100 depositors or 10%, or depositors owed 10% of the total deposit value. It does not apply to banking companies.
What can the NCLT order in a class action?
It can restrain the company from acting beyond its memorandum or articles or in breach of the Act, declare a resolution void where it was obtained by suppression or misstatement, and award damages or compensation against the company, its directors, its auditors and its advisers.
Where is a Section 245 class action filed?
Before the National Company Law Tribunal (NCLT), in the prescribed form under the NCLT Rules, 2016. On admission, public notice is given so others in the class can join, and duplicate applications are consolidated.
Can auditors be made liable in a class action?
Yes. Section 245 expressly allows a claim for damages or compensation against the auditors, including the audit firm, and against any expert, adviser or consultant, for an incorrect or misleading statement or for a fraudulent, unlawful or wrongful act.
Why is Section 245 used so rarely?
The entry threshold is high, organising a qualifying class is hard, and other remedies such as oppression and mismanagement are often used instead. For almost a decade few applications crossed the statutory threshold, though recent NCLAT rulings have read the admission test more flexibly.
Can I track a class action in Claw?
Yes. Claw searches 30 crore+ judgments in under 5 seconds, so the sparse Section 245 authority is quick to gather, and it tracks cases, orders and hearings across 9,102 courts, benches and forums for a live action. It tracks and researches the matter but does not give legal advice.