Section 245 — Class action

(1) Such number of member or members, depositor or depositors or any class of
them, as the case may be, as are indicated in sub -section ( 2) may, if they are of the opinion that the
management or conduct of the affairs of the company are being conducted in a manner prejudicial to the
interests of the company or its members or depositors, file an application before the Tribunal on behalf of
the members or depositors for seeking all or any of the following orders, namely:—
(a) to restrain the company from committing an act which is ultra vires the articles or memorandum
of the company;
(b) to restrain the company from committing breach of any pr ovision of the company’s
memorandum or articles;
(c) to declare a resolution altering the memorandum or articles of the company as void if the
resolution was passed by suppression of material facts or obtained by mis-statement to the members or
depositors;
(d) to restrain the company and its directors from acting on such resolution;
(e) to restrain the company from doing an act which is contrary to the provisions of this Act or any
other law for the time being in force;
(f) to restrain the company from taking action contrary to any resolution passed by the members;
(g) to claim damages or compensation or demand any other suitable action from or against—
(i) the company or its directors for any fraudulent, unlawful or wrongful act or omission or
conduct or any likely act or omission or conduct on its or their part;
(ii) the auditor including audit firm of the company for any improper or misleading statement
of particulars made in his audit report or for any fraudulent, unlawful or wrongful act or conduct;
or
(iii) any expert or advisor or consultant or any other person for any incorrect or misleading
statement made to the company or for any fraudulent, unlawful or wrongful act or conduct or any
likely act or conduct on his part;
(h) to seek any other remedy as the Tribunal may deem fit.
(2) Where the members or depositors seek any damages or compensation or demand any other suitable
action from or against an audit firm, the liability shall be of the firm as well as of each partner who was
involved in making any improper or misleading statement of particulars in the audit report or who acted in
a fraudulent, unlawful or wrongful manner.
(3) (i) The requisite number of members provided in sub-section (1) shall be as under:—
(a) in the case of a company having a sha re capital, not less than one hundred members of the
company or not less than such percentage of the total number of its members as may be prescribed,
whichever is less, or any member or members holding not less than such percentage of the issued share
capital of the company as may be prescribed, subject to the condition that the applicant or applicants
has or have paid all calls and other sums due on his or their shares;
(b) in the case of a company not having a share capital, not less than one -fifth of the total number
of its members.
(ii) The requisite number of depositors provided in sub -section (1) shall not be less than one hundred
depositors or not less than such percentage of the total number of depositors as may be prescribed,
whichever is less, or any depositor or depositors to whom the company owes such percentage of total
deposits of the company as may be prescribed.

(4) In considering an application under sub -section ( 1), the Tribunal shall take into account, in
particular—
(a) whether the member or depositor is acting in good faith in making the application for seeking
an order;
(b) any evidence before it as to the involvement of any person other than directors or officers of the
company on any of the matters provided in clauses (a) to (f) of sub-section (1);
(c) whether the cause of action is one which the member or depositor could pursue in his own right
rather than through an order under this section;
(d) any evidence before it as to the views of the members or depositors of the company who hav e
no personal interest, direct or indirect, in the matter being proceeded under this section;
(e) where the cause of action is an act or omission that is yet to occur, whether the act or omission
could be, and in the circumstances would be likely to be—
(i) authorised by the company before it occurs; or
(ii) ratified by the company after it occurs;
(f) where the cause of action is an act or omission that has already occurred, whether the act or
omission could be, and in the circumstances would be likely to be, ratified by the company.
(5) If an application filed under sub -section (1) is admitted, then the Tribunal shall have regard to the
following, namely:—
(a) public notice shall be served on admission of the application to all the members or depositors
of the class in such manner as may be prescribed;
(b) all similar applications prevalent in any jurisdiction should be consolidated into a single
application and the class members or depositors should be allowed to choose the lead applicant and in
the event the members or depositors of the class are unable to come to a consensus, the Tribunal shall
have the power to appoint a lead applicant, who shall be in charge of the proceedings from the
applicant’s side;
(c) two class action applications for the same cause of action shall not be allowed;
(d) the cost or expenses connected with the application for class action shall be defrayed by the
company or any other person responsible for any oppressive act.
(6) Any order passed by the Tribunal shall be binding on the company and all its members, depositors
and auditor including audit firm or expert or consultant or advisor or any other person associated with the
company.
(7) Any company which fails to comply with an order passed by the Tribunal under this section sha ll
be punishable with fine which shall not be less than five lakh rupees but which may extend to twenty -five
lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for
a term which may extend to three years and with fine which shall not be less than twenty -five thousand
rupees but which may extend to one lakh rupees.
(8) Where any application filed before the Tribunal is found to be frivolous or vexatious, it shall, for
reasons to be recorded in writing, reject the application and make an order that the applicant shall pay to
the opposite party such cost, not exceeding one lakh rupees, as may be specified in the order.
(9) Nothing contained in this section shall apply to a banking company.
(10) Subject to the compliance of this section, an application may be filed or any other action may be