WHAT????

Mass Tort: A tort by which large number of people are affected.

Courts use to manage it with various tools Class Action Lawsuit, Multi District Litigation.
Class Action Lawsuit Various individuals harmed combine their claims into a single
lawsuit.
Multi District Litigation Panels transfer individual cases to a particular court. Cases are not
combined into single lawsuit.
WHY???
Costs were overflowing the benefits in individual suits thus suits were not being pursued.
Rights in substantial law were not being enforced and it makes it no law in sense because it
can easily be violated. Infringing small individual rights were as a whole leading to huge
profits to some parties which is illegal. Class Actions reduces the individual costs, enforces
legal rights of large number of people, equalises the possibilities of engaging equally good
counsels to that of big corporate groups by the group which could not have been possible in
case of individuals. They are Efficient. Saves Courts Time. Avoids number of litigations on
the same issue. Provides effective remedy for breach of rights.
WHY NOT???
These suits are maximum times settled rather than taken for trial. And settlement agreements
state that defendants have not admitted to any wrongdoings.
WHERE???
Class Action suits were common in England from 1200. But the concept got extinguished by
the end of 1800. Due to enactments which dealt with issues regularly faced by certain
organizations most types of group litigations were removed. And then it never recovered. But
it existed in U.S. as it was adopted by Justice Joseph Story. And then it evolved with US law
as being a rule of equity. Presently Rule 23 of Federal Rules of Civil Procedure. Last
revised in 1966. It is still predominantly US concept.

WHEN???
India has adopted the concept from U.S. very late. Class Action lawsuit concept was not
present in Indian Law people had no right to combine civil lawsuits. Had to file individual
suits even if for same cause as of various others. Courts had option to take them as MDL. The
concept first came to the picture when Satyam Scam came into play.
In the Satyam Scam the company had done an accounts fraud with regulators, stock
exchanges, investors, stakeholders, etc. to show the fake image of its financial health. Where
the rights of state holders were infringed, the stakeholders won a compensation of 125
million dollars (700 crores) from US courts in a class action suit against the Satyam
corporation whereas their Indian counterparts which were to be compensated to the tune of
5000 crores as a whole had no such resort of class action suits and when lakhs of
shareholders came together to sue the company they approached from National Consumer
Disputes Redressal Commission to the Supreme Court but their claims were rejected.
HOW???
The concept of Class Action Suit is provided u/Sec. 245 of the Companies Act, as introduced
in the year 2013. Thus such an action can be brought in accordance with these provisions:
Who can File?
1. Members of a company
In case of share capital 100 or more/ more than 10% of total members (whichever is
less) or members holding at least 10% of issued share capital.
In case of not share capital members equal to or exceeding 1/5th of total members.
2. Depositors of a company - 100 or more/ more than 10% of total depositors (whichever
is less) or depositors holding at least 10% of total deposit of company.
3. Central Government In public interest.
Before Whom?
1. Application to be made before National Company Law Board/ Tribunal.
Against Whom?
1.
2.
3.
4.

A company
Any of its directors
Any of its Auditors, including audit firm
Expert/ Advisor/ Consultant/ Any other person.

When Can a Class Action Suit Be Filed?

1. To restrain a company from committing any act ultra vires the Articles of Association.
2. .