The National Company Law Tribunal (NCLT), Mumbai, has admitted Reliance Entertainment Studios Private Limited into the corporate insolvency resolution process (CIRP) over an alleged default of Rs 11.94 crores linked to the release of Ajay Devgn’s Auron Mein Kahan Dum Tha. In an order passed on August 19, a bench comprising judicial member Nilesh Sharma and technical member Sameer Kakar held that the Rs 20 crores advanced by Pen India to finance the film’s release qualified as financial debt under the Insolvency and Bankruptcy Code (IBC).
The tribunal has imposed a moratorium under Section 14 of the IBC and appointed Umesh Balaram Sonkar as the interim resolution professional. However, the NCLT clarified that it has not determined the final amount payable to Pen India and has left the process of collating the claim to the resolution professional.
Why did the dispute arise?
Pen India had advanced Rs 20 crores to Reliance Entertainment Studios under a security deposit agreement signed in November 2022. The agreement provided for repayment with interest at 21% per annum, compounded monthly. A subsequent agreement executed in October 2023 saw Friday Filmworks Private Limited, which is partly owned by Reliance, pay Rs 15 crores to Pen India.
According to Pen India, Rs 4.49 crores remained outstanding as principal, along with Rs 7.44 crores in interest.
Reliance Entertainment Studios argued that the amount was expressly described as a security deposit and therefore did not constitute a money-lending arrangement. The company also contended that its liability had been extinguished under a contractual provision that required repayment through a third-party satellite or digital rights provider.
The NCLT rejected these arguments, stating that the actual substance and commercial effect of a transaction matter more than the terminology used by the parties. “The transaction, therefore, possesses all the essential attributes of a borrowing notwithstanding the terminology adopted by …read more
Disclaimer : This story is auto-aggregated by a computer program and has not been created or edited by FilmyFriday. Source:: BollywoodHungama
