Auron Mein Kahan Dum Tha release funding row: Reliance Entertainment Studios enters insolvency process over Pen India’s Rs 11.94 crores claim
Here's the latest box office buzz making the rounds:
NCLT Mumbai has admitted Reliance Entertainment Studios to CIRP over a Rs 11.94 crores default linked to Pen India’s funding for Auron Mein Kahan Dum Tha.
Adding to this, 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.
Meanwhile, 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.
Notably, According to Pen India, Rs 4.49 crores remained outstanding as principal, along with Rs 7.44 crores in interest.
As per the latest buzz, 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.
In further updates, 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 the parties,” the tribunal shared.
On top of that, The bench also held that the clause concerning repayment through a third-party rights provider only created an additional mechanism for payment and did not remove Reliance’s primary liability.
The tribunal also took note of Reliance's subsequent conduct following the Rs 15 crores payment.
Source: Bollywood Hungama