Reliance Entertainment
Published on: 21 Aug 2026, 8:45 am
The National Company Law Tribunal (NCLT) at Mumbai has admitted Reliance Entertainment Studios Private Limited to the corporate insolvency resolution process (CIRP) over a ₹11.94 crore default linked to the release of the film Auron Mein Kahan Dum Tha.
The NCLT imposed a moratorium under Section 14 of the IBC and appointed Umesh Balaram Sonkar as the interim resolution professional. It, however, clarified that it has not crystallised the amount claimed by Pen India and left its collation to the interim resolution professional.
The amount was advanced to Reliance under a security deposit agreement executed in November 2022. The agreement required the company to repay it with interest at 21 percent per annum, compounded monthly.
Friday Filmworks Private Limited, partly owned by Reliance, subsequently paid ₹15 crore to Pen India under an additional agreement executed in October 2023.
₹4.49 crore, along with ₹7.44 crore in interest, remained outstanding as principal, as per Pen India.
Reliance Entertainment Studios argued that the transaction was expressly described as a security deposit and not a money-lending arrangement. It also contended that its liability stood extinguished under a clause requiring repayment through a third-party satellite or digital rights provider.
The NCLT rejected these arguments, holding that the substance and commercial effect of a transaction, rather than the label attached to it, determines whether it is financial debt.
“The transaction, therefore, possesses all the essential attributes of a borrowing notwithstanding the terminology adopted by the parties,” the tribunal said.
It added that the contractual clause relied upon by Reliance merely created an additional payment mechanism and did not extinguish the company’s primary liability.
The Bench noted that Reliance had repeatedly acknowledged the outstanding amount after the ₹15 crore payment.
In April 2024, it proposed paying the balance in two instalments by June 30 and September 30, 2024. In August 2024, it proposed a revised three-instalment schedule ending December 31, 2024.
“The subsequent conduct of the parties constitutes the best evidence of how they themselves understood and acted upon the Agreement,” the order said.
The NCLT found that Reliance had failed to make payments even under the revised schedules. It held that the company’s subsequent reliance on the contractual clauses was inconsistent with its earlier acknowledgements.
The Tribunal also rejected Reliance’s contention that Pen India was an unlicensed money lender under the Maharashtra Money-Lending (Regulation) Act, 2014. It said there was no evidence that Pen India was carrying on the business of money lending, as opposed to entering into an individual commercial transaction concerning a cinematographic project.
Reliance had also pointed out that the National E-Governance Services Limited, an information utility, recorded the alleged default as “disputed”.
The NCLT held that this did not require dismissal of a Section 7 plea.
“Unlike proceedings under Section 9, the existence of a dispute is not by itself a ground to reject an Application under Section 7,” it said.
Pen India was represented by advocates Nausher Kohli, Jehan Fauzdar and Shoma Maria of Wadia Ghandy & Co.
Reliance Entertainment Studios was represented by advocates Rohit Gupta, Krushi Barfiwala and Archit Shah of Parinam Law Associates.
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Reliance Entertainment Insolvency
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IBC
NCLT
IBC 2016
Reliance Entertainment
Auron Mein Kahan Dum Tha
