The Bombay National Company Law Tribunal (NCLT) on August 19 admitted PEN India Pvt. Ltd.’s insolvency plea against Reliance Entertainment Studios Pvt. Ltd. over a default of Rs. 11.94 crore. A bench comprising judicial member Nilesh Sharma and technical member Sameer Kakar held that an amount advanced under a Security Deposit Agreement can constitute a financial debt under section 5(8) of the Insolvency and Bankruptcy Code, 2016.
The dispute arose from a Security Deposit Agreement dated November 14, 2022, under which PEN India advanced Rs. 20 crore to Reliance on November 29, 2022. The agreement provided for repayment with 21% interest compounded monthly. Under a subsequent agreement dated October 6, 2023, Friday Filmworks Pvt. Ltd. paid Rs. 15 crore to PEN India on behalf of Reliance Entertainment, leaving around Rs. 5 crore in principal, alongwith interest, outstanding.
Reliance is said to have subsequently acknowledged the outstanding liability through various communications. In a letter dated April 3, 2024, the company undertook to clear the dues in two instalments due on June 30, 2024 and September 30, 2024.
After Reliance failed to pay the first instalment, PEN issued it a legal notice on October 8, 2024. It filed the insolvency application on August 8, 2025, claiming Rs. 11.94 crore.
Reliance opposed the petition, arguing that the transaction was not a lending or borrowing arrangement and added that its liability could be discharged through payment by a third party satellite and digital rights provider.
However, the NCLT admitted PEN India’s Section 7 application, and commenced insolvency proceedings against Reliance Entertainment Studios. It declared a moratorium and appointed Umesh Balaram Sonkar as the interim Resolution Professional to conduct the Corporate Insolvency Resolution Process.
