Phantom Studios India Private Limited Vs EROS International Media Limited (NCLT Mumbai)
The National Company Law Tribunal (NCLT), Mumbai Bench, dismissed a petition filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against Eros International Media Limited for an alleged operational debt of ₹1,48,28,902. The Tribunal held that the claim did not qualify as an “operational debt” under Section 5(21) of the IBC because it arose from a joint venture and profit-sharing arrangement rather than from the provision of goods or services.
The dispute arose from a Term Sheet dated 11.02.2013 and a Film Co-Production Agreement dated 17.12.2013 for the co-production of the Hindi film NH-10. Under the agreement, the Corporate Debtor was responsible for funding, distributing, exploiting, and marketing the film, while the producer was responsible for production-related activities. The parties also agreed to jointly bear the lead artist’s fee of ₹1.25 crore, contributing ₹62.50 lakh each, with the amount to be recouped from film revenues under the agreed recoupment mechanism. The producer’s rights were subsequently assigned to the petitioner through consent terms, a deed of novation, and related agreements.
The petitioner relied on a letter dated 14.03.2024, signed by both parties, recording that a net amount of ₹1,25,66,866, comprising ₹62.50 lakh towards principal and ₹63,16,866 towards agreed interest, was payable from revenues generated by the film and was to be paid on or before 30.06.2024. After repeated reminders seeking payment of the admitted dues, applicable GST, and a debit note, the petitioner issued a demand notice upon non-payment and contended that there was no pre-existing dispute because the liability had been expressly acknowledged.
