NCLT Admits Reliance Entertainment to Insolvency Over Rs 11.94 Crore

The National Company Law Tribunal's Mumbai bench has admitted Reliance Entertainment Studios Private Limited into the corporate insolvency resolution process over a default of Rs 11.94 crore, per Bar and Bench, which published the order. The order, passed on August 19 by judicial member Nilesh Sharma and technical member Sameer Kakar, arises from money advanced for the release of the 2024 Ajay Devgn starrer Auron Mein Kahan Dum Tha.

• The NCLT Mumbai admitted Reliance Entertainment Studios Private Limited to the corporate insolvency resolution process over a Rs 11.94 crore default, by an order passed on August 19, per Bar and Bench.
• The plea was filed by Pen India, which had advanced Rs 20 crore in November 2022 to finance the release of the film Auron Mein Kahan Dum Tha, per Bar and Bench.
• Friday Filmworks, partly owned by Reliance, repaid Rs 15 crore in October 2023, leaving Rs 4.49 crore principal and Rs 7.44 crore interest outstanding as per Pen India's claim, per Bar and Bench.
• The tribunal held the advance was financial debt under the Insolvency and Bankruptcy Code despite being labelled a security deposit, imposed a moratorium and appointed Umesh Balaram Sonkar as interim resolution professional, per Bar and Bench.
• The Economic Times and LiveLaw also reported the NCLT's admission of Pen India's plea against Reliance Entertainment Studios.
• The bench noted Reliance had twice proposed instalment schedules in 2024 to clear the balance and failed to pay under either, per Bar and Bench.

With admission comes a moratorium under Section 14 of the Insolvency and Bankruptcy Code, and the tribunal appointed Umesh Balaram Sonkar as interim resolution professional, per the same report. The bench clarified it has not crystallised the amount Pen India claims, leaving that collation to the resolution professional.

The money behind the dispute

Per Bar and Bench, Pen India advanced Rs 20 crore to Reliance in November 2022 under a security deposit agreement tied to the film's release, carrying interest at 21 per cent per annum compounded monthly. Friday Filmworks, a company partly owned by Reliance, later paid Rs 15 crore to Pen India under an additional agreement executed in October 2023.

That still left Rs 4.49 crore of principal and Rs 7.44 crore of interest outstanding, according to Pen India's claim as recorded in the order. The Economic Times and LiveLaw both reported the NCLT's admission of the plea, with LiveLaw noting the tribunal's finding that the security deposit was, in substance, a borrowing.

Why Reliance's defences failed

Reliance Entertainment Studios argued the transaction was expressly a security deposit rather than a loan, and that its liability had been extinguished by a clause routing repayment through a third-party satellite or digital rights provider, per Bar and Bench. The tribunal rejected both arguments, holding that the substance and commercial effect of a transaction, not its label, determines whether it is financial debt under the Code.

The bench also leaned on the company's own conduct: per the order as reported, Reliance acknowledged the outstanding amount repeatedly after the Rs 15 crore payment, proposing a two-instalment schedule in April 2024 and a revised three-instalment schedule in August 2024, and failed to pay under either. A further contention that Pen India was an unlicensed money lender under Maharashtra's money-lending law was dismissed for lack of evidence that Pen India was in the lending business at all.

What it means for the studio's slate

The admission places one of Hindi cinema's most prolific production and distribution houses under a resolution process in which an insolvency professional, rather than management, steers its affairs while claims are collated. Bollywood Hungama, reporting the development, framed it as the escalation of a release-funding row that has trailed Auron Mein Kahan Dum Tha since 2024.

None of the reports cited here suggest any finding beyond the tribunal's ruling on this specific debt, and the order itself leaves the final claim amount open. The next procedural steps, including any appeal, had not been reported at the time of writing.

This article is original commentary and analysis by The NE Times. Background facts were referenced from Bar and Bench, The Economic Times, LiveLaw, Bollywood Hungama.