The High Court of Judicature at Bombay has declined an application by Phantom Studios India Pvt. Ltd. seeking to vacate contractual negative covenants that currently prohibit the firm from producing or commercially exploiting film projects centered on the character of Hanuman or the epic Ramayana. In a judgment delivered on November 3, 2026 , the court determined that the restrictive clauses in an Assignment Agreement executed on April 19, 2024 , remain legally binding on the petitioner, regardless of subsequent changes in the entity’s corporate shareholding structure.

The dispute arose in the context of an agreement whereby Prime Focus Technologies Ltd. acquired intellectual property rights for "Project Ramayana" from Allu Mantena Media Ventures LLP . Phantom Studios, a party to the original contract, was subject to Clause 5 , which imposes a holdback and non-compete restriction on specific parties until Diwali 2027 . Phantom had sought urgent interim relief under Section 9 of the Arbitration and Conciliation Act, 1996 , arguing that the restriction was intended to apply only while the studio remained under the control of Madhu Mantena. Following a share buyback on October 17, 2024 , which facilitated Mantena’s exit, the petitioner contended that the commercial rationale for the non-compete obligation had vanished.

Justice Amit Borkar, presiding over the Commercial Division , rejected the premise that the restriction was inherently linked to the studio’s ownership status. The court highlighted that Phantom was an expressly named signatory within the core restrictive clauses, distinct from broader definitions used in the contract.

"There is a difference between an entity being covered under the definition of ' Assignor Parties ' and Phantom being separately named as a party bound by Clauses 5.1 and 5.2. Both expressions have been used in the Agreement," the court observed. Consequently, the judicial finding held that the contractual burden could not be unilaterally modified by a change in management or shareholding, particularly in the absence of a written, signed amendment.

Enforceability of Contractual Obligations

During the proceedings, the petitioner argued that the negative covenant should no longer be enforced because the primary purpose behind the grouping—the control by Madhu Mantena—had been resolved. Furthermore, Phantom contended that as other parties to the agreement were allegedly breaching the same restrictive terms, it should be released from its own compliance obligations. The court, however, dismissed this argument, noting that contractual performance is not contingent upon the conduct of other parties unless specifically provided for in the agreement.

"Each party has accepted its own obligation under that clause. Therefore, an alleged breach by one party does not end the obligation of another party," the court held. The ruling emphasized that the agreement explicitly outlined the limited conditions under which restrictions might be lifted, such as the abandonment of the project by the assignee, and found that none of these predefined events had occurred. The court further pointed to Clause 17.2 , the " entire agreement " provision, which mandates that any modification to the contract must be executed in writing.

Disputed Claims of Oral Assurances

Phantom Studios additionally asserted that it had been promised a release from these obligations, coupled with a separate compensation package of ₹9 crore, as part of an oral understanding reached during the management transition. This claim was vehemently contested by the respondents, who denied that any such assurance had ever been made.

The court held that the petitioner’s assertions in internal correspondence regarding an oral promise did not equate to evidence of a binding contract. Referring to the legal threshold for such claims, the court cited the decision in Alopi Parshad & Sons Limited vs. Union of India , noting that equity cannot be used to rewrite clear contractual terms. "The Indian Contract Act does not enable a party to a contract to ignore the express covenants thereof, and to claim payment of consideration for performance of the contract at rates different from the stipulated rates, on some vague plea of equity," the bench observed. Because no written, signed amendment was produced to substantiate the claim of a new payment arrangement, the court refused to deviate from the original written terms of the Assignment Agreement .

Financial Disclosure Requests Denied

In addition to its request to lift the filming restrictions, Phantom sought a court direction compelling the respondents to disclose all payments made or payable under the Assignment Agreement . The petitioner argued that this information was essential to protect its purported claim to compensation.

The court rejected this prayer, finding it to be an overly broad request for financial discovery. The agreement provided for the consideration to be paid to the Assignor, and no clause mandated that any portion of that sum be earmarked for or distributed to Phantom Studios. The court concluded that it could not order an intrusive financial investigation into the payment transactions between the assignees and the assignor without the petitioner first establishing a prima facie legal right to those funds.

As a result, the court dismissed both primary prayers for interim relief . This ruling reinforces the sanctity of negative covenants in commercial contracts, particularly in the entertainment and intellectual property sector, where such restrictions are deemed central to the commercial bargain. The parties remain free to pursue their substantive claims and evidence-based arguments within the ongoing arbitration proceedings . For now, Phantom Studios remains bound by the negative covenants of the April 2024 agreement until the expiration period of Diwali 2027 .