The court ruled that a lien on film revenues is enforceable over net profits, not gross revenues, and acknowledged the complexities of film production financing.

CS(COMM) 840/2023 Page 2 of 25 SANJEEV NARULA, J. (Oral): I.A. 6607/2024 (on behalf of the Plaintiff seeking injunction restraining the Defendant from releasing future films along with supporting affidavit)

1. The Plaintiff, Super Cassettes Industries Private Limited,1 has now, for the second time, filed the instant application seeking to prevent the Defendant, Reliance Entertainment Studios Private Limited,2 from releasing/ exhibiting/ broadcasting cinematographic films. SCIPL claims a lien and charge on the revenues generated by these films, asserting a consequential right to seek an injunction emanating from the Loan Agreement dated 19th May, 2021,3 and other ancillary agreements between the parties. SCIPL further alleges non-compliance by Reliance with a prior undertaking given to this Court, suggesting that Reliance is proceeding with the release of new films, despite a commitment to the contrary.

FACTS GERMANE TO THE PRESENT CONTROVERSY

2. SCIPL, as a financer of production and distribution of cinematographic films, extended a loan of Rs. 268 crores to Reliance under the Loan Agreement towards production and other related expenses in respect of eleven cinematographic films in the Hindi language. The monetary stipulations of the Loan Agreement underwent modifications through exchange of communications between the parties, with the last correspondence dated 17th March, 2023.4 According to this communication, SCIPL had disbursed an amount of Rs. 168 crores till the date of issuance of 1 “SCIPL”.

2 “Reliance”.

3 “Loan Agreement”.

4 “March letter”.

CS(COMM) 840/2023 Page 3 of 25 the letter towards production of six films, which was recoverable from Reliance along with the cost of capital.

3. SCIPL contends that Reliance has defaulted in repayment of the outstanding amounts due under the Loan Agreement, constraining them to institute the present suit for recovery of an amount of Rs. 60,23,73,358/-, allegedly due as on 16th November, 2023. This figure encompasses the principal amount due, cost of capital, and revenue components in accordance with the terms set forth in the Loan Agreement. In light of this alleged default, SCIPL asserts a lien and charge over any future films that Reliance plans to produce, either independently or in collaboration with others. Consequently, SCIPL seeks the Court’s intervention to prohibit Reliance from releasing any such films until the afore-mentioned sum is fully recovered, basing this request on the stipulations of the Loan Agreement, as reinforced by the March letter.

4. At the stage of issuance of summons and notice in the application under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure, 1908 [I.A. 23284/2023], Mr. Saurabh Kirpal, Senior Counsel for Reliance, demonstrating a spirit of fairness and acknowledging the longstanding relationship between the parties, assured the Court that Reliance would refrain from releasing any cinematographic films and from transferring any rights related to such films for a period of two weeks therefrom. He further committed that should Reliance contemplate undertaking either of these actions within the specified timeframe, it would first seek the Court’s permission through a formal application. The order dated 23rd November, 2023 thus notes as follows:

• CS(COMM) 840/2023 Page 4 of 25 “40. However, Mr. Saurabh Kirpal, ld. Sr. Counsel, fairly submits that in view of the long association between the Defendant and the Plaintiff, the Defendant shall not release any cinematograph films for the next two weeks and shall not transfer any rights in any cinematograph films for the next two weeks. If the Defendant wishes to do so, it would approach the Court by way of an application.”

5. The afore-mentioned commitment made by Reliance was extended on 19th December, 2023, and continues to bind them.

6. In this background, SCIPL has raised concerns that Reliance is gearing up for release of five films enlisted in paragraph No. 15 of the app