NCLT Dismisses Insolvency Plea Against Eros International, Says Revenue Share Not 'Operational Debt'

Mumbai, April 9: The National Company Law Tribunal (NCLT) has dismissed an insolvency plea filed by Gutz Feel Film Production LLP against Eros International Media Limited, ruling that claims arising from a revenue-sharing arrangement do not qualify as “operational debt” under the Insolvency and Bankruptcy Code (IBC).

Claim related to film agreements

The petition, filed under Section 9 of the IBC, sought initiation of the Corporate Insolvency Resolution Process (CIRP) against Eros International Media Limited over an alleged default of Rs 3.33 crore, along with interest.

The claim arose from agreements related to the films English Vinglish and Ki and Ka, under which the parties had entered into profit-sharing arrangements.

Revenue sharing not operational debt

The tribunal, however, maintained that the profit from the revenue-sharing arrangement cannot be equated with an operational debt, and the agreement is essentially in the nature of a joint venture and cannot be construed as service or goods supplied to the respondent by any stretch of imagination.

“At best, it can be termed as recoverable amount, which can be agitated before the Civil Court leading document and evidence etc,” reads the order.

Petitioner cites admitted dues

As per the petition, the petitioner company, Gutz Feel Film Production LLP, had argued that Eros had admitted dues of over Rs 3.33 crore through email communications in February 2023, allegedly promising payment within three months. However, the payment was allegedly not made, leading to the issuance of a demand notice and subsequent insolvency plea.

Eros contests claim

Eros International Media Limited opposed the petition, contending that the claim was disputed, barred by limitation, and stemmed from a partnership-like arrangement rather than an operational transaction.

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NCLT Dismisses Insolvency Plea Against Eros International, Says Revenue Share Not 'Operational Debt'

NCLT has dismissed an insolvency plea against Eros International, ruling that revenue-sharing claims do not qualify as operational debt under IBC. The tribunal said such disputes should be pursued through civil courts instead.