NCLT admits Section 9 IBC plea against Eros International Media for failure to clear NH‑10 Film revenue payments [Read Order]

The National Company Law Tribunal (NCLT) has admitted an insolvency petition filed under Section 9 of the Insolvency and Bankruptcy Code (IBC) against Eros International Media Ltd.

The petition was brought by Phantom Studios India Pvt. Ltd., which claimed that Eros failed to pay ₹1.48 crore in film revenue dues arising from a co‑production agreement for the Hindi movie NH‑10.

Operational Creditor Phantom Studios argued that Eros had acknowledged its liability through a letter dated 14 March 2024, confirming payment of ₹1.25 crore plus GST by 30 June 2024. Despite repeated reminders, the amount remained unpaid, prompting the operational creditor to issue a demand notice on 1 July 2024.

On the other hand, Corporate Debtor Eros contended that the claim did not qualify as an “operational debt” under Section 5(21) of IBC, asserting that the arrangement was a profit‑sharing joint venture rather than a supply of goods or services. It also sought to set off the amount against alleged dues owed by another entity, Supernova Entertainment Pvt. Ltd., which it claimed was under the same management.

After examining the agreements and correspondence, the tribunal held that the debt arose from the exploitation of the film and was therefore linked to the provision of services under the co‑production arrangement. The bench found no pre‑existing dispute and ruled that the petition was within limitation, noting Eros’s written acknowledgment of liability.

The bench comprising  Lakshmi Gurung (Judicial Member) and Hariharan Neelakanta Iyer (Technical Member) observed that the debt stemmed from a film co‑production agreement executed in 2013 between Eros and Phantom Films Production Pvt. Ltd. (now Phantom Studios).

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Under the agreement, both parties were to share production costs and revenues, including the ₹1.25 crore lead‑actor fee for Anushka Sharma.

The bench observed that “Even if money is owed by one party to another the nature of the relationship between the parties, based on the contract between them, plays a significant role in determining whether a debt can be considered as an operational debt”.

Accordingly, the NCLT admitted the Section 9 petition and directed initiation of the Corporate Insolvency Resolution Process (CIRP) against Eros International Media Ltd., appointing an Interim Resolution Professional to take charge of the company’s affairs.

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