NCLT admits Pen India insolvency plea against Reliance Entertainment Studios

The National Company Law Tribunal (NCLT) in Mumbai has admitted a ₹20-crore insolvency petition by Pen India against Reliance Entertainment Studios, triggering the corporate insolvency resolution process. Pen India had paid ₹20 crore as a security deposit in November 2022 under an agreement that carried 21% annual interest, compounded monthly. It claimed a default of ₹11.94 crore with a default date of June 30, 2024.

Pen India argued the deposit qualified as a financial debt under the Insolvency and Bankruptcy Code (IBC) because it was advanced against the time value of money and carried an explicit repayment obligation. Reliance contended the deposit was not a loan, citing a clause that said repayment could come from a third-party rights provider. The tribunal rejected that argument, noting that clause was only a payment mechanism and did not extinguish Reliance's primary liability.

The NCLT also dismissed objections under the Maharashtra Money-Lending Act, saying the case was about a financial debt, not a money-lending transaction. It cited multiple letters from Reliance acknowledging the debt and proposing repayment schedules, which were not honoured. With the petition admitted, a resolution professional will now take over to find a buyer or a repayment plan.