Bombay high court dismisses plea to appoint court receiver for digital prints of 4 films to recover loan

The Bombay high court (HC) recently dismissed an application filed by a company, Padma Ispat, to appoint a court receiver for digital prints of four films allegedly belonging to KriArj Entertainment, a production firm, to recover Rs16 crore that the latter failed to pay them.

The objective of appointing a receiver is to oversee the collection of revenue from these films so that KriArj does not delay the repayment of loan any further.

KriArj had given post-dated cheques to Padma Ispat that were dishonoured. Padma Ispat, therefore, filed an application to appoint a court receiver for digital prints of Fanney Khan, Batti Gul Meter Chalu, Kedarnath and Rani (Sapna Didi’s biopic) to recover the loan amount with interest.

However, KriArj said it was a monetary loan and Padma Ispat could not seek such reliefs.

The bench of justice SC Gupte was informed that Padma Ispat had forwarded a loan of ₹11.35 crore to KriArj in 2018 to fund the acquisition of the worldwide theatrical and music rights in two films.

The other three parties holding digital and theatrical rights of the films told the court that they had been given rights by KriArj prior to 2018 so it had no rights on the said films and no action could be initiated for recovery.

The bench said as the loan agreement did not have a clause where KriArj’s property could be attached for default, it would not grant Padma Ispat’s plea. It said in light of the fact that KriArj had already given away the rights of the films to others, it would not be possible to make the holders of the rights liable.

The bench said Padma Ispat should have verified the documents based on which KriArj sought a loan.

Though KriArj was not entirely honest and was liable to repay the loan with interest to Padma Ispat, it could not be done at the cost of others.

The bench hence refused to grant the prayer of Padma Ispat and dismissed the application.