Business

NCLT admits Pen India’s plea against Reliance arm

By Sohail Khan 20 August 2026, 11:54 pm

Benchmarks
Nifty24,231.85153.55

FEATURED FUNDS★★★★★

Motilal Oswal Midcap Fund Direct-Growth

5Y Return
23.26 %

Invest Now

Enter search text:

Business News›Industry›Media/Entertainment›Media›NCLT admits Pen India's plea against Reliance Entertainment Studios

Read Today's Paper

NCLT admits Pen India's plea against Reliance Entertainment Studios

Synopsis

NCLT Mumbai has admitted Pen India’s insolvency petition against Reliance Entertainment Studios over a ₹11.94 crore default linked to a security deposit agreement. The tribunal held that the transaction qualified as financial debt and that Reliance’s liability remained outstanding despite its repayment mechanism. It rejected Reliance’s objections and initiated the corporate insolvency resolution process.

Reuters

NCLT has admitted a Section 7 insolvency petition filed by film company Pen India against Reliance Entertainment Studios, initiating the corporate insolvency resolution process (CIRP).

Mumbai: The National Company Law Tribunal (NCLT), Mumbai, has admitted a Section 7 insolvency petition filed by film company Pen India against Reliance Entertainment Studios, initiating the corporate insolvency resolution process (CIRP).

The petition arose from a ₹20-crore security deposit agreement dated November 14, 2022, under which Pen India disbursed the amount to Reliance Entertainment Studios. The agreement provided for interest at 21% per annum, compounded monthly. Pen India claimed a default of ₹11.94 crore, with June 30, 2024 stated as the date of default.

ALSO READ | Reliance bets big on AI to drive next phase of growth for entertainment business

Under an additional agreement dated October 6, 2023, Friday Filmworks paid ₹15 crore to Pen India on behalf of Reliance, which was received on October 31, 2023. The tribunal noted that the entire amount advanced under the security deposit agreement was not repaid.

ET Bureau

Pen India argued that the transaction constituted a financial debt under Section 5(8) of the IBC, as the amount was advanced against consideration for the time value of money and carried interest and a repayment obligation.

It also relied on Reliance's letters dated January 5, April 3 and August 14, 2024, which it said acknowledged the outstanding liability and proposed repayment timelines. Reliance contended that the transaction was a security deposit, not a lending or borrowing arrangement, relying on Clause 15 of the agreement. It also argued that Clause 4(B) provided for repayment through a third-party satellite or digital rights provider and that its liability had consequently been extinguished.

Reliance further challenged the petition under the Maharashtra Money-Lending (Regulation) Act, arguing that Pen India did not hold a valid licence and that the 21% interest rate exceeded the applicable ceiling.

The NCLT rejected these objections, holding that the substance and commercial effect of the transaction established a financial debt. It held that Clause 4(B) was a payment mechanism and did not extinguish Reliance's primary liability.

The tribunal noted that Reliance had repeatedly acknowledged the outstanding liability and proposed repayment schedules, but failed to make the payment due on June 30, 2024 and honour the revised schedule. It, therefore, held that default was established.

The Bench also rejected the objection based on the "disputed" status recorded with NeSL, holding that it was not a judicial determination of default.

Add as a Reliable and Trusted News Source
Add Now!

(You can now subscribe to our WhatsApp channel)

(Catch all the Business News, Breaking News and Latest News Updates on The .)

…moreless

(You can now subscribe to our WhatsApp channel)

Read More News on
Pen IndiaReliance Entertainment Studiosreliance newsreliance sharesrilril stocks todayNeSLdefault paymentreliance

(Catch all the Business News, Breaking News and Latest News Updates on The .)

…moreless

Enter search text:

Continue reading with one of these options:
Limited Access
Free
Login to get access to some exclusive stories

& personalised newsletters
Login Now

Unlimited Access
Starting @ Rs120/month
Get access to exclusive stories, expert opinions &

in-depth stock reports
Subscribe Now

Unlock Access to All Exclusives with ETPrime FREE TRIAL

15 Days Free: Unlock All ETPrime Exclusives, Market Tools & ePapers

Trial offer expiring in00 : 05 : 00

I'd rather pay ₹2599 now

Uh-oh! This is an exclusive story available for selected readers only.

Worry not. You’re just a step away.

Prime Account Detected!

It seems like you're already an ETPrime member with

Log out of your current logged-in account and log in again using your ET Prime credentials to enjoy all member benefits.

Unlock ETPrime's Exclusive Stories Today!

Subscribe to gain powerful insights on business, stock market and industry trends.

Big Price Drop! Flat 40% Off

Student Only Offer

Already a Member? Sign In now

Already a Member? Sign In now
Already a Member? Sign In now

Offer Exclusively For You

Save up to Rs. 700/-

ON ET PRIME MEMBERSHIP

Avail Offer

Offer Exclusively For You

Get 1 Year Free

With 1 and 2-Year ET prime membership

Avail Offer

Offer Exclusively For You

Get 1 Year Free

With 1 and 2-Year ET prime membership

Avail Offer

Offer Exclusively For You

Get Flat 40% Off

Then ₹ 1749 for 1 year

Avail Offer

Offer Exclusively For You

ET Prime at ₹ 49 for 1 month

Then ₹ 1749 for 1 year

Avail Offer

Special Offer

Get flat 40% off on ETPrime

Avail Offer
Avail Offer

Claim NowAlready a Member? Sign In now

Need Assistance?

Connect with an ETPrime expert for personalized support and guidance

+91 9484700004

' + h3 + '

' + h4 + '

' + listing + '

What’s Included with

ETPrime Membership

1Exclusive Insights That Matter

Uncover the truth with our investigative stories

Make strategic moves using the real-world case studies

Read industry-specific stories to identify emerging trends

Spot opportunities with in-depth insights that matter

Trump temper on H-1B visas is forcing Indians to do these things to stay put in US

What Adani’s US indictment means for India Inc’s overseas fundraising
Why veterans like Reliance, L&T are on acquisition spree? Aswath Damodaran has an answer.

Will China’s dollar bond sale in Saudi Arabia trump the US in financial world?
Huawei launches its own OS to compete with Google and Apple. But can it win beyond China?

The problem with lab grown diamonds
Why a falling rupee is a better option for the economy

A list of top 20 momentum stocks that have delivered massive returns in one year