In a significant development concerning the Tamil film industry, the Madras High Court on Monday, August 12, 2024, issued a mandate that the renowned film production house, Studio Green, helmed by K.E. Gnanavelraja, cannot proceed with the release of its upcoming movies “Thangalaan” and “Kanguva” without meeting specific financial conditions. The Court stipulated that Studio Green must deposit ₹1 crore for each movie before their respective release dates.
The directive came from a Division Bench comprising Justices G. Jayachandran and C.V. Karthikeyan. The Bench insisted that the production company deposit ₹1 crore with the Official Assignee by or before Wednesday, August 14, 2024, and furnish proof of compliance on the same day. This action is crucial as “Thangalaan,” starring the iconic ‘Chiyaan’ Vikram, is scheduled to hit theatres nationwide on Thursday, August 15, 2024. Similarly, another ₹1 crore must be deposited prior to the release of “Kanguva,” which features celebrated actor Suriya.
This legal directive stems from an execution petition filed by the High Court’s Official Assignee, tasked with recovering debts accrued by the now-deceased insolvent businessman Arjunlal Sunderdas. The Official Assignee had presented a case in 2016, highlighting that Sunderdas was accused of defrauding multiple individuals by enticing them to invest in his finance and real estate ventures, resulting in numerous financial grievances.
Sunderdas had ventured into the film industry by deciding to co-produce a movie with Studio Green in 2011, committing to an investment of ₹40 crore. Consequently, he had disbursed ₹12.85 crore to the production firm at different intervals between September 2011 and October 2012. However, financial constraints forced him to withdraw from the collaboration midway, leaving a significant portion of the investment unrecouped. Studio Green, citing expenditure on pre-production, expressed its inability to return the entire amount.
As it stands, Sunderdas received a mere ₹2.5 crore back, leaving an outstanding balance of ₹10.35 crore. In response, the Official Assignee urged the court to instruct Studio Green to deposit the remaining ₹10.
.35 crore, along with 18 percent interest accruing since December 2013, thus enabling repayment to Sunderdas’ defrauded investors.
Studio Green defended its stance by claiming to have settled the dues through a transfer of Hindi remake rights for three Tamil films—”All in All Azhaguraja,” “Biriyani,” and “Madras.” The production house asserted that Sunderdas was entrusted to liquidate these rights using his Bollywood connections. However, to substantiate their claims, Studio Green could only produce a photocopy of the agreement, asserting that the original had perished in the devastating 2015 floods.
During the legal proceedings, Studio Green’s partner V.K. Easwaran admitted that the main office, located on the second floor of a building on Thanikachalam Street in T. Nagar, Chennai, had not been impacted by the floods. However, he contended that documents pertaining to the transaction with Sunderdas were kept on the ground floor of another office on Masilamani Street in T. Nagar and were irreparably damaged. Additionally, he mentioned informing the service tax authorities about the destruction in 2016.
In a judgment passed on August 29, 2019, the Division Bench ruled in favor of the Official Assignee, questioning the veracity of Studio Green’s claims. The court emphasized that the alleged agreement between Sunderdas and Studio Green lacked credibility, noting an absence of the original document, unclear agreement dates, and unsubstantiated values and goodwill of the movies involved.
The Bench stated unequivocally, “No evidence justifies the assumption that the remake rights of the three movies equal ₹10.35 crore. There has been no oral or documentary evidence to support this claim. Producing photocopies does not suffice, and the flood destruction explanation didn’t hold during cross-examination.”
The court thereby ordered Studio Green to deposit ₹10.35 crore with an 18 percent interest rate from 2013. Non-compliance with this directive led the Official Assignee to file the current execution petition, seeking to attach Studio Green’s upcoming releases, including “Thangalaan” and “Kanguva,” until the court’s order is fulfilled.
In conclusion, with the court’s directive clear and firm, Studio Green is now under considerable scrutiny and pressure to comply with the High Court’s order, ensuring that the dues are settled ahead of the anticipated release of its major films, thus averting any further legal entanglements.
