What the Delhi High Court said on the release of Amar Singh Chamkila

Reliance Entertainment Studios recently told the Delhi High Court that it would give 50 per cent of the profits coming from the film Amar Singh Chamkila, streaming on Netflix, to Super Cassettes Industries Private Limited (T-Series)..Justice Sanjeev Narula disposed of a plea filed by T-Series to prevent Reliance Entertainment Studios from releasing future films."...it is untenable for SCIPL (T-Series) to assert that revenues generated from the Netflix Reliance Agreement – executed under the License Agreement between WSF and Reliance – constitute revenues in Reliance’s possession over which, SCIPL can legitimately claim a lien or charge. Given the complexities inherent in distinguishing between gross revenues and direct profits accruing to Reliance, the Court finds that SCIPL’s lien or charge, under the current circumstances pertaining to the film in question, is more appropriately enforceable over the net profits of Reliance, rather than the gross revenues," the Court observed..Effectively, the film will be released on Netflix on April 12..The Court directed Reliance to fulfil the commitments it mentioned during the hearing of the case, which included,- a fixed commission of 2% from the licensing fee, to be deducted from the final tranche Reliance receives from Netflix, and- 50% of the profits generated by the film Amar Singh Chamkila."These measures reflect an equitable approach to reconciling the interests of all parties involved and ensuring compliance with the contractual and legal frameworks governing the relationships between SCIPL, Reliance, Netflix and WS," the Court observed while disposing of the application..The Court was dealing with an application by T-Series to prevent Reliance Entertainment from releasing films, claiming a right to injunction based on a loan agreement and other agreements between the parties.One of the agreements stated that until Reliance repays the loan, T-Series would have a claim on the revenues from all films produced by Reliance, including future ones..T-Series argued that Reliance failed to repay outstanding amounts to the tune of ₹60,23,73,358, claimed to have become due as of November 16, 2023.Due to this alleged default, T-Series asserted its right to lien and charge over any future films produced by Reliance, whether independently or in collaboration with others.Consequently, it sought the High Court's intervention to prevent Reliance from releasing any such films, including Amar Singh Chamkila, until the sum is fully repaid. T-Series made this demand based on a letter it had signed with Reliance in March 2023..During a hearing that took place in November last year, counsel for Reliance submitted that it would refrain from releasing any films and from transferring any rights related to such films for a period of two weeks. The company was bound to such submission till date. It was argued that Amar Singh Chamkila has been produced by Window Seat Films (WSF), independently from Reliance. It was contended by Reliance that as per its licensing agreement with WSF, it could grant sub-licenses to other entities for films produced by WSF. In that capacity, Reliance executed an agreement with Netflix. Therefore, the receipts from the film are not directly attributable to Reliance, precluding T-Series from laying any claim over them, it was submitted..T-Series expressed apprehensions that Reliance was preparing to release five films where they were identified as the producers.Counsel for T-Series argued that the film Amar Singh Chamkila has been produced by Reliance through WSF, a limited liability partnership, in which Reliance is one of the partners holding approximately 99.99% of the capital share. Consequently, T-Series has the right to enforce their lien and charge over the revenues generated by the film, it was argued..Counsel for Netflix argued that its agreement with Reliance was executed prior to the exchange of the March letter between T-Series and Reliance, and therefore, cannot prejudice the rights of Netflix..To answer the question of who was the producer of the film in question, the Court said,"At this stage, while it cannot be definitively concluded that Reliance is the sole and exclusive producer, the evidence presented prima facie indicates that WSF is the actual and legally recognized producer of the film “Amar Singh Chamkila”."It went on to state that T-Series' argument that WSF is merely an alter ego of Reliance, suggesting that the Court should pierce the corporate veil to reveal WSF's true nature, is not justified at this preliminary stage..On whether T-Series' right of lien can be extended to amounts received from Netflix, the Court said that a simple demarcation of Reliance’s revenues from these Netflix funds is not feasible, even if one were to assume that Reliance is an equal partner with WSF in the film production..Senior Advocate Amit Sibal along with Advocates Harsh Kaushik, Sanjeevi Sheshadri, Darpan Sachdeva and Srishti Mishra appeared for T-Series.Senior Advocate Saurabh Kirpal along with Advocates Malvika Kapila Kalra, Tanwangi Shukla and Adya Rajkotia appeared for Reliance Entertainment.Advocates Shyel Trehan, Raj Duggal, Raghav Kumar, Rohan Poddar, Aditya Ladha and Ganeha Gambani appeared for WSF.Senior Advocate Sandeep Sethi along with Advocates Thomas George, Tanvi Sinha, Sidharth Chopra, Devvrat Joshi, Neeti Nihal and Riya Kumar appeared for Los Gatos Production Services India LLP, an affiliate of Netflix..[Read Order]