Madras HC directs filmmaker Gautham Menon to refund ₹4.25 crore to financier over unmade film

The Madras High Court has directed filmmaker Gautham Vasudev Menon and his production entity to refund ₹4.25 crore with 12% interest to a film financier [Photon Factory Vs RS Infotainment].

A Division Bench of Justices P Velmurugan and Govindarajan Thilakavadi dismissed an appeal filed by Menon and his firm Photon Factory against a 2022 single-judge ruling that had ordered repayment with interest from May 11, 2010 till realisation.

"We are of the considered view that there is no infirmity found in the judgment and decree passed by the learned Single Judge, warrants any interference by this Court," the Division Bench said.

The case arose out of a 2008 agreement for the production of a Tamil film, referred to as “Production No.6.” Under the agreement, RS Infotainment had agreed to fund ₹13.5 crore, with production scheduled to commence in December 2008 and expected to be completed by April 2009.

The financier paid ₹4.25 crore, including an advance of ₹2.5 crore. However, RS Infotainment later sued for recovery of ₹9.53 crore, alleging that the producers failed to even begin production despite receiving funds.

The producers argued that the financier had defaulted in making scheduled payments, which prevented continuation of the project. They contended that only ₹4.25 crore had been paid out of the agreed ₹13.5 crore and that the funding uncertainty forced them to shelve the project.

They further claimed that the funds received had been utilised for production-related expenses and that the project was later revived and released as Nee Thane En Pon Vasantham.

The High Court rejected the defence of the producers and upheld the trial court’s conclusions.

“The defendants have not produced any tangible and valuable evidence to prove that the film was ever commenced," the Bench said.

The Court noted that the contractual timeline requiring commencement of production was not complied with. It also found that documents relied upon by the producers, including vouchers and other records, were not proved in accordance with law.

“The defendants failed to establish that the vouchers and bills are related to the agreed film," it ruled.

The Court also rejected the contention that the later film Nee Thane En Pon Vasantham satisfied the contractual obligation. It further found that the producers had attempted to avoid liability through structuring of entities.

“Hence, it is seen that only with a deliberate intention of avoiding the contract with the plaintiff, the said defendants have changed their respective roles to other firms only to avoid payments to the plaintiff," it added.

The Court, thus, concluded that the producers had committed breach of contract by failing to commence production despite receiving funds.

Senior Advocate A Abdul Hameed with advocate Anbarasi Rajendran represented Menon and Photon Factory.

Advocates V Anand and Mohamed Farook represented RS Infotainment.