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Thangalaan and Kanguva land in legal trouble, Madras High Court orders production house to deposit Rs 1 crore each
The Madras HC has ruled an order against the production company Studio Green, which is backing both Kanguva and Thangalaan. Read on to know more.
The Madras High Court on Monday (August 12) ruled that the film production company Studio Green, led by K.E. Gnanavelraja, must deposit Rs 1 crore each before the release of its upcoming films, Thangalaan and Kanguva. As per a report by The Hindu, the Division Bench, comprising Justices G. Jayachandran and C.V. Karthikeyan, directed that the deposit of Rs 1 crore be made to the Official Assignee by Wednesday, August 14, with compliance to be reported to the court on the same day.
The order came days before Thangalaan is scheduled for a release on Thursday, August 15. Additionally, the judges stipulated that another Rs 1 crore must be deposited prior to the release of Kanguva.
According to The Hindu, the court issued these orders following an execution petition filed by the High Court's Official Assignee, who was tasked with recovering debts owed by the late businessman Arjunlal Sunderdas. Sunderdas had been accused of defrauding numerous people out of crores of rupees by persuading them to invest in his finance and real estate companies.
In 2016, the Official Assignee filed an application with the High Court, stating that Sunderdas had agreed to co-produce a movie with Studio Green in 2011, committing an investment of Rs 40 crore. Between September 2011 and October 2012, Sunderdas paid Rs 12.85 crore to Studio Green but had to withdraw from the project due to financial constraints. The production house claimed it was unable to refund the full amount as the funds had already been used for pre-production activities.
Of the total amount, Sunderdas only recovered Rs 2.5 crore, leaving a remaining balance of Rs 10.35 crore. The Official Assignee requested the court to direct Studio Green to deposit this outstanding amount, along with 18 percent interest from December 2013, so that Sunderdas' creditors could be reimbursed.
Studio Green opposed the Assignee's request, asserting that they had settled the debt by granting Sunderdas the Hindi remake rights to three Tamil films - All in All Azhaguraja, Biriyani, and Madras - and advised him to sell those rights using his connections in Bollywood. However, the production house could only produce a photocopy of the supposed agreement, claiming that the original document was destroyed in the 2015 floods.
The Hindu further reported that during cross-examination, V.K. Easwaran, a partner at Studio Green, admitted that the company's main office, located on the second floor of a building on Thanikachalam Street in T. Nagar, Chennai, had not been affected by the floods. However, he claimed that the documents related to the Sunderdas transaction were stored on the ground floor of another office on Masilamani Street in T. Nagar, where they were allegedly destroyed. He further stated that the destruction was reported to the service tax authorities in 2016.
On August 29, 2019, the Division Bench approved the Official Assignee's application, expressing doubt over Studio Green's claims. The court noted that the alleged agreement between Sunderdas and Studio Green had not been presented, nor was the date of the agreement provided.
Additionally, the value and goodwill of the three films were not disclosed, and no evidence was offered to support the claim that the remake rights were worth Rs 10.35 crore. The court also found the photocopies of the documents unconvincing, and the explanation regarding the loss of originals in the floods did not hold up under cross-examination. Consequently, the court ordered Studio Green to deposit Rs 10.35 crore, along with 18 percent interest dating back to 2013.
Due to non-compliance with this 2019 order, the Official Assignee filed the current execution petition, seeking to attach all of Studio Green's future films, including Thangalaan and Kanguva, until the company complies with the court's five-year-old directive.
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