The Bombay National Company Law Tribunal (NCLT) on August 19 admitted PEN India Pvt. Ltd.’s insolvency plea against Reliance Entertainment Studios Pvt. Ltd. over a default of Rs. 11.94 crore. A bench comprising judicial member Nilesh Sharma and technical member Sameer Kakar held that an amount advanced under a Security Deposit Agreement can constitute a financial debt under section 5(8) of the Insolvency and Bankruptcy Code, 2016.
The dispute arose from a Security Deposit Agreement dated November 14, 2022, under which PEN India advanced Rs. 20 crore to Reliance on November 29, 2022. The agreement provided for repayment with 21% interest compounded monthly. Under a subsequent agreement dated October…