Financial Hardship Alone Cannot Justify Payment Of Disputed Claim: Bombay High Court

The Bombay High Court on Tuesday held that financial hardship by itself cannot justify directing payment of a disputed claim at an interim stage.

Refusing to order Ullu Digital Ltd. to secure or deposit about ₹2.58 crore claimed by the producer of the web series 'KINK 2', the Court observed that treating financial pressure as a sufficient reason for payment would blur the distinction between admitted and contested claims.

Justice Amit Borkar held that the material on record did not warrant interim relief. The Court also declined to restrain Ullu from continuing to stream and exploit KINK 2, observing that the parties would have to pursue their remedies before an arbitral tribunal.

“Merely because a party is facing financial pressure does not automatically mean that every disputed claim must immediately be treated as payable. If financial difficulty were accepted as sufficient reason for directing payment, the distinction between an admitted claim and a disputed claim would disappear. Courts dealing with applications at an interim stage are required to proceed on settled legal principles. Therefore, while the hardship alleged by the petitioner may be a relevant circumstance, it cannot by itself provide a sufficient basis for granting the relief sought.”, the court observed

The dispute arose from a Production Service Agreement executed on May 23, 2024 for production of KINK 2. The Capturing Factory claimed that shooting took place between June 28 and July 25, 2024 and that episodes were delivered in stages between November 2024 and April 2025.

It also pointed out that the series began streaming on Ullu's platform from February 28, 2025.

Claiming that dues remained unpaid despite the release of the web series, The Capturing Factory sought to secure the amount it claimed was outstanding. It also sought to stop further exploitation of the series.

The Capturing Factory argued that Ullu had accepted the content by streaming it and raised objections only later. Ullu maintained that further payments were linked to contractual deliverables and approvals.

It relied on correspondence showing complaints about delays in delivery, non-submission of materials and non-compliance with contractual obligations long before the proceedings were initiated. Ullu also maintained that certain deliverables remained incomplete and approvals were still pending.

The Court was not persuaded by the producer's contention that the objections had surfaced only after litigation began.

“However, from the material available on record, it is not becoming possible for this Court to accept the contention of the petitioner that all objections now raised by the respondents were brought for the first time only after filing of the present proceedings. When the correspondence placed by the respondents is looked into, it appears that issues regarding delay in delivery, non-submission of required materials and compliance with contractual requirements were being spoken about much before the present petition came to be filed.”

Examining the record, the court noted that the agreement contemplated delivery of episodes as well as various technical materials and approvals. It observed that the dispute extended beyond a simple claim for unpaid dues and involved contested questions regarding contractual performance, deliverables and compliance requirements.

The Court held that the matter could not be viewed as a case where liability was admitted and payment alone was being withheld without any contractual basis. It also observed that the material before it did not disclose any admission of liability by Ullu.

“For all the aforesaid reasons, I am not persuaded that the petitioner has established a case for grant of the interim directions sought in the present proceedings. Consequently, the prayer seeking direction for payment or deposit of the amount claimed and the prayer seeking a broad restraint against exploitation of the web series cannot be granted at this stage. The parties must therefore pursue their respective remedies before the arbitral tribunal where all contentions shall remain open for consideration in accordance with law,” the court held.