Madras High Court Upholds Release Of Vikram-Starrer Dhruva Natchathiram, Dismisses Financiers' Appeals

The Madras High Court has recently upheld an order permitting the release of filmmaker Gautham Vasudev Menon's long-delayed Tamil spy thriller 'Dhruva Natchathiram'.

The court held that a judicially supervised mechanism governing the film's revenues strikes a workable balance between enabling its release and protecting competing claims over its proceeds.

A Division Bench of Justices P. Velmurugan and K. Govindarajan Thilakavadi dismissed appeals filed by film financiers K. Prem Kumar and K. Punniyamoorthy.

The appeals challenged an April 30 order of a single judge that allowed the release of the Vikram- starrer movie subject to safeguards. Those safeguards included routing all receipts and disbursements through a dedicated bank account overseen by court-appointed observers.

"Having regard to the nature of the arrangement made by the learned Single Judge, we are of the considered view that the impugned order ensures a workable balance between facilitating the release of the film and ensuring that the receipt and utilisation of its revenues remain subject to judicial supervision," the bench observed.

"We do not find the exercise of discretion by the learned Single Judge to be arbitrary, perverse, or suffering from any patent illegality warranting interference in appellate jurisdiction," it added.

The dispute traces back to a Tamil Nadu theatrical distribution agreement executed on March 18, 2016. The agreement was entered into between the financiers and Escape Artists Motion Pictures in relation to Ennai Nokki Paayum Thotta. Under that arrangement, the financiers paid ₹13.72 crore towards acquisition of theatrical distribution and exploitation rights.

Disputes later arose between the parties. They were resolved through a Memorandum of Understanding dated March 31, 2018, which formed part of a compromise decree passed by the High Court on April 3, 2018.

Under the settlement, Escape Artists agreed to pay the financiers ₹18.72 crore. Of this amount, ₹8.50 crore was paid. A balance of ₹10.22 crore remained outstanding.

To secure repayment of that amount, the first respondent assigned and transferred its 50% share and interest in Dhruva Natchathiram in favour of the financiers.

The financiers also invested in other film projects promoted by Menon through associated entities. Disputes arising from those transactions were referred to arbitration. They culminated in arbitral awards dated June 28, 2022 in favour of the financiers.

Proceedings were subsequently initiated challenging the awards. However, no stay of their operation was granted. The awards continued to remain enforceable.

According to the financiers, steps were being taken to release *Dhruva Natchathiram* without adequately safeguarding their rights. Those rights arose from the compromise decree and the security interest created in their favour.

They contended that revenues generated from the film could be diverted towards other claims and liabilities. They therefore moved the High Court seeking interim protection.

On April 3, 2023, an interim injunction was granted. The order restrained release of the film.

During the proceedings, Kondaduvom Entertainment placed before the Court details of the project's financial position. These included amounts allegedly raised by pledging rights over 'Dhruva Natchathiram'. The affidavit also referred to rights already sold, liabilities claimed by vendors and service providers, amounts allegedly due to charge-holders and entities holding court orders, and sums said to be payable to partners of the production entity.

The respondents claimed that liabilities connected with the project exceeded ₹54.32 crore. They also asserted that further interest liabilities remained payable.

After considering the rival claims, the single judge concluded that continued restraint on the film's release would not serve the interests of any stakeholder. The court therefore permitted its release, subject to a mechanism governing the receipt and utilisation of funds.

The arrangement required all revenues generated by the film to be deposited into a designated account. The account was to function under the supervision of court-appointed observers.

Payments from the account could be made only in accordance with the framework approved by the Court. The Single Judge also directed that no payment be made to partners of Kondaduvom Entertainment towards remuneration or profit share without prior leave of the Court.

Challenging that order, the financiers argued that several liabilities disclosed by Kondaduvom Entertainment were inflated. They also contended that the liabilities were unsupported by records.

According to them, the approved payment structure would divert revenues away from the ₹10.22 crore they claimed remained payable under the settlement.

The respondents, including Menon, countered that the film could not be restrained indefinitely from release. They maintained that substantial liabilities had been incurred towards its production, completion and release.

The respondents further argued that the mechanism approved by the Single Judge adequately protected all stakeholders while allowing the project to generate revenue.

The Division Bench noted that the appeals arose from an interim order. It observed that the Court was not required at that stage to conclusively determine disputed questions concerning liabilities or the priority of competing claims.

"It is neither necessary nor appropriate to undertake a final adjudication of the rival claims or to conclusively determine disputed questions relating to the extent of liabilities or the priority of conflicting claims," the court held.

The bench noted that the single judge had devised a mechanism requiring all receipts and disbursements relating to the film to be routed through a designated account. That account would operate under the supervision of court-appointed observers. The arrangement, the court noted, ensured transparency and judicial oversight over the utilisation of funds.

"Questions relating to the correctness of liabilities disclosed by the respondents remain open. The same applies to the claims of financiers and creditors, as well as the extent of the financiers' own rights and entitlements. Those issues can be considered in the pending proceedings before the single judge", the bench observed.

Finding no ground to interfere with the exercise of discretion by the Single Judge, the Division Bench dismissed the appeals. It also confirmed the April 30, 2026 order.

The bench further vacated interim directions issued by a vacation bench on May 21, 2026. Those directions had restrained disbursal of ₹10.62 crore without the court's permission.

The court clarified that its observations were confined to deciding the present appeals. They would not amount to a final adjudication of the parties' rival claims.

It also left it open to any party to seek further directions, clarification, or modification of the interim arrangement before the single judge.

For Appellants: Senior Advocate S.R. Rajagopal; Advocate S.R. Sundar;

For Respondents: Advocate D. Kannan for Respondent No.1; Senior Advocate Abdul Hameed assisted by Advocate Anbarasi Rajendran for M/s AAV Partners for Respondent Nos.2 and 3; Senior Advocate T.R. Rajagopalan for Respondent No.4.