Madras High Court Paves Way For Release Of 'Dhruva Natchathiram' Movie, Orders Escrow Account To Safeguard Creditors' Dues

Justice Senthilkumar Ramamoorthy has ordered that an escrow account be created in the name of Kondaduvom Entertainment, a company owned by Menon. The court has directed that all the transactions that are to be done before and after the movie's release be done through the account. An advocate commissioner has also been appointed to oversee the transactions in the account.

The court passed the directions in an application filed by two creditors of Gautham Vasudev Menon and his production house, seeking to restrain the movie's release in light of pending dues. In 2023, the court passed an interim injunction order restraining the release of the movie.

The creditors, K Punniyamoorthy and K Premkumar, had informed the court that they had entered into an agreement with Escape Artists Motion Pictures, one of the producers of Dhruva Natchathiram, for the theatrical distribution of the Tamil movie “Enai Noki Payum Thotta”. However, a financial dispute arose between the parties, and arbitration proceedings were initiated. Eventually, the parties signed a Memorandum of Understanding (MoU) in 2018, through which the proprietor of Escape Artist gave away 50% of his rights in Dhruva Natchathiram movie to the producers.

When an announcement was made to release the movie in 2023, the creditors approached the court seeking to restrain the release. It was argued that the movie was their security to get back their dues. The court had allowed an interim injunction petition and stalled the release of the movie in 2023

When the matters were taken up recently, the creditors informed the court that they were willing to allow the movie's release but suggested that an escrow account be created in the movie's name or the company's name to ensure that the amounts received through the movie are not parted with and the creditors could have a claim over the same.

To this, Menon submitted that he had to obtain a no-objection certificate from creditors, from whom he had borrowed money for the making of the film and only after that the movie could be released. As per the court's direction, Menon also submitted a list of creditors to whom money was due and other documents in connection with the same.

After taking note of the submissions, the court has now directed that an account be created and all the money be deposited in connection with the release of the movie. The court also made it clear that the persons involved in the making of the movie should not make any withdrawals from the account without the permission of the court.

Noting that the producers were planning to release the movie by May 22, the court told the parties that they could approach the court seeking to extend the time limit for carrying out this exercise, if the movie could not be released on or before June 15.

Case Title: K Punniyamoorthy and another v M/s Escape Artists Motion Pictures and Others

Case No: OA 283 of 2023