Madras High Court Directs Actor Vishal Krishna Reddy To Pay Over 30 Crore To Lyca Productions
The Court said that Lyca Productions had successfully established that actor Vishal Krishna Reddy received and enjoyed the financial benefits of the loan agreement without repayment, and held that the repayment obligation was neither waived nor defeated by the force majeure clause.
Justice P.T. Asha
The Madras High Court, while decreeing a civil suit filed, directed actor Vishal Krishna Reddy to pay over Rs. 30 Crores to Lyca Productions Private Limited.
A Single Bench of Justice P.T. Asha observed, “This Court is of the opinion that the plaintiff has proved the transaction by oral and documentary evidence and has also established that the defendant had enjoyed the benefits under the agreement and has not repaid the same.”
The Court added, “The conduct of the defendant from the beginning of the suit proceedings appears to be evasive… The defendant who had received the money after the filing of the suit has not chosen to clear even a part of the plaintiff’s dues.”
Senior Advocate V. Raghavachari appeared for Lyca Productions, while Senior Advocate A.K. Sriram represented Vishal Krishna Reddy.
Brief Facts
Lyca Productions, a production house in the Tamil film industry, filed a money recovery suit claiming that actor Vishal Krishna Reddy owed it over 30 crore, inclusive of interest. According to the production company, Vishal had approached them in connection with a loan he had taken from Gopuram Films, to fund the production of the 2016 movie Marudhu.
Lyca Productions agreed to take over the liability and made payments totalling 21.29 crore directly to Gopuram Films between April and August 2019. A formal loan agreement was executed, under which Vishal undertook to repay seven crore a week before the release of his next film Thupparivalan II, and the remaining amount by the end of that year if the film was not released. The agreement also stipulated interest at 30 percent per annum.
Vishal did not repay any portion of the loan. Despite reminder letters and emails, there was no response from him. Lyca Productions later discovered that Vishal had completed and released another film, Chakra, and collected revenues from theatrical and OTT rights, however, he still made no effort to settle the dues.
Reasoning of the Court
The Court first considered whether Vishal Krishna Reddy had breached his obligations under the loan agreement and whether Lyca Productions had discharged the loan amount owed by him to Gopuram Films.
On the issue of breach, the Court noted, “The terms of the agreement dated 21.09.2019 has been breached. Therefore, Issue No.1 has to necessarily be answered in favour of Lyca Productions.”
The Court observed that Vishal had shifted his stance during the proceedings and that his earlier affidavit had admitted the execution of the agreement and the repayment schedule. It stated, “The defendant has taken out different stances / defense at different stages… he has not only admitted the execution of agreement dated 21.09.2019 but has also reiterated the terms of repayment.”
The Bench referred to Vishal’s earlier statement on oath, when he stated, “I am always ready and willing to perform my obligations under the subject agreement and repay whatever amounts that may be arrived at after mutual discussions and fixing the rescheduled time limit for repayment at the time of release of the film Thupparivalan II.”
Criticising the inconsistency in Vishal’s stand, the Court said, “In the written statement this defense has been given a total go by and a defense is raised that money was not directly paid by Lyca Productions to Vishal Krishna Reddy…”
Turning to whether Lyca Productions had paid Gopuram Films on behalf of Vishal, the Court found that the company had produced sufficient evidence including bank statements and ledger entries.
On the question of interest, the Court upheld the 30% contractual rate and dismissed Vishal’s objection that it was usurious. “The learned Judge in the Indiabulls case has also held that these two Acts would not apply to the money lenders who advanced loans on the basis of Negotiable Instruments exceeding Rs.10,000/-. Therefore… Vishal Krishna Reddy is liable to pay interest 30% on 21.29 crores from the date of agreement… till the date of payment”, the Bench added.
Regarding the plea of force majeure due to the pandemic, the Court rejected Vishal’s argument as untenable, noting that the Covid -19 pandemic had not dithered Vishal from producing or acting in ‘Chakra’ and other movies
The Court also condemned Vishal’s overall conduct during the proceedings noting, “The conduct of Vishal Krishna Reddy from the beginning of the suit proceedings appears to be evasive… Vishal who had received the money after the filing of the suit has not chosen to clear even a part of Lyca Productions’ dues.”
Consequently, the Court held that Vishal Krishna Reddy had breached the terms of the loan agreement and failed to repay the amount despite due notice, and accordingly decreed the suit in favour of Lyca Productions, directing him to pay a sum of Rs. 30,05,68,137/- with interest at 30% per annum on the principal amount of 21.29 crore from the date of suit till realisation.
Cause Title: Lyca Productions Private Limited v. Vishal Krishna Reddy (C.S. No. 59 of 2021)
Appearance:
Plaintiff: Senior Advocate V. Raghavachari
Defendant: Senior Advocate A.K. Sriram; Advocate M. Arun
