Refusing to order Ullu Digital Limited to secure Rs. 2.58 crores claimed by the producer of the web series ‘KINK 2’, the Bombay High Court has held that where the monetary claim under a contract is disputed on the basis of contractual provisions linking payment to submission, verification and approval of deliverables, and the record discloses contemporaneous material showing prior disputes regarding performance, QC/TC compliance, delayed deliveries and pending materials, the claim cannot be treated as an admitted liability in proceedings under Section 9 of the Arbitration and Conciliation Act, 1996.
In such circumstances, the Court clarified that the interim relief in the nature of deposit/payment of the claimed amount or a broad restraint against exploitation of the subject matter ought not to be granted, and the parties must pursue their remedies before the arbitral tribunal, with all issues relating to performance of contractual obligations, approvals and compliance kept open for adjudication.
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A Single Judge Bench of Justice Amit Borkar observed that, at the interim stage, it would not be proper to accept one version as correct and reject the other, because the material on record indicated the existence of a written agreement regulating the rights and obligations of the parties, and a prima facie reading of the clauses relied upon by the respondents appeared to show that the payment structure was not linked merely with lapse of time, but with fulfilment of deliverable-based obligations. The Bench held that whether those obligations were fulfilled by the petitioner, or whether the respondents were placing undue reliance on such clauses only for avoiding payment, were questions requiring detailed scrutiny and could not be finally determined in Section 9 proceedings.
The Bench further observed that though the petitioner had placed on record material such as chronology of events, correspondence, delivery records, borrowing details and screenshots indicating streaming, and these materials did lend some degree of support to its contention that substantial work was undertaken and the content was made available on the respondents’ platform, such material did not establish that every amount claimed had become immediately payable without reference to the terms of the agreement.
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The Bench found that the respondents had produced contemporaneous correspondence, including communications dated 12 August 2024 and 26 August 2024, showing that issues relating to delayed deliveries, non-submission of required materials, incomplete approvals and contractual compliance were being raised much before the present petition was filed. Therefore, it would be difficult to hold that the defence was raised for the first time only after institution of the proceedings.
The Bench also observed that financial hardship alleged by the petitioner, though not ignored, could not by itself become a ground for directing payment of an amount which continued to remain disputed. It held that in commercial dealings, parties often invest substantial sums, raise loans and incur risks in expectation of future returns, and merely because a party was facing financial pressure did not automatically mean that every disputed claim must immediately be treated as payable. Similarly, the prayer for restraint against further streaming or exploitation of the web series could not be granted, since doing so would amount to deciding disputed issues of performance and compliance at an interlocutory stage without evidence.
Briefly, a petition was filed under Section 9 of the Arbitration and Conciliation Act, 1996 seeking interim reliefs in relation to the web series “KINK 2”, including restraint on further broadcasting, streaming, transfer or creation of third-party rights, and a direction to the respondents to deposit and secure Rs. 2.58 crores allegedly payable towards production and delivery of the web series. The petitioner contended that it produced the web series for the respondents, delivered the episodes in stages, that the respondents acknowledged delivery through challans, completed master delivery, and thereafter streamed the episodes on their platform from 28 February 2025 onwards, yet failed to release substantial payments, particularly for episodes 13 to 32. The petitioner further alleged that repeated changes, modifications and delayed approvals increased production costs and compelled it to raise funds from lenders and financial institutions to complete the project.
The respondents opposed the petition on the ground that the dispute was not a simple case of non-payment, but arose from the petitioner’s alleged failure to comply with several obligations under the Production Service Agreement dated 23 May 2024. According to the respondents, payment was linked not merely to delivery or telecast of episodes, but to submission of all contractual deliverables in the prescribed format and successful completion of the Quality Control and Technical Compliance process. They contended that there were repeated delays, incomplete submissions, pending technical materials, QC failures and other deficiencies, and that contemporaneous email correspondence had recorded these issues much prior to institution of the petition. The respondents also relied on the fact that approximately Rs. 85.26 lakhs had already been paid to the petitioner and asserted that further payment had not matured because approved and compliant deliverables were still awaited.
