Madras High Court directs actor Vishal Krishna Reddy to repay Rs 30 crore with interest to Lyca Productions. Court finds him guilty of breaching a loan agreement and evading repayment.
The Madras High Court recently gave a major judgment in a civil suit where popular Tamil actor Vishal Krishna Reddy was directed to pay a large sum of more than Rs 30 crores to Lyca Productions Private Limited.
This decision came after the Court found that Vishal had received the money under a valid agreement but failed to repay it.
Justice P.T. Asha heard and decided the case, who observed that Lyca Productions had presented both oral and documentary evidence to prove their claim.
“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 further noted that Vishal’s approach throughout the legal proceedings had been unreliable and non-cooperative.
“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.”
The legal team for Lyca Productions was led by Senior Advocate V. Raghavachari, while Vishal Krishna Reddy was represented by Senior Advocate A.K. Sriram.
The case was based on a money recovery suit filed by Lyca Productions, a well-known film production house in Tamil Nadu.
The company claimed that Vishal had borrowed a large sum of money from Gopuram Films to finance his 2016 movie Marudhu. Later, Vishal approached Lyca Productions asking them to take over his liability from Gopuram Films.
Lyca agreed to this and made payments totaling Rs 21.29 crore to Gopuram Films between April and August 2019.
A loan agreement was formally signed between the parties on 21 September 2019.
As per the terms, Vishal was supposed to repay Rs 7 crore before the release of his upcoming movie Thupparivalan II, and the rest of the amount by the end of the same year if the movie was not released.
The contract also included an interest clause at a high rate of 30% per annum.
However, Vishal failed to pay even a single rupee back to Lyca Productions. Despite several reminder letters and emails, there was no response from him.
Lyca later found out that Vishal had completed and released another film titled Chakra, and had also earned money through theatrical and OTT releases. Still, no part of the dues was cleared.
The Court examined whether Vishal had violated the agreement and whether Lyca had actually paid off his debt to Gopuram Films. The Judge found that the agreement was clearly breached.
“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.”
During the court proceedings, it came to light that Vishal had earlier admitted to signing the agreement and agreeing to the repayment schedule. However, he later changed his stance, which did not go well with the Court.
“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.”
In an earlier affidavit submitted in Court, Vishal had stated under oath:
“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.”
However, the Court was critical of the fact that Vishal’s written statement contradicted this oath. He even tried to argue that the money was not paid directly to him, which the Court rejected.
“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…”
To determine whether Lyca had truly paid Gopuram Films on Vishal’s behalf, the Court looked into all financial documents submitted, including bank statements and ledgers. The evidence was found to be sufficient.
Regarding the interest rate of 30% per annum, Vishal tried to argue that it was too high and unfair. But the Court disagreed and upheld the agreed-upon rate.
“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.”
Vishal also argued that the COVID-19 pandemic should be considered as a force majeure (unforeseen event) which delayed his repayment. But the Court rejected this reasoning, pointing out that he was actively working during the pandemic.
The Court strongly disapproved of Vishal’s overall behavior throughout the case.
“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.”
Finally, the Madras High Court ruled in favor of Lyca Productions. It found that Vishal had clearly breached the loan agreement, had not made any payments despite receiving notices, and had enjoyed the money for his personal benefit.
The Court, therefore, ordered Vishal Krishna Reddy to pay Rs 30,05,68,137, along with an interest of 30% per annum on the principal amount of Rs 21.29 crore from the date of filing the suit until the amount is fully paid.
Advocates: Plaintiff (Lyca Productions): Senior Advocate V. Raghavachari, Defendant (Vishal Krishna Reddy): Senior Advocate A.K. Sriram, Advocate M. Arun
Cause Title:
Lyca Productions Private Limited v. Vishal Krishna Reddy (C.S. No. 59 of 2021)
Click Here to Read Our Reports on Sharmistha Panoli
