The National Company Law Tribunal (NCLT) has allowed filmmaker Aanand L. Rai’s application to refer a dispute between him and a listed movie production house Eros International Media Ltd (EIML) to arbitration.

The division bench of judicial member Sushil Mahadeorao Kochey and technical member, Prabhat Kumar, while allowing the filmmaker’s application, observed that the petition filed by Eros is a ‘dressed-up petition’ instituted with the sole intent of ‘circumventing the arbitration’ contractually agreed upon by the parties and is therefore vexatious in nature.

“Although the petitioner (Eros) has claimed certain reliefs by way of declaration and injunction under the garb of alleged oppression and mismanagement, a holistic reading of the petition, its pleadings and the reliefs sought points to it being a dressed-up petition,” said the tribunal in its April 28 order.

The genesis of the dispute lies in the term sheet signed by the parties in 2014, under which Eros International had acquired a 50% stake in Colour Yellow Productions Pvt Ltd, a company founded by Rai and his wife. The agreement split the responsibilities between parties, allowing Rai creative control while vesting Eros with authority over financing, budgeting and other production decisions.

Under the term sheet, it was agreed that Colour Yellow Productions could collaborate with third parties only if Eros International declined to fund the project.

However, the dispute between the parties began in 2019-20, with Eros International alleging mismanagement at the company, diversion of funds, and Rai's non-disclosure of financial information to the company. The company also claimed it was excluded from key management decisions despite being an equal shareholder.

Countering this, Nausher Kohli and Prachi Wazalwar, advocates appearing for Rai, argued that the 2014 term sheet and a subsequent 2023 agreement both contain arbitration clauses. Therefore, as per the arbitration clause in the term sheet, the dispute ought to be referred to arbitration.

Rai’s lawyers also argued that the entire petition under Sections 241-242 of the Companies Act, 2013, is dressed up to avoid the agreed-upon forum of arbitration between the parties.

When contacted, Pradeep Dwivedi, group chief executive of EIML said Eros remains committed to protecting its rights and is actively evaluating all legal options available to it, including appropriate appellate remedies.

“Our position has consistently been that the matters in question involve serious issues of oppression and mismanagement, including concerns around financial governance and related-party transactions at Colour Yellow Productions which we believe merit full and proper adjudication,” said Dwivedi.

“We are confident that the appropriate forum will allow the complete facts to be brought on record, and we will continue to pursue all necessary steps to safeguard the interests of the Company and its stakeholders,” he added.

The tribunal, while allowing an application filed by Rai and disposing of Eros International’s petition, observed that the petition is nothing but an attempt to circumvent the agreed arbitration clause under the term sheet and may also amount to an effort to oust the respondents (Rai and Colour Yellow Productions), who are the original promoters of the company.

The moviemaker Rai and Eros have been at loggerheads at multiple judicial forums. In January, Eros International approached the Bombay High Court, accusing Rai and his production house Colour Yellow Media Entertainment of allegedly illegally riding on the goodwill of its 2013 blockbuster ‘Raanjhanaa’ while promoting and releasing the 2025 film ‘Tere Ishq Mein’.