'Court Has Been Deceived By False Promises': Madras HC Imposes 25 Lakh Costs For Disobeying Order Directing Payment Of Outstanding Dues

The Madras High Court on Friday imposed costs to the tune of Rs 25 lakhs on a film production studio after observing that it had needlessly dragged on an appeal filed before the Court by deceiving the Court through 'false promises' to repay the amount owed by it.

A Bench comprising Chief Justice Sanjib Banerjee and Justice PD Audikesavalu observed,

"Defaulting borrowers, like the present Appellants, take advantage of the existing judicial system and prey on its shortcomings. This is because more often than not, courts do not pass appropriate order for costs and do not take matters to their logical conclusion by taking action in perjury in respect of false affidavits."

The Court further observed that the entire object of the Commercial Courts Act, 2015 would be defeated if commercial matters are not dealt with by applying commercial principles and by awarding appropriate costs and interest.

The Bench also noted that adjournments had been sought and obtained all through last year while making promises for payment but the payment eventually had not been made.

"There is no doubt that the appellants here took advantage of the system and its delays in dragging the matter over a long period and being bold enough to submit to court that cheques had been issued which were to arrive the next day only to proffer some further specious excuse for the non-arrival of the cheques the following day", the Court remarked further.

The Bench also observed that during the pendency of the appeal, a film had been permitted to be released upon the appellants' assurance that the outstanding sum of money would be paid by March 31, 2020.

"... the promised payment has not been made despite the passage of more than 18 months after the promised date," the Court noted further.

It further added with dismay,

"The appeal has been needlessly dragged by the appellants and in course of the last few months, both the court and the respondent plaintiff have been deceived by false promises made by or on behalf of the appellants without, as it now turns out, any intention to abide by the same,"

Accordingly, the Court dismissed the appeal as being devoid of merit and further directed the appellants to pay costs to the tune of Rs 25 lakhs to the respondent-financier in addition to whatever is due in terms of the commercial court decree under challenge.

Case Title: M/s. Gemini Film Circuit and ors v. M/s.Venkateswara Financiers and Anr

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