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Informist, Friday, May 30, 2025

 

NEW DELHI – The Mumbai bench of the National Company Law Tribunal Friday dismissed Hindi film star Salman Khan's insolvency plea against Jerai Fitness for an unpaid amount of INR 72.42 million. In its order, the tribunal said, "We are of the considered view that there exists prior dispute in relation to corporate debtor's obligation for payment of usage fees for the period from Apr. 1, 2023, onwards."

 

According to the tribunal, Jerai Fitness had offered to pay INR 16.38 million along with goods and services tax as a one-time payment to settle the matter. However, this proposition was not acceptable to Khan, who wanted the entire debt claimed in the petition to be paid.

 

The offer by Jerai Fitness and Khan's refusal to accept it led the tribunal to the inference that he had filed the application primarily to seek payment of disputed and undisputed debt and not for the purpose of resolution of corporate debt. "Accordingly, in our considered view, the present application is in the domain of recovery proceedings," it said and dismissed Khan's petition.

 

"The intent and object of the (Insolvency and Bankruptcy) Code is to admit application for resolution of the corporate debtor in order to revive it by addressing its default in payment of debts due to creditors and the proceedings under the Code are not meant for recovery of dues," the tribunal said.

 

The case has its genesis from Khan entering into an agreement with Jerai Fitness, a company involved in the business of providing personal and commercial options in fitness equipment and leading gym equipment brands in India. By the agreement, Khan granted a licence to use the "Being Strong" trademark for products manufactured by Jerai Fitness. This entitled Jerai Fitness to manufacture, market, distribute, and sell products under the trademark through distribution channels as defined under the agreement and to create promotional material using the trademark. In the agreement, royalty was payable to Khan by Jerai Fitness. On non-payment of his dues, Khan moved the tribunal to start insolvency proceedings against Jerai Fitness.  End

 

Reported by Surya Tripathi

Edited by Rajeev Pai

 

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