The Bombay High Court has clarified that financial hardship and commercial exploitation of content do not automatically establish an admitted liability warranting interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, where the underlying contractual obligations remain in genuine dispute. The judgment underscores the limited scope of interim relief and reinforces that courts must not pre-judge performance issues reserved for arbitral adjudication.
Background & Facts
The Dispute
The petitioner, The Capturing Factory (a division of Israni Entertainment India Limited), sought interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, against Ullu Digital Limited and another respondent, alleging non-payment of Rs. 2,58,29,005/- for the production of the web series "KINK 2" (Kiss Ishq N Konnections 2). The petitioner claimed it had completed production and delivery of all 32 episodes, which were streamed on the respondents’ OTT platform from February to April 2025, yet payments remained unpaid despite commercial exploitation.
Key Facts
The web series "KINK 2" was conceived as Season 2 of a successful prior series, with initial discussions beginning in November 2023.
A Letter of Intent was issued on 04.01.2024, but a formal Production Service Agreement (PSA) was executed only on 23.05.2024.
The petitioner alleged an informal understanding of Rs. 12,00,000 per episode, with partial payments upon delivery of raw footage and final payments post-completion.
Production commenced on 28.06.2024 and concluded on 25.07.2024.
Episodes were delivered in batches between November 2024 and April 2025, with acknowledgments issued via challans.
Episodes 1 - 5 were streamed on 28.02.2025; Episodes 6 - 10 on 07.03.2025; Episodes 11 - 15 on 14.03.2025; Episodes 16 - 20 on 21.03.2025; Episodes 21 - 25 on 28.03.2025; remaining episodes streamed in April 2025.
The petitioner obtained loans and incurred mortgage liabilities to finance production, citing financial distress.
The respondents had paid Rs. 85,26,252/- to the petitioner during the project.
The petitioner claimed no payment was received for Episodes 13 - 32.
Procedural History
23.05.2024: Production Service Agreement executed between parties.
06.08.2024: First contractual delivery deadline for Episodes 1 - 2.
12.08.2024: Respondents sent email citing non-receipt of first batch and reminding of contractual timelines.
26.08.2024: Respondents reiterated delays in delivery of Episodes 1 - 8 and referenced penalty clauses.
15.12.2025: Respondents communicated that content delivery remained incomplete and approvals pending.
25.02.2025: Atrangii Network Private Limited (affiliated with respondents) notified Ullu Digital of QC/TC failures in deliverables.
19.11.2024: First 12 episodes delivered and acknowledged via challans.
January - April 2025: Remaining episodes delivered.
28.02.2025 - April 2025: Web series streamed in batches on respondents’ platform.
09.06.2026: Arbitration Petition (L) No. 9509 of 2026 filed under Section 9 seeking interim relief.
11.06.2026: Judgment reserved.
16.06.2026: Judgment pronounced.
The Parties' Positions
Petitioner’s Position: The petitioner argued that streaming of the series constituted acceptance of content, rendering payment obligations due. It claimed the respondents’ post-streaming objections were pretextual, designed to avoid payment after reaping commercial benefit. Financial hardship from loans and liabilities was presented as urgent grounds for interim relief.
Respondents’ Position: The respondents contended that payment was contractually contingent upon full delivery of technical deliverables (raw footage, audio files, XMLs, QC/TC approvals) and not merely episode delivery. They cited repeated communications from August 2024 onward highlighting delays, incomplete submissions, and QC failures. They asserted that Rs. 85 lakhs had already been paid and that the petitioner had not fulfilled contractual milestones.
Relief Sought
The petitioner sought:
An injunction restraining respondents from further broadcasting, streaming, licensing, or transferring rights in "KINK 2".
A direction to deposit Rs. 2,58,29,005/- with the court as security for unpaid dues.
The Legal Issue
Can a party obtain interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, including injunction and deposit of disputed sums, where the underlying contractual performance is contested and no admission of liability is established, merely because the content has been commercially exploited and the claimant faces financial hardship?
Arguments Presented
For the Petitioner
The petitioner relied on the principle that once a party accepts and exploits content, it cannot later deny payment by raising belated objections. It cited the streaming of episodes as conclusive evidence of acceptance under commercial practice. It emphasized that financial hardship caused by loans and liabilities created an urgent need for interim protection. It argued that the respondents’ conduct - streaming the series while withholding payment - constituted unjust enrichment and bad faith.
For the Respondent
The respondents contended that payment under the PSA was conditional upon fulfillment of multiple contractual milestones, including submission of technical deliverables and successful QC/TC approval. They produced contemporaneous emails from August 2024 and December 2025 showing persistent complaints about incomplete submissions and QC failures. They argued that Rs. 85 lakhs paid demonstrated good faith and that the dispute was not about refusal to pay, but about whether conditions precedent to payment had been met. They asserted that interim relief under Section 9 cannot be granted to resolve disputed factual issues reserved for arbitration.
The Court's Analysis
The Court emphasized that Section 9 applications are not meant to decide the merits of the underlying dispute but to preserve the subject matter of arbitration. It noted that while the petitioner’s financial distress was evident, financial hardship alone cannot convert a disputed claim into an admitted liability.
"The existence of such material does not establish that every amount claimed by the petitioner became immediately payable without reference to the terms of the agreement."
The Court examined the Production Service Agreement dated 23.05.2024 and found that it clearly linked payment to the completion of deliverables and QC/TC approvals, not merely to episode delivery. The respondents’ communications from August 2024 - well before the petition was filed - demonstrated that concerns about delays and non-compliance were raised contemporaneously, undermining the petitioner’s claim that objections were fabricated post-streaming.
"It cannot be said that the respondents are raising a new story having no earlier foundation in the record."
The Court rejected the petitioner’s argument that streaming equated to acceptance, noting that commercial expediency may compel release of content despite unresolved technical issues. It observed that the respondents had undertaken remedial work to make episodes broadcast-ready, which further indicated that the content was not fully compliant.
The Court also noted that the respondents had paid over Rs. 85 lakhs, indicating a willingness to pay, but only upon fulfillment of contractual conditions. It held that the dispute involved complex factual questions - regarding delivery completeness, QC compliance, and contractual interpretation - that required evidentiary examination before an arbitral tribunal.
The Court concluded that granting an injunction against exploitation or ordering deposit of Rs. 2.58 crores would amount to a premature adjudication of the merits, which is impermissible at the interim stage. It stressed that courts must not substitute their view for that of the arbitral tribunal on disputed contractual obligations.
The Verdict
The Arbitration Petition was dismissed. The Court rejected the prayer for an injunction against broadcasting, streaming, or transferring rights in "KINK 2". The prayer for deposit of Rs. 2,58,29,005/- was also rejected. The Court clarified that all disputes regarding contractual performance, QC/TC compliance, approvals, and payment entitlements remain open for determination by the arbitral tribunal. No costs were awarded. The parties are free to pursue their claims before the arbitral tribunal without being bound by any observations in this order.
What This Means For Similar Cases
Interim Relief Requires Admitted Liability, Not Just Exploitation
Practitioners must demonstrate a prima facie admitted liability before seeking interim payment or injunction under Section 9.
Commercial exploitation of content alone does not equate to contractual acceptance if the agreement conditions payment on performance milestones.
Courts will not infer admission of liability from conduct alone where contractual terms are clear and disputed.
Contemporaneous Communications Are Critical
Emails, notices, and reports exchanged during project execution carry greater weight than post-dispute assertions.
Parties must maintain documented records of compliance and non-compliance to rebut claims of belated objections.
Delayed objections raised only after litigation begins are unlikely to succeed if contemporaneous communications show prior notice of defaults.
Financial Hardship Is Not a Substitute for Legal Entitlement
Financial distress caused by project financing does not justify interim relief unless liability is undisputed.
Courts will not override contractual payment triggers merely because a party has incurred debt or loans.
Parties must structure contracts with clear payment triggers and contingency mechanisms to mitigate financial risk.
Arbitration Tribunals Retain Exclusive Authority on Merits
Section 9 applications are not mini-trials; courts must avoid pre-judging factual disputes.
Arbitral tribunals are best positioned to evaluate QC reports, technical deliverables, and contractual interpretation.
Parties should focus on evidentiary preparation for arbitration, not on seeking interim remedies as a litigation tactic.
