The case of Akhanda 2: How film releases can be hostage to legal tangles

While Akhanda 2 did manage to arrive in cinemas a week later, among other instances, the Delhi High Court and Madras High Court had earlier restrained release of the Tamil films Veera Dheera Sooran and Vaa Vaathiyar, respectively, over similar issues.

The Akhanda 2 delay is less an outlier than a reminder of how exposed film releases remain to unresolved contractual and financing disputes. Industry experts say such court interventions can immediately disrupt a film’s commercial trajectory. According to industry experts, any such delay could hike marketing costs by up to 40%, besides putting a pause on sale of other rights such as satellite and OTT.

High cost of last-minute litigation

Legal tangles in the run-up to release are becoming common as producers recognize repercussions of copyright arrangements and profit-sharing agreements, among other issues. Co-producers of films such as Animal and Amar Singh Chamkila have also sparred in the past.

A stay order issued close to release can unsettle distributor arrangements, negate substantial marketing spends and create reputational challenges for the producers, who may then need to rebuild momentum at a later date.

“Disputes between production houses and distributors usually involve unpaid advances, minimum guarantees, revenue-sharing, tax incentives, violation of exclusive rights and unauthorized sub-contracting. They can quickly trigger court injunctions that halt releases at the last minute, disrupting distribution timelines, freezing marketing efforts, and blocking the monetization of commercial rights," Aishwarya Kaushiq, partner, disputes team at BTG Advaya said. The financial impact is immediate, Kaushiq added: longer gestation periods, wasted promotional spend, which loses effectiveness within a short window, and escalating holding costs. In more serious cases, an adverse decree or arbitral award can enable creditors to restrain not just the present film but also future projects, undermining the producer’s ability to secure financing and destabilizing the release pipeline itself.

The substantive dispute in the Akhanda 2 case arose from a UK tax subsidy that accrued in respect of two other Telugu movies. Eros claimed production house 14 Reels was required to, but failed to pass on the subsidy. However, 14 Reels contended that Eros received the funds directly from the UK tax authority. The Arbitral Tribunal sided with Eros.

A last-minute stay order is catastrophic for a film release schedule, as it immediately halts the primary asset monetization flow including theatrical, digital, and satellite revenues and freezes the film indefinitely, making it a powerful litigation tool for the creditor, said Anupam Shukla, partner at Pioneer Legal. With streaming right sales linked to box-office performance, a delay in the theatrical release delays OTT too.

For financiers and distributors, last-minute injunctions turn release dates into contingent events, complicating underwriting and deal pricing in the industry.

“The immediate risks are operational: the distribution chain is paralyzed, global schedules are shattered, and exhibitors demand compensation for cancelled premieres. Financially, all non-refundable marketing and advertising expenses become sunk costs, requiring a fresh budget for a second release campaign. Most significantly, it poses a severe reputational risk, signalling financial instability to future partners and financiers, while eroding audience goodwill and excitement, which are crucial for initial box office success." Shukla pointed out.

Building safeguards

To be sure, industry experts say production houses can reduce delays and conflicts by taking proactive legal steps well before release. Early settlement with disputing parties is often the most effective tool. Commonly, many production houses these days conduct pre-release legal audits to ensure all financing, rights, and contractual obligations are in order, reducing the risk of last-minute litigation. Strengthening documentation, using escrow or completion-guarantee structures, and maintaining clean compliance practices further help keep release schedules on track.

A senior executive at a content studio said many of these issues stem from contracts that are either inadequately drafted or lack specificity. Additionally, the absence of comprehensive legal guidance during the formation of these agreements often leads to grey areas and subsequent conflicts. Marketing campaign expenses can mount by 20-40%, depending on the extent of the film release delay, besides weakening audience interest, the executive added.

However, producers are learning fast. In an earlier interview with Mint, Apoorva Mehta, chief executive of Dharma Productions had pointed to the importance of systems and processes to ensure there is no misuse of power and founders are able to run the organization correctly.

“To avoid these setbacks, production houses are increasingly ensuring that legacy dues are cleared or appropriately secured before launching new projects. Transparent corporate structures, stronger contractual discipline, and escrow-based payment safeguards are also becoming standard. In today’s ecosystem, financial compliance and risk-management are as critical to a film’s success as its creative execution," Ketan Mukhija, partner, co-head of PE (private equity) and VC (venture capital) practice at Kochhar & Co, said.