Salman Khan withdraws insolvency plea against Jerai Fitness in ₹7 crore payment dispute

Bollywood superstar Salman Khan withdrew his insolvency plea against Jerai Fitness Pvt Ltd after reaching a settlement in a ₹7.24 crore payment dispute.

The dispute is linked to Khan's fitness equipment brand Being Strong.

Appearing before the National Company Law Appellate Tribunal (NCLAT), Khan’s counsel informed the bench led by Justice Ashok Bhushan on Wednesday that the parties had resolved the matter and decided to withdraw the petition.

What's the case?

Khan, who owns the trademark "BEING STRONG" and has the exclusive right to grant a licence and the right to use the same, had entered into a trade licence agreement in October 2018, news agency PTI reported.

Jerai Fitness was granted a licence for the usage of the trademark "BEING STRONG" on the products manufactured by it.

Later, due to interruptions in business and the onset of the COVID-19 pandemic, at the request of the Corporate Debtor, the Bollywood actor agreed to revise the royalty payable to him from the period of commencement of the first agreement till March 31, 2023.

However, according to Salman Khan, after the Corporate Debtor failed to make the payments, he sent a demand notice on September 14, 2024, demanding payment of ₹7.24 crore along with interest at 24 per cent per annum and later moved the National Company Law Tribunal (NCLT) claiming default.

While Jerai Fitness contended that there was a pre-existing dispute between the parties and that it invested a significant amount of money towards making necessary components to launch a category of products known as the “X-tend” series and “Proton series”.

In May this year, the Mumbai bench of NCLT had dismissed Salman Khan's insolvency plea against Jerai Fitness.

NCLT had observed that Jerai Fitness has the right to "manufacture, market, distribute, sell" the products under the trademark "BEING STRONG" and to create promotional material using the trademark.

However, as per the clauses, there had to be prior intimation of all major and substantial decisions regarding the manufacture, promotion, marketing, and distribution of the products to the petitioner, and such decisions were to be taken by Alvira Agnihotri or her authorised person on behalf of the petitioner.

NCLT observed that Jerai Fitness was restricted from distributing any products under the trademark which were not specifically pre-approved. The tribunal then said the claim was disputed in nature and was "in domain of recovery proceedings".

(With inputs from agencies)