Introduction:
The Bombay High Court recently dealt with a significant dispute arising out of a soured film collaboration deal between Kannada actor Dhruva Sarja alias Dhruva Kumar and filmmaker Raghavendra Hegde. The controversy has its roots in a financial transaction linked to an intended film project, where Hegde alleged that Sarja duped him of over ₹9 crore, while Sarja maintains that he only received ₹3 crore as a signing amount under a valid agreement and never backed out of the collaboration. The case came before a division bench of Justices Ajay Gadkari and Rajesh Patil after Sarja petitioned the High Court seeking to quash the First Information Report (FIR) lodged against him at Amboli Police Station, Mumbai. The FIR was registered under various provisions pertaining to cheating, fraud, and criminal breach of trust, on the complaint of Hegde who accused the actor of not only withdrawing from the project but also avoiding all communication despite having received substantial funds. The matter assumed importance due to the magnitude of the claims, the alleged financial distress suffered by Hegde who reportedly borrowed huge sums at high interest to fund the project, and the broader implications for accountability in contractual dealings within the film industry.
In his petition, Dhruva Sarja, represented by Senior Advocate MS Shyamsundar Seni along with Ashima Mandla, Mandakini Singh, Mohd. Faiz, and Aryan Kotwal, candidly admitted that he had indeed received ₹3 crore from Raghavendra Hegde back in 2019 after both parties entered into a film agreement. He, however, disputed the allegations of cheating to the tune of ₹9 crore or more and asserted that there had been no refusal on his part to work on the project. On the other hand, Hegde, represented by Senior Advocate Sanjeev Kadam, argued that Sarja’s conduct of avoiding calls and abruptly backing out after years of delay amounted to dishonesty, particularly since he had raised substantial loans from multiple lenders amounting to ₹43 crore by 2025, much of which was premised on the actor’s participation in the proposed venture.
Arguments of the Petitioner:
Sarja’s legal team laid emphasis on transparency and clarity in presenting their case before the High Court. Senior Advocate MS Shyamsundar Seni submitted that his client never disputed the initial financial transaction. He accepted the fact that a sum of ₹3 crore was transferred to him in 2019 by the complainant under a formal film collaboration agreement. Seni stressed that Sarja, being an artist, had agreed in good faith to collaborate with Hegde, and the receipt of money was not under any fraudulent circumstances but pursuant to a legitimate contractual arrangement. However, Seni pointed out that the process of project execution was delayed due to reasons attributable to the complainant himself. He highlighted that while the agreement was signed in 2019, Hegde first presented a script only in 2023, nearly four years later, and thereafter withdrew that script. Later, in 2024, Hegde forwarded another story, and in July 2025, he instructed Sarja to engage with one of his investors to provide assurances of their collaboration. According to the petitioner’s counsel, this indicated that Sarja was always willing to work and there was no repudiation of the agreement from his side.
The petitioner also countered the allegation of “disappearance” by contending that there had been regular communication until the complainant suddenly chose to file a police complaint. Seni argued that the FIR was abrupt and premature since no conclusive evidence suggested that Sarja had abandoned the collaboration. In this context, Seni requested the bench to quash the FIR, arguing that mere receipt of an advance for a film agreement, without subsequent fraudulent intention, does not automatically translate into cheating or fraud under criminal law. Seni also pressed for interim protection in the form of an order preventing coercive action against Sarja until the case was finally adjudicated.
Arguments of the Respondent:
On the other hand, the complainant Raghavendra Hegde, represented by Senior Advocate Sanjeev Kadam, painted a very different picture. According to Hegde, the alleged loss was not limited to the ₹3 crore signing amount but extended to a total financial distress exceeding ₹43 crore. Kadam submitted that Hegde had borrowed extensively from multiple sources, often at higher interest rates, to fund the project and provide Sarja with the necessary financial support. Hegde alleged that Sarja induced him into these borrowings by repeatedly promising collaboration but ultimately failed to perform his obligations, leaving Hegde burdened with huge debts.
The respondent’s case further stressed that Sarja’s alleged conduct of avoiding calls, messages, and suddenly withdrawing from communication in 2025 demonstrated bad faith and amounted to cheating under the Indian Penal Code. Kadam argued that Sarja’s silence and lack of participation, despite repeatedly receiving scripts and being called upon to engage with investors, betrayed the trust reposed in him and inflicted grave financial injury upon Hegde. He contended that the FIR was not premature but a necessary recourse in view of the financial devastation caused to the complainant. Kadam urged the Court to allow the investigation to proceed without interference and opposed any interim relief to Sarja.
Court’s Observations and Direction:
Having heard the submissions of both sides, the division bench of Justices Ajay Gadkari and Rajesh Patil made a crucial observation that while Sarja’s counsel admitted to the receipt of ₹3 crore, the actor’s bona fides needed to be demonstrated in order for the Court to even consider the plea for quashing or interim relief. The bench orally observed that the petitioner must “show bonafides” by depositing the said ₹3 crore in the Registry of the High Court. Justice Gadkari specifically asked Sarja’s counsel to take instructions from his client on whether he was willing to deposit the amount. The Court was categorical in stating that unless Sarja complied with this direction, the bench would not grant any interim protection such as an order against coercive steps by the police.
When Seni sought interim relief while simultaneously agreeing to the suggestion of depositing money, the judges declined to pass such an order at this stage. The bench maintained that the deposit of ₹3 crore was a necessary demonstration of good faith before any consideration of relief. Consequently, the matter was adjourned for the following week, allowing time for Sarja to take instructions and decide on compliance.
The Court’s approach underscores a pragmatic balancing act. While it refrained from quashing the FIR outright, it also opened a window for Sarja to demonstrate his good faith by refunding the signing amount to the Registry, which could potentially alter the dynamics of the criminal proceedings. At the same time, the refusal to grant interim protection highlights the judiciary’s cautious stance in fraud-related allegations involving large financial stakes.
Broader Legal and Industry Implications:
This case underscores important principles regarding the intersection of contractual disputes and criminal law. While ordinarily a failure to perform contractual obligations would give rise to civil remedies, the introduction of allegations of fraud and dishonest intent transforms the dispute into a criminal matter. The Bombay High Court’s insistence on showing bona fides through monetary deposit reflects a judicial effort to sift genuine disputes from malicious or exaggerated claims while also ensuring that the complainant’s financial injury is not disregarded.
For the film industry, the case is a stark reminder of the risks involved in informal or loosely structured agreements. Large transactions, delays in script development, and reliance on verbal assurances without clear contractual enforcement mechanisms can give rise to protracted litigation and even criminal prosecution. For actors and producers alike, this case demonstrates the importance of maintaining transparency, timely communication, and documented compliance with contractual terms.