Vishal vs Lyca Issue: High Court to Examine Legal Limits Of High Interest Ordered On Actor - Case Explained

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a relief for Purushan actor Vishal, the Madras High Court has decided to review whether the high interest demanded from him by Lyca Productions violates the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003, and other applicable laws. Earlier, actor-producer Vishal Krishna Reddy had moved the court challenging an order that directed him to repay Rs 30.05 crore to Lyca Productions along with steep interest. The Division Bench observed that such rates appear usurious even in high-value transactions.

Madras High Court To Examine Legality of 30 Percent Interest Charged by Film Financiers On Vishal’s Loan

As of February 3, the Madras High Court has decided to closely examine whether film financiers can legally charge interest rates as high as 30 percent per annum on loans extended to actors, producers, and other stakeholders in the film industry. The issue has come into focus following an appeal filed by actor-producer Vishal Krishna Reddy of Vishal Film Factory against an earlier order directing him to repay Rs 30.05 crore to Lyca Productions along with high interest.

A Division Bench observed that charging such high interest could be considered usurious, even when the principal amount runs into several crores. During the hearing, counsel for Lyca Productions stated that Vishal’s total liability had risen to around Rs 54 crore due to accumulated interest, while Vishal’s counsel argued that the interest component alone amounted to nearly Rs 40 crore. The High Court said it would examine whether such interest demands violate the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003, as well as other laws governing financial transactions. A justice noted that even if a borrower agrees to a high interest rate out of financial necessity, such terms cannot override the law. The court also stressed that exploitation cannot be justified, regardless of whether the person who borrowed is wealthy or financially vulnerable.The Bench granted an interim stay on the earlier order, subject to Vishal depositing Rs 10 crore into an interest-bearing account maintained by the court. Notices have been issued to Lyca Productions as the appeal proceeds.

What Is The Vishal vs Lyca Case About?

The dispute traces back to financial dealings involving Vishal Film Factory and Gopuram Films. As per court records, Vishal allegedly borrowed Rs 21.29 crore through his production house, with Lyca Productions later stepping in to settle the debt under an agreement that transferred control of Vishal’s film rights until the amount was repaid. However, Vishal has denied borrowing the full sum, stating that his financial dealings were limited to Rs 12 crore. Vishal also claimed that he signed a “one-sided” agreement with Lyca in good faith without closely examining all clauses, trusting the production house and not anticipating any dispute. He further maintained that he had only acted in the film Marudhu and had not taken a production loan related to it.

The single-judge order being challenged relied on a previous ruling that allowed high interest rates in large-value commercial loans, observing that the 2003 Act primarily protects small borrowers. The present appeal will determine whether such high interest rates are legally sustainable within the film industry.

On the professional front, Vishal remains active in cinema and is currently acting in and directing Magudam. He is also working on Sundar C’s Purushan, which stars Tamannaah and Yogi Babu in key roles.