Kolkata, Oct 10th – A clinical corporate litigation finally sees a closure with epic actor Salman Khan retracting his claims. The ongoing INR 7.24 crore royalty dispute between Salman Khan and Jerai Fitness is finally ending. The gym instruments manufacturer finally agreed to out-of-court settlements, which Salman Khan also gave consent to.
The dispute occurred around the trademark licensing of Jerai’s equipment under Salman Khan’s brand “Being Strong” and the payout of royalties for the same. Salman Khan’s legal team, which initiated the insolvency petition before the National Company Law Appellate Tribunal, finally withdrew it.
What are the key takeaways of this case from a legal standpoint? The insolvency case exposes complexities layered in celebrity endorsements and trademark licensing with/under celeb-endorsed brands. It also inadvertently emphasises the need for the evolution of insolvency litigation in the country.
Background of the Dispute
The roots of the conflict trace back to a trademark licensing agreement signed in October 2018 between Salman Khan’s Being Strong and Jerai Fitness Pvt Ltd. Under this agreement, Jerai was granted rights to manufacture, market, and sell gym equipment using the Being Strong brand name. The contract was revised in 2019 and renewed again in August 2023, with updated terms.
The financial arrangement stipulated that Jerai would pay ₹3 crore annually or 3% of net sales, whichever was higher. However, Khan alleged that Jerai defaulted on payments, including a one-time settlement of ₹1.63 crore for dues pending before March 2023 and royalties for subsequent years, totalling ₹7.24 crore.
Legal Proceedings and Tribunal Observations
In response to the alleged default, Khan initiated a Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016, before the National Company Law Tribunal (NCLT), Mumbai.
Jerai Fitness, however, countered the claims, arguing that Khan had failed to fulfil his contractual obligations. The company cited delays in approvals for product designs and promotional materials, as well as Khan’s absence from the launch of its Proton series in November 2023. Jerai also presented WhatsApp messages and emails as evidence of repeated requests for branding support.
On May 30, 2025, the NCLT dismissed Khan’s petition, stating that while the ₹1.63 crore was an undisputed liability, the remaining royalty claims were subject to a “genuine pre-existing dispute”. The tribunal concluded that the matter fell within the domain of recovery proceedings, not insolvency resolution under the IBC.
Settlement and Withdrawal of Appeal
After the case filed with the NCLT was dismissed, Salman Khan dragged the insolvency petition to the NCLAT. His motive was appellate relief. However, his legal team informed the tribunal that the involved parties have finally agreed to an out-of-court settlement with 100% consensus.
The NCLAT members, Justice Ashok Bhushan, and Technical Committee member Arun Baroka gave consent to the settlement. Salman Khan also formally retracted the insolvency appeal after the court officially licensed and urged him to do so.
Legal Analysis: Key Takeaways for Law Firms and Corporations
Law firms must take a note or two from this insolvent redressal case. Celebrity endorsements and celeb brand collabs have their own nuances that need to be looked at. This case also showcases the need for firmer insolvency management laws. Here are the key takeaways:
1. Endorsement Agreements Must Be Structurally Robust
The case pinpoints that contractual language of celebrity endorsements should be clear and specific. Especially, the clauses linked to royalty payouts, performance obligations of trade collabs, and terminal procedures should be clarified.
2. Pre-Existing Disputes Can Derail Insolvency Claims
The NCLT formally dismissed the case at first. The decision hints at a strong legal connotation that governs such cases:
“Insolvency proceedings are not equipped to redeem debts under disputed situations. The IBC, Section 9, can be enforced in cases where the debts (royalty payouts, in this case) are genuinely undisputed and seriously due.
The first charter of action in this case should involve civil recovery procedures or an invitation for arbitration. When that fails, the NCLT can pass a governance in the matter.
3. Due Diligence in Brand Collaborations
All celebrity endorsements in India are governed by the Consumer Protection Act of 2019 and the ASCI Guidelines for Influencer Advertising. If your brand makes misleading claims, endorsers would be liable for the consequences as well.
For your first offence, you might have to face penalties up to INR 10 lakh. However, repeated violations may incur penalties of more than INR 50 lakhs. What’s worse, you might be deferred from making any further endorsements for the next three years, from the date you were convicted.
Celebrity Endorsement Litigation: A Growing Trend
According to the Advertising Standards Council of India (ASCI), over 80% of misleading advertisements in 2023–24 originated on digital platforms, often involving influencers and celebrities who failed to disclose paid collaborations.
The TAM Media Research Report further revealed that 91% of advertisements violated endorsement guidelines, with the highest violations in the personal care and food & beverage sectors.
A Cautionary Tale for Brands and Celebrities
The Salman Khan–Jerai Fitness case serves as a cautionary tale for both celebrities and corporations. While celebrity endorsements can elevate brand visibility, they also carry legal risks that must be proactively managed. Law firms advising clients in this space should prioritise:
· Contractual clarity
· Regulatory compliance
· Dispute resolution mechanisms
· Risk mitigation strategies
More celebrities are getting involved in multi-layered endorsement schemes. Hence, the legal scrutiny around endorsements would grow as well. In alignment, seeking expert legal services in India for navigating high-stakes partnerships is crucial. If you need help regarding endorsement agreements, reach out to credible legal counsel.
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