The opening of a forgotten 400-seat underground theatre beneath Islington Green has been thrown into doubt once again.

Islington Gazette: An artist's impression of how the theatre could look from Upper Street. Picture: Foster Wilson ArchitectsAn artist's impression of how the theatre could look from Upper Street. Picture: Foster Wilson Architects (Image: Archant)

Islington Council says the owner of Collins Theatre, Berjaya UK Investment and Development, wants to ditch an agreement dating back to 2002 that requires the venue to actually be opened.

Before the town hall could reject the application, Berjaya appealed to the Planning Inspectorate saying it was taking too long. It says there is nothing wrong with its bid, and has also accused the council of "interfering with commercial negotiations with the proposed theatre operator", Shawthing Productions.

"Heads of terms had been agreed with the proposed theatre operator before a meeting with the council, the appellant and the proposed theatre operator and subsequent to that meeting negotiations have come to a standstill," the appeal states.

The £35million theatre, under the old Collins Music Hall - now Waterstones - was constructed as an Elizabethan courtyard-style venue and was originally meant to have the salvaged set from Shakespeare in Love as its auditorium.

Islington Gazette: An artist's impression of how the theatre could look. Picture: Foster Wilson ArchitectsAn artist's impression of how the theatre could look. Picture: Foster Wilson Architects (Image: Archant)

The plans were signed off in 2002 and included building 72 flats to pay for the theatre.

Designers decided the only way to fit the planned 600-seater venue in was to dig down three storeys - and 22 metres.

However, a row between the previous owners - a trust headed up by the Old Vic's then chief exec Sally Greene - and the developers, as well as various planning complications, stopped the project in its tracks.

The flats are there, but the theatre has been left in shell form since it was finished in 2008.

The ambitious designs for the theatre included having a public piazza above it. The glass canopy that was to cover the piazza can be seen spilling over a temporary wall in Essex Road today.

Islington Council said in its submission for the appeal: "The 2002 Section 106 agreement contains an obligation requiring the theatre to be fitted out and opened.

"The applicant has said explicitly that he would not be prepared to enter into an agreement with equivalent provisions to that contained in the 2002 agreement in respect of encouraging the delivery of the theatre.

"Given this unwillingness to provide equivalent provisions to help facilitate the delivery of the theatre, there is a fundamental objection to the scheme."

The theatre space will be used for an installation titled Void at the London Design Festival next month. It has also been used to film a One Direction music video, a Skepta gig and a one-off theatre production.

The Collins Music Hall was opened in 1863 by entertainer Sam Collins at the rear of The Landsdowne Arms pub and seated up to 1,000 people.

Charlie Chaplin, Tommy Cooper, Norman Wisdom and Benny Hill all played the theatre, but in 1958 it was gutted in a fire that destroyed all but the front and side walls.

Last year Avis Saltsman Baldry, who campaigned for a replacement to the old music hall throughout the 1990s, was delighted to hear about the planned opening.

"It would be amazing," Avis, now in her 80s, told the Gazette. "I had given up hope but it would be wonderful if it happened."