Why Bombay HC upheld arbitral awards directing BCCI to pay over Rs 538 crore to Kochi Tuskers Kerala owners
The Bombay High Court on Tuesday (June 17) rejected two pleas by the Board of Control for Cricket in India (BCCI) to quash the arbitral awards of over Rs 538 crore granted to owners of Kochi Tuskers Kerala, the now-defunct Indian Premier League (IPL) franchise.
The two companies are Rendezvous Sports World (RSW), which was co-owned by Sunanda Pushkar, the late wife of Congress leader Shashi Tharoor, and Kochi Cricket Private Limited (KCPL).
As reported by The Indian Express earlier, Pushkar had in April 2010 surrendered her shares in RSW.
The dispute and legal trail that reached Bombay HC
The Bombay HC passed a verdict on two pleas filed by BCCI challenging arbitral awards passed on June 22, 2015.
Kochi Tuskers took part in only one season of the IPL in 2011, under a consortium led by RSW and later operated by KCPL. The dispute arose after the BCCI terminated the franchise in September 2011, citing an alleged breach of agreement.
The agreement was signed between BCCI and RSW on April 11, 2010, pending the incorporation of the joint venture company KCPL. The KCPL had entered into an agreement with the BCCI on March 12, 2011.
On September 19, 2011, the BCCI wrote to KCPL and RSW and terminated agreements with them, claiming that the two firms had failed to deliver the requisite bank guarantee on or before March 2011.
The aggrieved firms initiated arbitration proceedings against the termination. On June 22, 2015, the arbitrator directed BCCI to pay Rs 384.83 crore to KCPL along with interest at the rate of 18 % from date of termination in 2011 till the date of award.
Through another decision passed on the same day, the arbitrator directed BCCI to pay Rs 153.34 crore to RSW together with 18 % interest from the date of termination until the date of the arbitral award. In total, the arbitrator ordered an award of Rs 538.17 crore in favour of Kochi IPL franchise owners.
Three months later, the cricketing body challenged the two awards before the Bombay High Court under section Section 34 of the Arbitration and Conciliation Act, 1996.
Based on the BCCI's interim plea, the High Court in April 2018 granted unconditional stay on the award in favour of KCPL, which the Supreme Court next month modified and directed the BCCI to deposit Rs 100 crore in the court.
The High Court in April 2018, while dealing with the BCCI's challenge of the award in favour of RSW, had passed an order of stay on a condition that the BCCI deposited 50% of the awarded amount with interest.
BCCI's contentions
The BCCI argued that the arbitral awards were 'contrary to the agreements, patently illegal and prejudicial to the cricket board's rights.'
The Board said that the arbitrator's observation that the non-availability of a brand new stadium in Kochi — which the team owners had cited as one reason why they could not get the bank guarantee — was a breach on the part of BCCI was 'ex facie materially contrary to the terms of governing contracts/documents'.
The BCCI argued that the KCPL had requested that they be allowed to play at Jawaharlal Nehru Stadium in Kochi till Kerala Cricket Association made an alternative site for the new stadium.
The BCCI also addressed the matter of then IPL commissioner Lalit Modi putting out tweets about Pushkar and others' ownership of Kochi Tuskers. It argued that the arbitrator's finding that the Board was bound by the consequences flowing from the tweets, made in April 2010, was 'erroneous.'
The Board said that Modi's posts were made in his personal capacity and there was no evidence to suggest he made those posts in the course of his duties as the Chairman of the Governing Council of the IPL. It said that the KCPL raised the issue for the first time in 2012 as an 'afterthought'.
The BCCI further claimed that the KCPL's failure to provide the bank guarantee was a breach of the franchise agreement and the damages awarded to the owners of the team for loss of profits and wasted expenditure were in excess of the agreements, and as the arbitrator acted 'beyond the terms of the contract,' the impugned decisions were flawed and should be set aside.
The respondents KCPL and RSW claimed that the termination of the franchise was 'wrongful, malafide' and was done 'without giving reasonable notice to remedy the so-called breach' by them.
They submitted that the time of furnishing guarantee was extended from time to time by the BCCI but abruptly brought to an end, which was unjust. For failing to furnish the bank guarantee by March 2011, the KCPL referred to the non-availability of a new stadium in Kochi, shareholding approvals, and a sudden reduction in the number of IPL matches.
They further argued that the arbitrator rightly concluded that the BCCI had wrongfully invoked the bank guarantee, which amounted to 'repudiatory breach' of the franchise agreement.
High Court ruling
A single-judge Bench of Justice Riyaz I Chagla in its June 18 verdict held that the 'BCCI's dissatisfaction as to the findings rendered in respect of the evidence and/or the merits cannot be a ground to assail the Award.'
What next
The HC has permitted the KCPL and RSW to withdraw amounts deposited by the BCCI after six weeks. The HC had initially allowed withdrawal after four weeks. But on BCCI's request, so as to file an appeal before the Supreme Court, Justice Chagla extended the period by another two weeks.
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