This article is written by S A Rishikesh from Shri Ramswaroop Memorial University, Lucknow. This article tries to analyze the issue of termination of the contract of the Deccan Chargers by the Board of Control for Cricket in India. This will also throw some light on the Kochi Tuskers Kerala issue.
Table of Contents
Background
Cricket is more than five centuries old but still young at heart, especially after it got a T20 booster shot in England by Stuart Robertson. In probably one of the biggest ironies of all time, it is the Indians who took this concept from England and made it world-famous. All thanks to Lalit Modi and BCCI’s brainchild, the Indian Premier League (IPL), with the perfect mix of cricket, Bollywood and big money, is in a league of its own. Though the franchise is loved for its cricket, it is not just all fun and games, it is business and it thrives on its profits.
The IPL works on similar terms as that of the English Premier League (EPL) and the National Basketball League (NBA) of the United States of America. It is a franchise-based competitive sport where franchisees have the power of hiring and transferring players. It had eight franchises when it started in 2008 representing eight cities or states of India namely Bangalore, Chennai, Delhi, Hyderabad, Rajasthan, Kolkata, Punjab and Mumbai. Mukesh Ambani’s Reliance Industries Limited (RIL) owned Mumbai Franchise named Mumbai Indians being the most expensive for $111.9 Million.
Why was Deccan Chargers terminated from the IPL
Deccan Chargers was one of the eight founding franchises of the IPL. This team was based in the city of Hyderabad. The team finished at the last spot of the first IPL, despite being one of the favourites and then went on to win the trophy in the 2009 edition. Despite high hopes, the team could not perform well in the upcoming seasons. The team was not in news because of its performance, but the controversies going on around its owners Deccan Chronicle Holdings Ltd. (DCHL).
It all began in late July 2012 when the owners of the Deccan Chargers were unable to pay INR 13 Crores second instalment of the player salaries. The owners asked for an extension up to August 10, citing that many of their sponsors had not paid them. The BCCI allowed it but the deadline was not met.
As a result, the Chairperson of the franchise again met the members of the governing council of the IPL on August 14 and asked for further issues citing the problems in which the owner of the company was. The Deccan Chargers owners were given time till September 15, to fix all their issues and regularize with the operations to maintain the integrity of the league. A notice which reached them further stated if the owners were unable to comply with this deadline, their franchise would stand terminated.
Apart from this, all the franchises have to give 10% of the amount in which they bought the franchise, to BCCI in form of a bank guarantee from a nationalised bank, before the start of every IPL which is returned to the franchises when the season ends. Deccan Chargers had to pay $19 million or INR 100 crores. Things changed drastically on September 14, when the BCCI called an emergency meeting and terminated the contract of the Deccan Chargers just one day before the deadline.
New bids for the franchise after termination
BCCI blamed the change of stance by the franchise for the termination of Deccan Chargers but this did not go down too well for the franchise. They knocked on the door of the Bombay High Court on October 1. The final judgement was pronounced by Justice S J Kathawala, who asked Deccan Chronicle Holdings Ltd. (DCHL) owners of the Deccan Chargers to comply with the terms and conditions of the contract with BCCI and pay them INR 100 crores bank guarantee from a nationalised bank in a month. The owners asked for a three days extension to do so. But they failed again.
Failure simply meant the termination of the franchise was upheld and the BCCI was allowed to invite bids for the new franchise. The termination of Deccan Chargers became effective from October 12, 2012. The Hyderabad franchise then went to the Sun Network, which currently owns the franchise Sunrisers Hyderabad.
Arbitration proceedings and their results
The Bombay High Court decision was a setback for the owners of Deccan Chargers. Yet they went ahead with the petition alleging they had been discriminated against and put up some serious allegations against the BCCI. The court accepted the petition and appointed retired Supreme Court Justice (Retd.) C. K. Thakker as the sole arbitrator to settle the dispute.
Justice Thakker gave his judgement on July 17, 2020. He held the termination of Deccan Chargers illegal and discriminatory by the BCCI. He ordered the BCCI to pay INR 4,814 crore to the Deccan Chronicle Holdings Ltd.
BCCI’s challenge to the arbitral award
The BCCI immediately, under Section 34 of the Arbitration and Conciliation Act, 1996, challenged the decision of the arbitrator in the Bombay High Court. A single-judge bench composed of Justice Gautam Patel overruled the decision of the arbitrator.
Contentions of the parties
Petitioner – Board of Control for Cricket in India (BCCI)
BCCI justified the termination of Deccan Chargers on three grounds which were:
- Not paying players and others,
- creating charges on the assets (mortgaging assets to different banks), and
- insolvency proceedings against the company.
The contract between the BCCI and the Deccan Charges said the first two were curable; if uncured, it may lead to termination. While the third ground could trigger immediate termination.
The award given by the arbitrator was given ignoring all the evidence, going far away from the terms of the contract and the reliefs given, were not prayed for.
Respondent – Deccan Chronicle Holdings Ltd.
One of the main contentions of the DCHL was that the BCCI terminated their contract one day before the deadline given to them. Next, they alleged that the BCCI was acting with malafide and malicious intention against them as there were other franchises also who had defaulted on the payment of the players but the action was taken against them. Moreover, it was found that BCCI owed INR 36 Crores to the Deccan Chargers.
The award given by the Tribunal is fair and more than sufficient reasons are given in the award itself justifying the conclusions.
Final findings of the Court
The Court accepted all the contentions of Mr Tushar Mehta representing the BCCI and set aside the award of the Tribunal. Justice Patel held that all the defaults mentioned by BCCI were not addressed satisfactorily by the DCHL in the present case, yet the arbitral award in the favour of the franchise clearly shows the award proceeded to ignore evidence and taking into account views that were not even possible.
Justice Patel also found that the BCCI could terminate the contract with the franchise before the deadline, as it was not bound to give any show-cause notice and moreover the third breach of insolvency could invite immediate termination as per the contract between the BCCI and the franchise. Regarding insolvency proceedings, DHCL has agreed to make all payments in four instalments to the Industrial Finance Corporation of India (IFCI) and therefore to the date of termination, that is, September 14, 2020, it could not be said that the Insolvency Event was no more in existence as the winding-up petition was neither disposed nor dismissed till that date.
However, Justice Patel held that BCCI was liable to pay INR 34.07 Crores it owed to the franchise and as mentioned in the arbitral award also.
Similar issue with Kochi Tuskers Kerala
Kochi Tuskers Kerala as the name suggests itself represent the state of Kerala. It was added to the 2011 edition of IPL along with Rising Pune Supergiants. The franchise was owned by the Kochi Cricket Pvt. Ltd. and it was a consortium of many companies. Notably, the Kochi Tuskers Kerala played only for one season and was terminated immediately after that.
The franchise was in the middle of controversies from the very beginning since many companies together owned the franchise that there was a dispute regarding the share among the shareholders. There were disputes related to home ground and names also. The dispute among multiple shareholders led to the non-payment of the ten percent bank guarantee and according to the BCCI. Several reminders were sent to them but they failed. So the then BCCI President Mr. N. Srinivas terminated the Kochi Tuskers Kerala. On October 14, 2011, BCCI decided to go with just nine teams in the 2012 season.
In February 2012, Rendezvous Sports World, one of the shareholders of the Kochi Tuskers Kerala announced that it will take the matter to the court. In July 2015, the court-appointed arbitrator Justice Lahoti, who passed his order in favour of the franchise and asked BCCI to pay a compensation of INR 550 crores with an 18 percent interest rate per annum. This decision was challenged in the Supreme Court by the BCCI, but the Supreme Court also ruled against the BCCI. The BCCI is yet to pay compensation to the shareholders of Kochi Tuskers Kerala.
Conclusion
The BCCI has become the richest Cricket Board in the world, thanks to the IPL. But the same IPL has haunted the BCCI at times. The BCCI needs to be more careful while terminating contracts and must use a legal system to terminate contracts as such issues not only damage the brand value of IPL but gives the world a chance to mock the non-payment of dues of players and staff of such franchises.
References
- https://www.espncricinfo.com/story/ipl-news-kochi-franchise-terminated-by-bcci-532973
- https://www.newindianexpress.com/sport/cricket/2018/mar/16/sc-orders-bcci-to-cough-up-rs-1700-cr-for-kochi-tuskers-1787869.html
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