The Board of Control for Cricket in India (BCCI) has been asked to pay the now defunct Indian Premier League (IPL) franchise Rs. 4800 crore for illegally terminating their contract. Bombay High Court-appointed sole arbitrator CK Thakkar, awarded the owners of the team, Deccan Chargers Holding Ltd (DCHL) the amount as a settlement in the dispute.
DCHL won a successful bid to participate in the IPL in 2008, which subsequently led to an agreement between the two parties (BCCI and IPL) for ten years.
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However, the decade-long contract hit a snag in August of 2012 when the BCCI issued a show-cause notice for termination of the franchise to DCHL based on allegations that the franchise had failed to pay its players. The Board confirmed the termination of contract a day before the expiry of the 30-day period granted to respond to the notice, DCHL’s lawyer said.
After the termination, BCCI had come forward to help facilitate the sale of the team and put advertisements calling for potential buyers. Hyderabad based PVP ventures had offered Rs 900 crore which was refused by DCHL because they thought the payment terms were unacceptable. Not long after, the BCCI called a tender for a new team which was won by the Sun TV network. The franchise, Sunrisers Hyderabad exists in the IPL today.
“The sole arbitrator on Friday upheld the termination to be illegal and granted damages to the tune of Rs 630 crores and compensation to DCHL to the tune of Rs 4160 crores.
“DCHL has also been granted Rs 36 crore as an admitted amount payable under the Franchise Agreement,” said Maneesha Dhir, Managing Partner of Dhir & Dhir Associates, who appeared for DCHL.
While reflecting on the decision made by the arbitrator, a BCCI official said this verdict was not what they expected. The Board is expected to appeal the verdict.
Deccan Chargers aren’t the only ones who have gone into arbitration against the Board citing wrongful termination of contracts. In 2017, the owner of the now-defunct Kochi Tuskers won a similar case of arbitration against BCCI, and the cricket governing body was asked to pay Rs 850 crore to the owners.
The board, additionally, had encashed the bank guarantee of the team citing breach of the contractual agreement. They not only denied to pay the compensation amount but also did not restore the franchise in the IPL. BCCI has no payments yet and the matter stands unresolved.
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In another case of arbitration -- albeit one where the BCCI has found itself on the right side of the law -- litigation is pending against Lalit Modi and World Sports Group (WSG).
An arbitral tribunal made up of Supreme Court Justices (Retd) Sujatha Manohar, Mukunthakam Sharma and S.S. Nijjar upheld BCCI’s decision to terminate IPL media rights for overseas territories with WSG, on June 28, 2010. The matter went to arbitration, after WSG wanted to stake claim over the profit the company would have made, if BCCI continued with the agreement. They also wanted BCCI to pay for the wrongful termination of the agreement. BCCI stuck to its stand that the company was fraud.
“It has been proved that Lalit Modi in conspiracy with WSG officials cheated, and defrauded the BCCI,” senior counsel, Raghu Raman, who represented the BCCI said.
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