Deccan Chargers wins big at arbitration against BCCI; Arbitral Tribunal orders BCCI to pay Rs. 8,000 crores to Deccan Chronicles Holdings Ltd.

The Board of Control for Cricket in India (BCCI) has received a fresh jolt as the long pending dispute of cancellation of the Hyderabad Franchise (Deccan Chargers) owned by Deccan Chronicles Holdings Ltd. (DCHL) has been held to be bad in law by the Arbitrator appointed by the Bombay High Court.

DCHL was the successful bidder for the Hyderabad Franchise of the Indian Premier League (IPL) in the year 2012 and a Franchise Agreement was signed for 10 years. The franchise, i.e. Deccan Chargers also successfully participated in the IPL Season I to IV and won the second season held in South Africa in 2009 under the captaincyof former Australian wicket-keeper and batsman Adam Gilchrist.

BCCI issued show cause notice of termination to DCHL on 16.08.2012 citing various breaches by the Franchise under the Agreement. Though the show cause notice provided for 30 day time period for curing the defects, but BCCI terminated the Franchiseby calling a late night meeting of the Governing Council at 9:30 at night on14.08.2012, one day prior to the expiry of the cure period.

DCHL claimed that the defects were trivial, such aspending payments of players, claim of creation of charge on the Franchise and winding up notices received by DCHL, and such defect, were even otherwise cleared on 15.08.2012. However the elaborate steps taken to cure were wholly ignored and disregard by the BCCI. DCHL claimed that the entire scenario was pre-planned and done solely to benefit an interested party by rebidding the Hyderabad Franchise.

On termination DCHL approached the Bombay High Court and the High Court appointed Hon’ble Mr. Justice C. K. Thakar (Retd.) Former Judge Supreme Court of India as the sole arbitrator.

The proceedings which started in 2012, culminated on 17th July 2020, when the Ld. Arbitrator allowed the claim of DCHL and held that the termination was wrong as it was prior to the time given for curing the defects. The termination was also held to be bad on the ground that defects were cured within the prescribed period. The Ld. Arbitrator also observed that the action of termination against DCHL was harsh and arbitrary as compared to the defects mentioned in the show cause notice. It was also observed other Franchiseeswho committed illegal acts of betting were left scot free and no steps were taken by BCCI. Infact steps were taken only after specific directions passed by the Hon’ble Supreme Court. Even at this stage the punishment imposed was only restraining them from participating in the IPL for two seasons, while the hugely successful Hyderabad Franchise of Deccan Chargers was cancelled permanently. BCCI even went ahead for rebidding in 2012 itself.

While setting aside the termination the Ld. Arbitrator granted damages to the tune of Rs. 630 crores. The Ld. Arbitrator instead of granting specific performance and restoration of the Franchisee, has granted compensation to DCHL to the tune of Rs. 4814.17 crores. DCHL has also been granted Rs. 36 crores as amount payable under the Franchisee Agreement. Ld. Arbitrator has also granted interest @10% from the date of initiation of the arbitration proceedings. The total amount awarded comes to approximately Rs. 8000 crores.

This is by far the biggest award against BCCI in an arbitration and will have huge financial implications for BCCI.

At the same time, it is a big victory for DCHL, which started facing financial issues from 2012 itself and is nowunder the management of the Resolution Application (RA) after a successful Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC).

Though the dispute has seen some finality however it is going to be long journey for DCHL before it actually receives the damages, as BCCI is surely likely to challenge the award beforethe Bombay High Court.

Dhir & Dhir Associates represented DCHL while BCCI was represented by Maniar Srivastava Associates.

Speaking to Obiter & Ratio, Jayashree Shukla Dasgupta, Partner, Dhir & Dhir Associates stated that:

One of the primary reasons for the economic downfall of DCHL was the   illegal termination of the Deccan Chargers Franchise from the IPL by the BCCI. This award will infuse much needed funds into the Company, which is also the leading newspaper of south india. Unfortunately, during this time, the Company underwent insolvency proceedings. Despite the funds coming into the company, the original management of DCHL has already been ousted under these insolvency proceedings, and the benefits of these funds may be reaped by the new management who has stepped in subsequently.”