BCCI asked to pay Rs.4800 crore for wrongfully terminating Deccan Chargers

In a favourable turn of events, Deccan Chronicle Holdings Limited (DCHL), owners of Deccan Chargers, who took home the second edition of the Indian Premier League(IPL), has won a substantial arbitral award in an age-old dispute involving the Board of Control for Cricket in India (BCCI). The decision could cost the Indian cricket board a huge sum of Rs 4800 crore. BCCI is expected to challenge the decision in Supreme Court .

How it all started?

DCHL was declared as the bidder and it acquired the rights of Deccan Chargers for $107 million in 2008, the inception year of IPL. The BCCI subsequently entered into an agreement with DCHL for a period of 10 years.

The dispute arose in 2012 when the BCCI terminated the Hyderabad-based franchise following an emergency meeting with IPL governing council on September 15, 2012. The BCCI argued that DCHL broke the code and made several breaches and hence there was no other option apart from its termination.

BCCI initiated a new tender which was won by the renowned Sun TV Network of Kalanithi Maran and the name of the franchise was changed to Sunrise Hyderabad (SRH). DCHL challenged BCCI’s decision, by approaching Bombay High Court with a plea that their termination was illegal and arbitrary.

The high court had appointed retired Supreme Court justice CK Thakkar as the sole arbitrator between the two parties eight years back.

Reason for termination

The dispute had started when the media company DCHL was unable to make mandatory payments due to financial problems. The franchise lost its IPL status after it failed to fulfill a bank guarantee of INR 100 crore, which was declared as a mandatory condition for its survival in IPL. The BCCI issued a show cause notice to DCHL to state reasons within 30 days about its failure to pay the sum.

The BCCI claimed that DCHL had pending dues to the tune of RS. 4000 Crore as it had not paid the players as well as many bank creditors. Therefore, the BCCI terminated the franchise. However, the termination came on a day when there was still a day left in the 30 day period which the BCCI had given to DCHL to respond.

It was on this ground that DCHL claimed that the termination was premature and wrong. The arbitrator had put a stay on the termination of DC. However the Bombay HC overruled the arbitrator’s decision and the termination finally came into effect.

In 2017, insolvency proceedings were initiated against DCHL under The Insolvency and Bankruptcy Code, 2016 (IBC) and therefore, the arbitration proceedings were halted for two years.

After a gruelling battle of eight long years, the sole arbitrator upheld the termination as illegal, premature, and arbitrary, and consequently awarded Rs. 4800 Crore, along with an interest of 10% since the arbitration commenced in 2012.

Now BCCI has to pay Rs.4800 crore along with the interests by the end of September.

In 2017, a similar arbitration case was won by the owners of the now terminated Kochi Tusker Kerala and the BCCI was asked to pay Rs 850 crore.