Bombay High Court
Deccan Chronicle Holdings ... vs Board Of Control For Cricket In ... on 1 October, 2012
Bench: S. J. Kathawalla
KPP -1- ARBP(L) NO. 1238 OF 2012
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION (L) NO. 1238 OF 2012
Deccan Chronicle Holdings Limited )
having its registered office at 36, Sarojini Devi Road, )
Secunderabad-500 003 )...Petitioner
vs.
Board of Control for Cricket in India, )
having its registered office at Holkar Stadium,
ig )
Khel Prashal, Race Course Road, Indore-452 003 )
and
Board of Control for Cricket in India, )
Cricket Centre, Wankhede Stadium, )
'D' Road, Churchgate, Mumbai-400 020 )...Respondent
Mr. Zal Andhyarujina along with Mr. Arcot Chandrashekhar and Ms. Mona
Bhide, instructed by M/s. Dave & Girish & Co., for the Petitioner.
Mr. R.A. Dada, Senior Advocate, along with Mr. T.N. Subramaniam, Senior
Advocate, along with Mr. Viraj Maniar, Mr. P.R. Raman, Ms. Akhila Kaushik and
Ms. Misbah Dada, instructed by M/s. Maniar Srivastava Associates, for the
Respondent.
Mr. Milind Sathe, Senior Advocate, along with Mr. Ashish Kamat, instructed by
M/s. Crawford Bayley & Company, for the Intervenor.
CORAM: S.J. KATHAWALLA, J.
Judgment reserved on : 26th September, 2012
Judgment pronounced on : 01st October, 2012
JUDGMENT:
The above Petition is filed by the Petitioner - Deccan Chronicle
Holdings Limited ("DCHL") under Section 9 of the Arbitration and Conciliation
Act, 1996 ("the Act") seeking to restrain the Respondent - Board for Control for
Cricket in India ("BCCI") from terminating the Franchise Agreement dated 10 th
KPP -2- ARBP(L) NO. 1238 OF 2012
April 2008, entered into by and between DCHL and BCCI.
2. The relevant facts in the matter are briefly set out hereunder :
3. In and around 2007, BCCI conceptualised a tournament to be called
"Indian Premier League ("League") which would involve competition between
various teams of Twenty-20 format of cricket. A sub-committee of the
Respondent known as Indian Premier League ("IPL") managed by a separate
Governing Council, was set up / established to oversee the operation of the
League, which in turn, ultimately reports to BCCI. The IPL/BCCI conceived that
private individuals/companies should establish and operate the teams as
Franchisees in the League, as per the guidelines and regulations framed by
IPL/BCCI.
4. Pursuant to a bidding process in January 2008, DCHL was declared
the successful bidder for the Hyderabad franchise of the League ("Franchise")
and the Franchise Agreement dated 10th April 2008 ("Franchise Agreement") was
thereafter executed between DCHL and BCCI.
5. Clause 11 of the Franchise Agreement sets out the circumstances and
the manner in which either party may terminate the Franchise Agreement.
Clauses 11.1, 11.2, 11.3 and 11.6 are relevant and are reproduced hereunder:
KPP -3- ARBP(L) NO. 1238 OF 2012
"11.1 Either party pay terminate this Agreement with immediate
effect by notice in writing if the other party has failed to remedy
any remediable material breach of this Agreement within a
period of 30 days of the receipt of a notice in writing requiring it
to do so which notice shall expressly refer to this Clause 11.1 and
to the fact that termination of this Agreement may be a
consequence of any failure to remedy the breach specified in it.
For the avoidance of doubt a breach by the Franchisee of its
payment obligations under this Agreement or under Clause 22
shall be deemed to be a material breach of this Agreement for the
purposes of this Clause.
11.2 Either party may terminate this Agreement with
immediate effect by written notice if the other party commits or
permits an irremediable breach of this Agreement or if it is the
subject of an Insolvency Event.
11.3 BCCI-IPL may terminate this Agreement with
immediate effect by written notice if:
(a) there is a Change of Control of the Franchisee (whether
direct or indirect) and/or a Listing which in each case
does not occur strictly in accordance with clause 10;
(b) the Franchisee transfers any material part of its business
or assets to any other person other than in accordance
with Clause 10;
(c ) the Franchisee, any Franchisee Group Company and/or
any Owner acts in any way which has a material adverse
effect upon the reputation or standing of the League,
BCCI-IPL, BCCI, the Franchisee, the Team (or any other
team in the League) and/or the game of cricket.
11.6 An "Insolvency Event" shall occur in respect of a party to
this Agreement if:
(a) any bona fide petition is presented or any demand under
the Act is served on that party or an order is made or
resolution passed for the winding up of that party or a
notice is issued convening a meeting for the purpose of
passing any such resolution;
KPP -4- ARBP(L) NO. 1238 OF 2012
(b) any bona fide petition is presented for an administration
order or any notice of the appointment of or of an
intention to appoint an administrator of that party is
filed in court or an administration order or interim order
is made in relation to that party;
(c ) any administrative or other receiver or manager is
appointed of that party or of all or any material part of
its assets and/or undertaking within the meaning of the
Act or any other bona fide step is taken to enforce any
encumbrances over all or any part of the assets and/or
undertaking of that party;
(d) Any step is taken by that party with a view to proposing
any kind of composition, compromise or arrangement
involving that party and any of its creditors, including
but not limited to a voluntary arrangement under the
Act;
or anything similar occurs under any analogous legislation
anywhere in the world."
6. Admittedly, DCHL failed to make payments as agreed to its players,
support staff, associations and overseas cricket boards which became due on and
from 1st May, 2012. According to BCCI, DCHL in breach of the Franchise
Agreement have also created charges on the Deccan Chargers Franchise and a
Winding up Petition being CP No. 146 of 2012 is already filed against them by
M/s. IFCI in the High Court of Hyderabad thereby constituting an "Insolvency
Event" under clause 11.6 of the Franchise Agreement.
7. BCCI therefore by its letter dated 16 th August 2012 addressed to
DCHL inter alia alleged that DCHL, had committed various breaches of the
Franchise Agreement and called upon DCHL to remedy the breaches on or
KPP -5- ARBP(L) NO. 1238 OF 2012
before 15th September, 2012, while reserving its right to terminate the Franchise
Agreement in case of failure on the part of DCHL to do so within the said time
limit. By its said letter BCCI called upon DCHL to do the following on or before
15th September 2012:
(i) pay all sums currently due and owing to DCHL players under their
respective IPL Player Contracts and to confirm in writing to BCCI that DCHL
have done so;
(ii) cancel the charge created on the Deccan Charters Franchise in favour of
Kotak Mahindra Bank in the Registrar of Companies (RoC), and any other
charges, encumbrances or other security interest of any kind over the Deccan
Chargers Franchise and to confirm in writing to BCCI that DCHL have done so
and that no other such charges or encumbrances subsist; and
(iii) show acceptable proof that the winding up petition filed by M/s. IFCI
in CP No. 146 of 2012 in the High Court of Hyderabad stands
withdrawn/dismissed.
By the said letter, BCCI clarified that whilst affording this opportunity to DCHL
to remedy its breaches, BCCI did not accept or acknowledge that the breaches
committed by DCHL are remediable and specifically reserved its right to
terminate the Franchise Agreement with immediate effect and reserved all other
rights and remedies under the Franchise Agreement.
8. DCHL vide its letter dated 29th August 2012, inter alia accepted its
KPP -6- ARBP(L) NO. 1238 OF 2012
inability to run the Franchise and requested BCCI to co-operate in the process of
finding a genuine buyer to take over the Franchise. It would be relevant to
mention at this stage that DCHL has in the above petition alleged that DCHL
was coerced into signing the said letter of BCCI. In the affidavit-in-rejoinder
filed by the Chairman of DCHL, he has deposed that he had met the President of
BCCI on 29th August 2012, to request him to allow DCHL to sell its team
"Deccan Chargers". The President of BCCI agreed to consider the proposal made
by DCHL to sell its team but asked him to issue a letter to BCCI recording the
same. The Chairman of DCHL asked the President of BCCI to have the necessary
letter prepared. Accordingly, the lawyer for BCCI Mr. P. Raghuraman was
called, and was directed to draft the necessary letter. The Advocate for BCCI
drafted the letter and the Chairman of DCHL being anxious to sell the team,
without objecting to the contents of the letter signed the same.
9. BCCI vide its letter dated 4th September 2012, addressed to DCHL
agreed to afford certain assistance to DCHL in relation to the possible sale of the
Franchise on a "without prejudice" basis.
10. By a letter dated 5th September 2012 addressed by YES Bank (one
of the Bankers of DCHL), to BCCI, YES Bank recorded that they were ready and
willing to make immediate payments to the players, support staff and respective
Cricket Board(s) for and on behalf of DCHL for the IPL-5 season. After setting
KPP -7- ARBP(L) NO. 1238 OF 2012
out the details of such payments required to be made, YES Bank recorded that
the said payments shall be effected by it, subject to BCCI confirming in writing
that it shall remit the entire outstanding amount payable to DCHL in the
account maintained by DCHL with YES Bank.
11. YES Bank also addressed a letter dated 13th September 2012 amongst
others to BCCI, wherein YES Bank, inter alia, recorded as follows:
"In line with the present perfected exclusive first charge of YES
Bank on the present and future receivables of Deccan Charters,
division of DCHL, Yes Bank is willing to extend the entire
additional financial support, exclusively, to DCHL, for
managing IPL 6."
12. At the auction of the Deccan Chargers Franchise held on 13 th
September 2012, only one bid was received and the same was not accepted by
DCHL for reasons set out in paragraph 7 (g) of the affidavit-in-rejoinder.
13. On 14th September 2012, DCHL forwarded a letter to BCCI wherein
DCHL submitted that it had not committed any breach of the Franchise
Agreement and sought to refer the disputes to Arbitration as agreed under clause
21 of the Franchise Agreement. According to BCCI, in view of the said notice
invoking arbitration, received from DCHL, BCCI convened an emergency meeting
of the Governing Council of the IPL on 14 th September 2012 at 9.30 p.m., and in
the said meeting decided to terminate the Franchise Agreement with immediate
effect.
KPP -8- ARBP(L) NO. 1238 OF 2012
14. DCHL therefore filed the above Petition and moved this Court on
Saturday, 15th September, 2012 for urgent reliefs. The Counsel appearing for
DCHL strongly contended before this Court on 15 th September 2012 that BCCI
could never have terminated the Franchise Agreement on 14 th September 2012
when BCCI itself had granted time to DCHL upto 15 th September 2012 to
remedy the alleged breaches by its letter dated 16 th August 2012. In view
thereof, the learned Senior Advocate appearing for BCCI assured the Court on
15th September 2012 that in the event of DCHL making a representation to BCCI
setting out the details of them having satisfied all the objections raised by BCCI
in their letter dated 16th August, 2012, BCCI will reconsider its decision to
terminate the Franchise Agreement dated 10th April 2008. The matter was
therefore adjourned to 17th September 2012 for final hearing.
15. On the same day, YES Bank along with its letter dated 15 th
September 2012, on behalf of DCHL forwarded payments to BCCI towards the
dues of the players (both Indian and Foreign), support staff, Cricket Board
(s)/Association (s) as more particularly mentioned in Annexure-1 to the said
letter. The said letter is relevant and is reproduced hereunder:
" Dear Sirs,
Sub: Payment to IPL V session players/support staff/cricket
boards/associations on behalf of Deccan charges by YES Bank
Limited.
Re: Section 9 petition filed by Deccan Chronicle Holdings
KPP -9- ARBP(L) NO. 1238 OF 2012
Limited against BCCI before Hon'ble Bombay High Court
("BHC") dated September 15, 2012, challenging termination of
the Franchise.
Please refer to our earlier letter dated September 05, 2012 and
two letter(s) each dated September 13, 2012, inter alia,
addressed to BCCI and the hearing, which happened today in
the captioned petition inside the Chambers of Hon'ble Justice
S.J. Kathawalla.
As assured and committed by YES Bank Limited ("the Bank")
in its aforesaid correspondence to BCCI and in line with the
commitments made today before the Hon'ble Justice
Kathawalla, the Bank is hereby making the payments, to the
players' (both Indian and Foreign), Support Staff, Cricket
Board(s)/Association (s), as more particularly mentioned in the
Annexure 1 hereto.
The aforesaid payment aggregating to USD 3409207.74 is paid
in the form of demand draft (s) dated September 15, 2012, as
more particularly mentioned in the Annexure 1 hereto since it is
not possible to wire transfer /remit the funds to the foreign
players, support staff, Cricket Board(s)/Association(s), as the
Foreign Exchange transfer/remittances are not permitted by
Reserve Bank of India, on Saturdays and Sundays.
The aforesaid payment aggregating to AUD 7940.00 is paid in
the form of demand draft (s) dated September 15,2012, as
more particularly mentioned in the Annexure 1 hereto since it is
not possible to wire transfer/remit the funds to support staff, as
the Foreign Exchange transfer/remittances are not permitted by
Reserve Bank of India, on Saturdays and Sundays.
We are releasing the aforesaid Demand Drafts to demonstrate
our assurance and commitment and we shall make the wire
transfer to the respective foreign parties on Monday i.e.
September 17, 2012 subject to BCCI returning the said Demand
Drafts to authorized representative of the Bank, namely Mr. R.
Ravichander, Group President YES Bank Limited.
The Bank is also issuing Demand Drafts aggregating INR
89538750 as more particularly mentioned in the Annexure II
hereto, towards the payments to be made to the Indian Players,
Support Staff, Cricket Board (s)/Association(s).
KPP -10- ARBP(L) NO. 1238 OF 2012
In case, any further clarifications are required, we request you
get in touch with Mr.Sumit Gupta, Senior President, YES Bank
Limited at + 91 9810017850 or [email protected] in.
In the meantime, kindly acknowledge
Yours sincerely,
Sd/-
Sumit Gupta
Senior President.
Encl:
(a) Annexure 1 detailing the payment to be effected to the
player (both Indian and Foreign), support staff, Cricket
Board(s)/Association (s);
(b) Annexure II providing details of Demand Drafts;
( c) Demand Drafts dated September 15, 2012, 45 Nos. )
aggregating USD 3409207.74and INR 89538750 and I No.
AUD 7940.00
We, Deccan Chronicle Holdings Limited do hereby absolutely,
irrevocably and unconditionally agree and confirm the above
and undertake to the Bank to pay all monies due and payable
to it by BCCI.
Sd/-
T. Venkattram Reddy
Chairman, Deccan Chronicle Holdings Limited."
16. The said letter was received by the Hon. Secretary of BCCI along
with the demand drafts on 15th September 2012 by 5.00 p.m.
17. On 16th September 2012 (Sunday), YES Bank forwarded a letter
dated 15th September, 2012 to BCCI, inter alia, requesting BCCI to forthwith
release payments which are due and payable by BCCI to DCHL, and credit the
same in the account of DCHL maintained by YES Bank. The Bank also requested
KPP -11- ARBP(L) NO. 1238 OF 2012
BCCI to instruct it to release the wire transfer, and also release the demand
drafts to Indian Players on 17th September 2012, if the arrangement was
acceptable to BCCI.
18. On 16th September 2012, YES Bank had a "brief informal
discussion" with the Treasurer of BCCI Mr. Ajay Shirke. During the said
discussion, YES Bank found that Shri Shirke was non-committal as to whether
BCCI was contemplating withdrawal of the termination notice, despite the fact
that the breaches alleged by BCCI against DCHL were substantially and
materially cured by DCHL before 5.00 p.m. on September 15, 2012. YES Bank
therefore informed Shri Shirke that if BCCI was going ahead with the
termination of the Franchise, and also was going to distribute the said demand
drafts to the players (both Indian and Foreign), cricket Board/Associations,
support staff etc., the same would be harsh, and urged BCCI to refrain from
taking such drastic steps.
19. On 17th September 2012, when the matter was taken up for hearing
and final disposal, the learned Senior Advocate appearing for BCCI informed
the Court that BCCI has confirmed the termination of the Franchise Agreement
dated 10th April, 2008. The learned Senior Counsel for BCCI also tendered an
affidavit-in-reply running into 236 pages (with annexures). The learned
Advocate for DCHL therefore sought time and applied for a direction to BCCI to
maintain status quo until further orders. In view thereof, the above Petition
KPP -12- ARBP(L) NO. 1238 OF 2012
was adjourned to 24th September 2012 and BCCI was directed to maintain status
quo until further orders.
20. By its e-mail dated 17 th September 2012, YES Bank urged BCCI to
withdraw the termination proceedings initiated against DCHL as they had
materially and substantially cured all possible defects on 15 th September, 2012
by 5.00 p.m. YES Bank requested BCCI to deposit the amounts payable to
DCHL by BCCI in the account of DCHL with YES Bank and requested BCCI not
to release the 45 demand drafts issued by the Bank on behalf of DCHL, if the
request made by YES Bank was not acceptable to BCCI.
21. The learned Advocate appearing for DCHL advanced his
submissions on 24th September 2012 when Mr. Milind Sathe, Learned Senior
Advocate representing YES Bank, was also present in Court. However, on the
next day i.e. 25th September 2012, Mr. Sathe tendered a Chamber Summons
praying that YES Bank be joined as a party Respondent to the above Petition, or
in the alternative permitting Yes Bank to intervene and be heard in the matter,
and for directions to BCCI to return the demand drafts in the event of BCCI
being opposed to withdrawal of the impugned termination of the Franchise
Agreement executed by and between DCHL and BCCI. In the affidavit-in-
support of the Chamber Summons, YES Bank has contended that the demand
drafts are given to BCCI on the basis that the impugned termination would not
KPP -13- ARBP(L) NO. 1238 OF 2012
be effectuated, and BCCI would deposit the IPL receivables of DCHL, in DCHL
's Bank Account maintained by YES Bank. YES Bank has further stated in the
affidavit that in the event BCCI was not agreeable to withdraw the impugned
termination and/or make payment of the DCHL 's IPL receivables into the DCHL
's Bank account maintained with YES Bank, YES Bank is entitled to seek return
and/or refund of the demand drafts enclosed at Annexure-1 to the Petition.
22. Being surprised by the said Chamber Summons filed on behalf of
YES Bank, DCHL sought an adjournment to respond to the said Chamber
Summons. In view thereof, the proceedings were adjourned to 26 th September
2012.
23. On 26th September 2012, Mr. Sathe, learned Senior Advocate
appearing for YES Bank, informed the Court that he has instructions not to press
the Chamber Summons any more. He submitted that the said Chamber
Summons was taken out by YES Bank since YES Bank felt that despite DCHL
having substantially cured the defects set out in the notice dated 16 th August
2012 issued by BCCI, BCCI cannot continue to take an unfair stand that it will
hand over the demand drafts deposited by DCHL through YES Bank, to the
players, support staff, Cricket Board/s, Association/S, etc. and also terminate the
Franchise Agreement with DCHL. Mr. Sathe informed the Court that YES Bank
has now realised that they have unconditionally deposited the demand drafts on
KPP -14- ARBP(L) NO. 1238 OF 2012
behalf of DCHL with the BCCI, by their first letter dated 15 th September 2012,
and in view thereof the breach as regards payment of the players dues (both
Indian and Foreign), support staff, Cricket Board (s)/Association (s), stands
cured and YES Bank now cannot have any say qua the said payments and it is
only DCHL who is free to make its own submissions before the Court in the
above Application. Mr. Sathe further submitted that the demand drafts were
deposited by YES Bank with BCCI on instructions from DCHL and that the said
deposit of demand drafts was unconditional and YES Bank has no objection if
this Court allows BCCI to hand over the said demand drafts to the players,
support staff, Cricket Board/s, Association/s, etc. Mr. Sathe also submitted
that he has instructions from YES Bank to withdraw the second letter dated 15 th
September 2012 received by BCCI from YES Bank on 16 th September, 2012 and
the e-mail dated 17th September 2012 addressed by YES Bank to BCCI.
24. Mr. Zal Andhyarujina, Learned Advocate appearing for DCHL,
submitted that BCCI right from the beginning is determined to terminate the
Franchise Agreement dated 10th April 2008. He has drawn the attention of the
Court to the letter written by BCCI to M/s. Crawford Bayley & Company,
Advocates for YES Bank, on 8th September,2012 wherein BCCI has recorded as
under:
"Therefore that you have a paramount charge on receivables
and that you would seek the Court action to stop the Tender if
the sums are not remitted to your account do not concern the
BCCI. We are only interested in protecting our interest which,
KPP -15- ARBP(L) NO. 1238 OF 2012
under the situation that emerges, clearly points to the
inevitable viz. termination of the Deccan Chargers Franchise
and total erosion of any value that may be attached to it."
25. Learned Advocate for DCHL has submitted that the decision to
terminate the Franchise Agreement with DCHL by BCCI was pre-determined is
also evident from the fact that though BCCI had in its notice dated 16 th August
2012 given time to DCHL to cure the three defects set out therein on or before
15th September 2012, the Franchise Agreement was terminated on 14 th
September 2012 itself. The haste on the part of BCCI to terminate the said
Franchise Agreement with DCHL is also obvious from the fact that after
extending the time upto 5.00 p.m. on 15 th September 2012 to enable DCHL to
cure the purported defects, BCCI immediately at 5.30 p.m. on the same day,
without considering all the representations made to BCCI, confirmed the
termination dated 14th September 2012, by only considering two letters received
from ICICI Bank Limited and Axis Bank Limited, and the demand drafts handed
over by the representatives of DCHL on the pretext that "no representation of
any kind was placed for consideration of the Working Committee from DCHL and
in the absence of any material to show that all the breaches committed had been
cured as per the demand made in the BCCI notice dated 16 th August 2012....". The
learned Advocate for DCHL therefore submitted that if BCCI had admittedly
received only the demand drafts for payments to be made to the players etc. on
15th September, 2012 by 5.00 p.m. BCCI now cannot be heard to say that due to
the alleged conditions attached either by DCHL or the YES Bank qua the said
KPP -16- ARBP(L) NO. 1238 OF 2012
outstanding payments, it was compelled to terminate the said Franchise
Agreement.
26. The learned Advocate for DCHL submitted that 15 th September, 2012
being a Saturday, the International Banking Channels were closed and it was not
possible via these banking channels to make payment overseas. Accordingly,
DCHL and YES Bank arranged to have pay orders made out in the names of all
the players, along with pay orders in favour of the relevant Overseas Boards and
Support Staff Entities on 15th September 2012 itself. It is submitted that though
as on 15th September 2012, only a sum of Rs. 2,06,34,875/- and a sum of US $
6,58,993/- was in fact due and payable to the Indian and Overseas players
respectively, DCHL with a view to establish its bona fides and satisfy BCCI of its
capacity to meet its obligation in the PIL obtained pay orders from YES Bank
which aggregated to a very considerable amount of Rs. 8,95,38,750/-, US $
34,09,207.74 and Australian Dollars 7940/-, and arranged to hand over the
same to BCCI before 5.00 p.m. The pay orders were accompanied by a letter
addressed by YES Bank to the Respondent which is reproduced in paragraph 15
above. The learned Advocate for DCHL submitted that though the receipt of
the letter issued by YES Bank dated 15 th September 2012 was acknowledged by
Mr. Shirke of BCCI, the same was not even considered by BCCI as can be seen
from paragraph 7 (q) of the affidavit-in-reply filed by BCCI.
27. As regards the issue that DCHL had created multiple charges
KPP -17- ARBP(L) NO. 1238 OF 2012
towards the Franchise Agreement in favour of various Banks, the Learned
Advocate appearing for DCHL has submitted that Mr. Shirke from BCCI called
Mr. E. Venkatram Reddy of DCHL requesting him to issue a letter to BCCI
informing/ explaining that the charges over the Franchise Agreement stood
released/vacated. DCHL vide its letter dated 15 th September 2012 wrote to the
the President of the BCCI, inter alia, stating as under:
" With reference to above we hereby submit that the Lenders
namely a) IDFC Limited b) Kotak Mahindra Bank Limited c)
ICICI Bank Limited d) Religare Finvest Limited, who have
created charge on IPL Franchise Agreement dated 21.02.2011
have released the charge vide letter dated 15th September, 2012.
Accordingly, the Company has filed modification of charge with
respect to the releasing their right over the IPL Franchisee. The
relevant documents along with attachments filed with ROC,
Hyderabad are enclosed herewith.
Sr.No. Name of the Charge Modification of Date of
Holder charge Registration
with the
ROC1
1 IDFC Limited B57672230 15.09.2012
2 Kotak Mahindra Bank B57677932Ltd 15.09.2012
Limited
3 ICICI Bank Ltd. B57683674 15.09.2012
4 ICICI Bank Ltd. B57685752 15.09.2012
5 Religare Finvest B45643053 17.09.2012
Limited
Kindly note that with the filing of the above modifications by
the lenders the charge created on IPL franchisee stands
withdrawn.
Please acknowledge the receipt of the above."
The said letter was faxed from the office of DCHL at 5.58 p.m. and a copy of
the fax letter was also subsequently handed over to Mr. Guruprasad of BCCI
KPP -18- ARBP(L) NO. 1238 OF 2012
with an endorsement evidencing that it had been received by BCCI.
28. As regards the winding up petition filed by IFCI being CP No. 146 of
2012 before the High Court of Hyderabad, the Learned Advocate appearing for
DCHL submitted that IFCI had also filed a suit against DCHL for the dues which
formed the subject matter of the winding up petition. IFCL and DHCL have
already filed consent terms before the Debts Recovery Tribunal-I, Jhandewalan,
New Delhi on 12th September, 2012, whereunder IFCI has agreed to receive
from DCHL an amount of Rs. 25,17,28,944/- as set out in the consent terms.
As set out in the consent terms, out of the said amount of Rs. 25,17,28,944/-, an
amount of Rs. 6,00,00,000/-was paid by DHCL to BCCI on 9 th August 2012
much before the notice to cure the alleged defects was issued to DCHL by
BCCI on 16th August 2012. Thereafter a further amount of Rs. 4,00,00,000/-
plus legal expenses quantified at Rs. 8,00,000/- is paid by DCHL to IFCI. The
balance amount of Rs. 15,17,28,944/- is agreed to be paid on 10 th October,
2012, 10th November, 2012, 10th December, 2012 and 10th January, 2013. It is
submitted that in the Consent Terms, IFCI has expressly agreed that in view of
the settlement between the parties the winding up proceedings filed by IFCI is
kept on hold by IFCI and the same will be withdrawn after the terms of
settlement are complied with. The learned Advocate appearing for DCHL
therefore submitted that the question of DCHL not curing the defects qua the
pending winding up petition does not arise. In any event, the learned Advocate
for DCHL submits that an undertaking may be recorded on behalf of DCHL
KPP -19- ARBP(L) NO. 1238 OF 2012
that they shall pay the installment amounts as agreed under the consent terms
to IFCI on the due dates. The learned Advocate appearing for DCHL submitted
that after the hearing before this Court in the morning on 15 th September 2012,
DCHL persistently attempted throughout the day to contact the relevant decision
makers in IFCI, with a view to completely satisfying the BCCI that the winding
up petition was disposed of/withdrawn for all practical purposes. However,
despite DCHL's persistent efforts, the concerned decision makers remained
unavailable and could not be spoken to. DCHL also instructed its Advocates to
make a written representation to BCCI with regard to the said matters. Further
to these instructions, DCHL's Advocates vide their e-mail dated 15 th September
2012 sent at 5.23 p.m. to BCCI forwarded a letter dated 15 th September 2012 in
the form of an attachment "regarding the fulfilment of the requirements of
BCCI". This letter recorded the following:
"On behalf of our clients, Deccan Chronicle Holdings Limited,
we have to inform you that payment with respect to the players'
dues is already made by our clients by way of demand drafts
handed over at your office in Chennai by the representative of
our clients Mr. Guruprasad. The acknowledgement of the
receipt of the pay orders is being emailed separately. Pay
Orders/DDS have been handed over to Mr. Shirke at the
meeting at Taj Coromandel.
With respect to the charges created in favour of Kotak
Mahindra Bank Ltd. and IDFC Limited, we inform you that the
same have been vacated and the requisite forms for
modification in this regard are filed with ROC. Copies of the
said forms are attached for your ready reference and record.
With respect to the Winding up petition filed by FCI since the
settlement terms are already filed in the Debt Recovery
Tribunal I at Delhi, the winding up will be withdrawn. Today
KPP -20- ARBP(L) NO. 1238 OF 2012
being a Saturday we are unable to speak with IFCI officials and
our client will be obtaining necessary confirmation.
It is our clients' humble request that as agreed before the
Hon'ble Judge Mr. S.J. Kathawalla, no steps therefore be taken
in terms of your Notice dated September 14, 2012, as agreed
nor will any auction be conducted as mentioned in your notice."
29. The learned Advocate appearing for DCHL therefore submitted that
by the evening of 15th September, 2012, all the purported defects on the part of
DCHL qua the Franchise Agreement stood substantially cured. The first letter of
15th September 2012 written by YES Bank to BCCI cannot be construed to have
incorporated any condition whatsoever. In any event, admittedly even the said
letter is not considered by BCCI whilst confirming its decision to terminate the
Franchise Agreement with DCHL in the evening of 15 th September 2012. It is
submitted that whatever YES Bank wrote to BCCI on 16 th and 17th September
2012 is of no relevance because DCHL was not consulted by YES Bank before
writing any such letters and the stand subsequently taken by YES Bank would
not be binding on BCCI. It is submitted that in any event, YES Bank has
informed this Court that whatever they had written to BCCI was in the form of
their submissions and not conditions, and in any event YES Bank has withdrawn
the letters dated 15th September 2012 received by BCCI on 16 th September 2012
as also the letter dated 17th September 2012. The learned Advocate appearing
for DCHL has therefore submitted that the termination of the Franchise
Agreement by the BCCI is wrong and illegal and deserves to be set aside.
KPP -21- ARBP(L) NO. 1238 OF 2012
30. The learned Advocate appearing for DCHL further submitted that
after entering into the Franchise Agreement and participating in IPL Series V,
DCHL has invested an approximate amount of Rs. 600 crores in the Franchise
"Deccan Chargers" for payment of the license fee to BCCI, payment to the
players, support staff, the brand building of the Franchise, publicity and other
expenses which were incurred for the past 5 years of the IPL League. He
submitted that in the earlier series, the amount paid towards the Franchise team
was Rs. 47,21,28,120/- (Rupees Forty seven crores twenty one lakhs twenty
eight thousand one hundred twenty), the cost of the players and support team
was Rs. 36,65,75,625/- (Rupees Thirty six crores sixty five lakhs seventy five
thousand six hundred twenty five), the match conduction and other expenses
which DCHL has to spend for arranging transport, food and accommodation of
the players at eight different destinations was Rs. 28,63,83,091 (Rupees Twenty
eight crores sixty three lakhs eighty three thousand ninety one). He submitted
that DCHL will be spending a similar amount for the IPL Series 6 scheduled to
be held in April 2013. It is further submitted on behalf of DCHL that if the
termination of the Franchise Agreement is not stayed, grave and irreparable
prejudice, harm, loss, damage and injury will be caused not only to the
Petitioner but would also render the DCHL's Consortium Bankers including
some of the Nationalised Banks and private Banks at a loss and shall also render
the Arbitration proceedings initiated by DCHL to be infructuous. It is submitted
that the balance of convenience is entirely in favour of DCHL.
KPP -22- ARBP(L) NO. 1238 OF 2012
31. Mr. Rafique Dada, Learned Senior Advocate appearing for BCCI, has
at the outset submitted that though BCCI by its notice dated 16 th August, 2012
issued to DCHL had given time upto 15 th September 2012 to DCHL to cure the
three breaches/defects set out therein, BCCI was entitled to terminate the
Franchise Agreement with DCHL earlier i.e. prior to 15 th September 2012 and
accordingly terminated the same in the emergency meeting held on 14 th
September 2012 at 9.30 p.m. He submitted that in any event in the morning of
15th September 2012 when the parties appeared before this Court in Chambers,
BCCI agreed to grant time to DCHL to cure the defects by 5.00 p.m. on that day.
He submitted that despite extension of time agreed by BCCI, DCHL failed to cure
any of the three defects which they were required to cure by 5.00 p.m. on 15 th
September 2012. In view thereof, BCCI on 15 th September 2012 at 5.30 p.m.
held a meeting and confirmed its action terminating the Franchise Agreement.
32. The Learned Senior Advocate appearing for BCCI further submitted
that DCHL is admittedly facing severe financial problems since long. BCCI did try
to help DCHL overcome their financial problems by allowing the sale of their
Franchise through auction. Unfortunately the same did not materialise. He
submitted that DCHL has, for reasons best known to them, not disclosed its
current indebtedness, despite BCCI categorically stating in its affidavit-in-reply
that DCHL should disclose its current liabilities. He submitted that Canara Bank
KPP -23- ARBP(L) NO. 1238 OF 2012
has in its letter addressed to BCCI alleged that an amount of approximately Rs.
4000 crores is due and payable by DCHL to its lenders. It is submitted that upto
31st October 2012, the franchisees have the option to extend the contract with
their players for the same fee as was contracted for IPL season 5. If any
franchisee fails to extend the contract by 31 st October 2012, the players would be
available to any other franchisee for IPL season 6. It is therefore important that
the franchisee is in place and in good standing before 31 st October 2012. If this
deadline is missed, the players will become "free agents" and it will be difficult
for the new franchisee to assemble a competitive squad for IPL season 6. He
submitted that again, if in the midst of Series-VI of IPL, DCHL is unable to make
the required payments, or meet with the necessary expenses, BCCI will be put to
grave difficulties, its reputation will be tarnished internationally and the other
leagues from Bangladesh and Srilanka will not even want to associate with BCCI
in future.
33. The Learned Senior Advocate appearing for BCCI further submitted
that DCHL failed to pay the players, support staff, Cricket Board/s, Association/s,
etc. since May 2012, which forced BCCI to issue notice dated 16 th August 2012 to
DCHL to cure the said breach within a period of thirty days. DCHL failed to cure
the defects during the entire month and tried to cure the same on the last day
i.e. 15th September 2012, knowing full well that they were required to make
payments to players, etc. by 15 th September 2012, and not deposit their
KPP -24- ARBP(L) NO. 1238 OF 2012
payments with BCCI. He submitted that the Bankers of DCHL i.e. YES Bank
tried to attach conditions to the payments deposited with BCCI, as can be seen
from the letters dated 15th September 2012 and 17th September 2012 written by
YES Bank to BCCI and also from the contents of the affidavit-in-support of the
Chamber Summons filed by YES Bank. It is therefore submitted that by no
stretch of imagination, DCHL can now submit that the defect qua payments
required to be made to players, support staff, Cricket Board/s, Association/s, etc.
was cured by them on or before 15th September 2012. The Learned Senior
Advocate appearing for BCCI also submitted that during the period when the
above Petition was heard by this Court, BCCI was informed that a decree in the
sum of Rs. 100 crores is passed by the U.K. Court against DCHL, and that DCHL
has till date not cleared the entire outstanding amount payable to the hotels,
etc., which were booked for the stay of the players during IPL Series V. In this
regard, the Learned Advocate appearing for DCHL has denied and disputed that
any amounts are payable to Hotels which housed the players during IPL Series V
and contended that the decree passed by the U.K. Court is ex parte and DCHL is
in the process of challenging the same.
34. The Learned Senior Advocate appearing for BCCI relied on Schedule-
3 of the Franchise Agreement which sets out the obligations of the Franchisee.
Clause 9 of the said Schedule-3 reads as follows:
"9. General
(a) The Franchisee shall not without first obtaining BCCI-
KPP -25- ARBP(L) NO. 1238 OF 2012
IPL's prior written consent to charge, pledge, grant any
security over or otherwise encumber the Franchise or any of
the rights granted to the Franchisee hereunder whether or
not such encumbrance is in the ordinary course of business.
(b).... ..... ......"
The Learned Senior Advocate appearing for BCCI submitted that in view of the
said clause 9, a Franchisee cannot create any encumbrance over the franchise or
any of the rights granted to the franchisee under the Franchise Agreement to any
third party, including the Bankers of the Franchisee. It is submitted that by
creating a charge on the receivables in favour of its lenders, the DCHL has
breached the said obligation/condition (9) and despite having received notice
dated 16th August 2012 from BCCI calling upon DCHL to cancel all the charges
created on the Deccan Chargers Franchise in favour of any party in the Registrar
of Companies (RoC), and to confirm the same in writing to BCCI, DCHL has
failed to give such confirmation and in fact YES Bank and many other Banks are
till date claiming that DCHL has created a charge in their favour qua the
receivables i.e. the amounts DCHL is entitled to receive from BCCI under the
Franchise Agreement. It is therefore submitted that DCHL has failed to cure the
said breaches on or before 15th September,2012 and BCCI was justified in
terminating the Franchise Agreement entered into with DCHL.
35. The Learned Senior Advocate appearing for BCCI has further
submitted that DCHL has failed to get the winding up petition filed by IFCI
before the High Court of Hyderabad withdrawn/dismissed on or before 15 th
KPP -26- ARBP(L) NO. 1238 OF 2012
September 2012. In view thereof, the Insolvency Event which has admittedly
occurred in view of clause 11.6 of the Franchise Agreement, continues to be in
force till date, which entitles BCCI to terminate the Franchise Agreement. It is
submitted that BCCI is therefore absolutely justified in terminating the Franchise
Agreement and no protective reliefs be granted in favour of DCHL.
36. The Learned Senior Advocate appearing for BCCI further submitted
that if the Court considers the fact that DCHL has invested an amount of Rs. 600
crores in the franchise "Deccan Chargers" as alleged and that termination of the
Franchise Agreement by BCCI will cause grave and irreparable prejudice to
DCHL as also cause loss to DCHL Consortium Bankers including some of the
Nationalised Banks and Private Banks, and the fact that the arbitration
proceedings initiated by DCHL would become infructuous as alleged, the Court
whilst passing orders, may also take care of the apprehension expressed by BCCI
and keep in mind the interest of BCCI and the interest of the game viz. cricket,
including the players of the said game.
37. I have gone through the pleadings filed by the Parties and have also
considered the submissions advanced by the learned Advocates appearing for
the Parties.
38. It is true that DCHL is currently facing financial difficulties and is
raising finance through various Banks and financial institutions to overcome this
KPP -27- ARBP(L) NO. 1238 OF 2012
difficult phase. It is also true that BCCI by its notice dated 16 th August 2012,
gave an opportunity to DCHL to pay the amounts (currently due) to the players,
support staff, Cricket Board/s, Association/s, etc. It is also true that DCHL
approached BCCI to sell its franchise to a third party on 29 th August 2012 and
BCCI agreed to allow DCHL to sell their franchise. The auction was held on 13 th
September 2012 but the same attracted only one bidder whose bid could not be
accepted for reasons set out in clause 7 (g) of the affidavit-in-rejoinder filed by
DCHL. Though BCCI had clarified that the permission to auction the franchise by
BCCI was granted without prejudice to their letter dated 16 th August 2012, it is
obvious that upto 13th September 2012, DCHL concentrated on the auction and it
is only after the exercise to sell the franchise by auction failed on 13 th September
2012, that DCHL invoked arbitration by their letter dated 14 th September 2012.
It appears that BCCI in view of its fears as expressed by their Counsel and
recorded hereinabove, did not wait upto 15 th September 2012, despite having
given time to DCHL upto 15th September 2012, to cure the breaches/defects and
in their state of fear and anxiety took a decision to terminate the Franchise
Agreement on 14th September 2012 itself. DCHL having received the
termination letter on 14th September 2012 itself, prepared the above Petition
overnight and moved this Court on Saturday, 15 th September 2012 at around
11.00 a.m. After hearing the Parties and upon the assurance given by the learned
Senior Advocate appearing for BCCI that in the event of DCHL making a
representation to BCCI setting out the details of them having satisfied all the
KPP -28- ARBP(L) NO. 1238 OF 2012
objections raised by BCCI, BCCI will reconsider its decision to terminate the
Franchise Agreement dated 10 th April, 2008, the matter was adjourned to 17 th
September, 2012 for final hearing.
39. As can be seen from the affidavit-in-rejoinder filed by DCHL dated
22nd September 2012, pay orders aggregating to Rs. 8,95,38,750/- and US $
34,09,207.74 and Australian Dollars 7940/- were delivered by DCHL to BCCI by
5 .00 p.m. on 15th September 2012. In the letter dated 15 th September 2012
forwarded by YES Bank along with the said pay orders, a request was made to
BCCI to release the payment on 17 th September 2012 itself. It was recorded in
the said letter that the payment aggregating to US $ 3409207.94 and AUD
7940.00 is paid in the form of demand draft (s) dated September 15, 2012,
since it was not possible to wire transfer/remit the funds to the respective
foreign players, support staff, Cricket Board(s)/Association(s), as the Foreign
Exchange transfer/remittances are not permitted by Reserve Bank of India on
Saturdays and Sundays. It was also clarified that the said demand drafts are
forwarded to BCCI on behalf of DCHL to demonstrate the commitment made to
BCCI, and that YES Bank shall make the wire transfer to the respective foreign
parties on Monday, 17th September 2012, upon BCCI returning the said demand
drafts to the authorised representative of the Bank. In the said letter there is no
condition placed on BCCI by DCHL or YES Bank qua the said payments. The
Learned Senior Counsel appearing for BCCI, in support of his submission that the
KPP -29- ARBP(L) NO. 1238 OF 2012
payment is conditional, tried to draw support from the letters dated 5 th
September, 2012 and 13th September, 2012 referred to by YES Bank in the said
letter. However, in my prima facie view, reference is made to the letter dated 5 th
September 2012 in the said letter dated 15 th September 2012 only because in the
said letter, YES Bank has informed BCCI that they are ready and willing to make
immediate payments to the players and not because in the said letter it was
mentioned that BCCI should confirm in writing that the entire amount payable
by BCCI to DCHL shall be deposited by BCCI in the account of DCHL maintained
by YES Bank. If YES Bank had any intention of placing any conditions on
BCCI, in its first letter dated 15 th September 2012 itself it would have spelt out
such a condition. It is obvious that the letter dated 13 th September 2012 was
written by the Bank, inter alia, to BCCI in view of the auction fixed on 13 th
September 2012 and the said letter was referred to by the Bank in its letter dated
15th September 2012 because by the said letter YES Bank had assured to extend
the entire additional financial support to DCHL for managing IPL- 6 season. In
any event, as can be seen from paragraph 7 (q) of the affidavit-in-reply filed by
BCCI, BCCI has not even considered the first letter dated 15 th September 2012
written by YES Bank to BCCI and BCCI has confirmed the earlier termination
dated 14th September 2012 on 15th September 2012 only after considering the
two letters received by BCCI i.e. from ICICI Bank Ltd. and Axis Bank Ltd. on the
mere ground that no representation of any kind was placed for consideration of
the Working Committee of DCHL. It is true that YES Bank has written a second
KPP -30- ARBP(L) NO. 1238 OF 2012
letter dated 15th September 2012 and another letter dated 17 th September 2012,
and also had a talk with the officials of BCCI on 16 th September 2012, wherein
YES Bank has repeatedly urged BCCI to deposit the amounts due and payable by
BCCI to DCHL in the account of DCHL maintained by YES Bank. As submitted
by the Learned Advocate appearing for DCHL, apart from the fact that YES
Bank had no privity of contract with BCCI and no locus to write any such letters ,
there was nothing wrong if YES Bank urged BCCI by its second letter dated 15 th
September 2012 to deposit the amounts due to DCHL in the account maintained
by DCHL in YES Bank. In any event, the fact remains that BCCI had already
confirmed the termination of the Franchise Agreement with DCHL on 15 th
September 2012 at around 5.30 p.m. by considering only two letters written by
ICICI Bank and Axis Bank to BCCI on the ground that no representation was
received from DCHL for curing the alleged defects by DCHL. Apart from the fact
that YES Bank has now submitted that they have handed over the demand
drafts to BCCI on 15th September 2012 unconditionally and are withdrawing
their second letter dated 15 th September 2012 forwarded to BCCI on 16 th
September 2012 as also their letter dated 17 th September 2012 forwarded to
BCCI, I am prima facie of the view that on 15 th September 2012 the entire
payment payable to the players, support staff, Cricket Board/s, Association/s,
etc. upto December 2012, as regards IPL V series, was unconditionally
forwarded to BCCI and the first letter dated 15 th September 2012 received by
BCCI by 5.00 p.m. on the same day contains no conditions by YES Bank. In any
KPP -31- ARBP(L) NO. 1238 OF 2012
event BCCI has without considering the said first letter dated 15 th September
2012 forwarded along with the demand draft, proceeded to confirm its decision
dated 14th September 2012 to terminate the Franchise Agreement on the ground
that DCHL has not cured the defect qua payments to players, support staff,
Cricket Board/s, Association/s, etc. even on 15 th September 2012. In light of the
above BCCI now cannot contend that the demand drafts tendered by DCHL were
conditional and therefore DCHL has failed to cure the breach/defect qua
payment, on or before 15th September 2012. BCCI also cannot contend that since
DCHL handed over the drafts to BCCI on 15 th September 2012 and not to the
players, Board, etc. they have failed to cure the breach by 15 th September 2012.
If the last day for curing the breach qua payments was a Saturday when wire
transfers were not allowed due to Reserve Bank Regulations, DCHL was entitled
to deposit the demand drafts with BCCI which they have done. DCHL has
therefore substantially cured the breach pertaining to making payments towards
the dues of players, support staff, cricket board, etc. on 15th September 2012.
40. As regards BCCI's contention that DCHL, without permission of BCCI,
could not have charged the receivables under the Franchise Agreement to any
lender and DCHL failed to produce letters from the lenders giving up their
charge on receivable qua the amounts to be received by DCHL from BCCI, I am
prima facie of the view that BCCI is incorrect in its stand that the amounts
payable by BCCI to DCHL cannot be charged to any lender. Clause/condition 9
KPP -32- ARBP(L) NO. 1238 OF 2012
of Schedule- 3 on which BCCI has relied on makes it clear that the said clause
forbids a Franchisee from creating a charge, pledge, grant any security over or
otherwise encumber the Franchise or any of the rights granted to the
Franchisee. In cases where DCHL had allowed a charge to be created on the
Franchise itself, DCHL upon receipt of the notice / letter dated 16 th August 2012
from BCCI had got the same modified by 15 th September 2012 as can be seen
from the letter dated 15th September 2012 set out in paragraph 27 above. The
said letter along with the documents and attachments despite having been
received by BCCI and despite the official of BCCI having a talk with Mr. E.
Venkatram Reddy of DCHL and the Company Secretary Mr. Girdhar Reddy of
DCHL as set out in paragraphs (viii), (ix) and (x) of paragraph 4 of the affidavit-
in-rejoinder of DCHL, the same was not at all considered by BCCI before
confirming its decision to terminate the Franchise Agreement dated 14 th
September, 2012 in the evening of 15 th September 2012, as can be seen from
paragraph 7(q) of the affidavit-in-reply filed by BCCI. As regards the rights
granted to Franchisee under the Franchise Agreement the said rights are clearly
set out in clause 4.3 of the Franchise Agreement and the same are reproduced
hereunder:
"4.3 The Franchisee shall be entitled to exploit the Franchisee
Rights in such manner as it decides and it is acknowledged by
BCCI-IPL that the Franchisee Rights include the following:-
(a) the shirt sponsorship rights in respect of the Team;
(b) official suppliership rights in respect of the Team;
(c) corporate entertainment/premium seating rights at the
Stadium during home League Matches (subject to BCCI-IPL's
right to receive tickets referred to in paragraph (e) below;
KPP -33- ARBP(L) NO. 1238 OF 2012
(d) the right to conduct Franchisee Licensing (subject as
provided in clause 5);
(e) the right to retain all of the Gate Receipts in respect of the
Franchisee's home League Matches and, if it stages the Play-Off
Matches, the gate receipts from such matches save that in each
case it is acknowledged that BCCI-IPL may require such
number of tickets as corresponds to 20% of each category of
tickets in respect of each such home League Match or Play-Off
Match free of charge (such tickets to be used to meet the
Stadium host cricket associations commitments to members
and other organisations);
(f) the right to sell merchandise at the Stadium on the days
of its home League Matches; and
(g) such other rights in relation to the Team (not being
Central Rights) which may be identified in the commercial
guidelines which BCCI-IPL shall provide to Franchisees to assist
them in the exploitation of the Franchisee Rights (as such
guidelines may be updated from time to time)."
It is only the above rights granted to the Franchisee which cannot be charged or
encumbered to by it, and it would be incorrect to say that the share of the
Franchisee received from BCCI from the central rights cannot be charged by it.
BCCI itself has admitted this position in its letter dated 8 th September 2012
wherein BCCI has whilst dealing with the contention of YES Bank as recorded in
its Advocate's letter dated 6th September 2012, viz., that the amounts lent by
YES Bank to DCHL are secured by a charge over receivables of the Franchisee
and as evident from the records of the Registrar of Companies, Hyderabad,
stated: "Therefore that you have a paramount charge on receivables and that you
would seek the court action to stop the Tender if the sums are not remitted to your
account do not concern the BCCI." I am therefore prima facie convinced that
DCHL had also substantially cured the defects pertaining to the creation of
charge in favour of certain lenders qua the franchise itself by modifying the
KPP -34- ARBP(L) NO. 1238 OF 2012
charge to the necessary extent.
41. As regards the winding up petition filed by IFCI Ltd. before the High
Court of Hyderabad, as can be seen from the consent terms dated 12 th September
2012, the debts due and payable by DCHL have been restructured by IFCI and an
amount of Rs. 10 crores plus legal expenses quantified at Rs. 8 lakhs is already
paid to IFCI Ltd. by DHCL. IFCI Ltd. who has filed the winding up petition before
the Hyderabad High Court against DCHL has itself agreed to keep the winding
up petition on hold/in abeyance and agreed that DCHL may pay the balance
amount of Rs. 15,17,28,944/- in instalments commencing from 10 th October,
2012, thereafter on 10th November, 2012, 10th December,2012 and finally on
10th January, 2013. Though the consent terms form part of the Petition which
was already served on BCCI, BCCI did not deem it fit to consider the above facts
whilst confirming its decision dated 14 th September 2012 in the evening of 15 th
September 2012, to terminate the Franchise Agreement with DCHL.
42. In the above circumstances I am of the view that BCCI has at all
stages acted in some haste in terminating the Franchise Agreement with DCHL.
Though BCCI had after issuing the termination notice on 14 th September 2012,
granted time to DCHL to cure the defects upto 5.00 p.m. on 15 th September
2012, it would have been prudent on the part of BCCI to take the decision of
confirmation of termination of the Franchisee Agreement after considering all
KPP -35- ARBP(L) NO. 1238 OF 2012
the letters received from DCHL or its Bankers on 15 th September 2012. Instead,
BCCI has, on the same day at 5.30 p.m., without considering the letters received
by it by 5.00 p.m. or a little thereafter, taken the decision to confirm its decision
dated 14th September 2012 to terminate the Franchise Agreement executed by
and between BCCI and DCHL. Despite the above, I do not attribute any motives
to BCCI at this stage and, as stated hereinabove, I am proceeding on the basis
that the haste on part of BCCI was due to the fear and anxiety expressed by their
Learned Senior Advocate namely that the failure on the part of DCHL to fulfill
their contractual commitments may tarnish their image in International
cricketing circles. However such hasty termination, if after a detailed
adjudication by the Arbitrator is found to be incorrect will cause grave loss and
prejudice not only to DCHL but also to the Banks and financial institutions which
are backing DCHL with financial support, resulting in complete destruction of
DCHL which cannot be compensated in terms of money. At the same time the
Court whilst granting protective reliefs in the above petition to DCHL, as
submitted by the learned Senior Advocate appearing for the BCCI, will also have
to keep in mind the interest of BCCI, the game and its players more particularly
the image of BCCI in the International Cricketing World. I have inquired from
the Learned Advocate for DCHL whether his clients are willing to furnish an
irrevocable and unconditional Bank Guarantee to BCCI in the sum of Rs. 100
crores as security for the IPL Series VI, within 10 days from 26 th September
2012 , the Learned Advocate after taking instructions has responded in the
KPP -36- ARBP(L) NO. 1238 OF 2012
affirmative. Though I find that the balance of convenience is more in favour of
DCHL, I am of the view that the following protective orders will take care of the
interest of both the parties.
(i) DCHL shall furnish an irrevocable and an unconditional Bank
Guarantee of a Nationalised Bank in the sum of Rs. 100 crores (Rupees One
hundred crores) to BCCI on or before 9 th October, 2012 which should be in force
for a period of one year.
(ii) DCHL shall bear all the expenses for IPL Series-6 i.e. make
payments to BCCI towards Franchise fee, player and support team costs and in
addition also bear the cost of match conduction and other expenses. In the event
of any default on the part of DCHL, BCCI shall be entitled to invoke the Bank
Guarantee to the extent necessary.
(iii) The representative of YES Bank who is present in Court, undertakes
to make wire transfer to the respective foreign parties on or before 3 rd October
2012 and upon presenting proof of such wire transfer, BCCI shall return the
demand drafts drawn in favour of the foreign parties by YES Bank to the
authorised representative of the said Bank.
(iv) BCCI shall forthwith disburse the demand drafts aggregating to Rs.
KPP -37- ARBP(L) NO. 1238 OF 2012
8,95,38,750/- to the beneficiaries named therein.
(v) Upon DCHL furnishing the said Bank Guarantee in the sum of Rs.
100 crores to BCCI and DCHL through its Bankers effecting the aforestated wire
transfers to the foreign parties, BCCI shall deposit the amount already due and
payable by BCCI to DCHL and payable in future to DCHL with the Prothonotary
and Senior Master of this Court which the Prothonotary and Senior Master shall
invest in a fixed deposit of a Nationalised Bank from time to time until further
orders of the Court.
(vi) BCCI shall, pending the arbitration proceedings and making of an
Award by the learned Arbitrator and for a period of 7 days thereafter if the
Award is in their favour, not act on the termination of the Franchise Agreement.
However, it is clarified that this order shall immediately cease to be in effect in
the event DCHL fails to furnish a Bank Guarantee of Rs. 100 crores as provided
in clause (i) above on or before 9th October, 2012.
(vii) DCHL undertakes to pay IFCI Ltd. the balance installments as
agreed in the consent terms on its due dates. The undertaking is accepted.
(viii) DCHL shall pay the undisputed outstanding dues of Hotels,
transporters etc. as regards the IPL Series V on or before 31 st October 2012.
KPP -38- ARBP(L) NO. 1238 OF 2012
(ix) This Order shall not preclude the BCCI from adding one more
Franchisee for IPL-6 series and thereafter.
43. The above Arbitration Petition is accordingly disposed of with a
clarification that all the observations made herein are prima facie and the
Learned Arbitrator shall make his Award without being influenced by any of the
observations made herein.
ig (S.J. KATHAWALLA, J.)
