Deccan Chargers case: Arbitration setback for BCCI could cost it Rs 4800 crore
The arbitration proceedings were initiated by DCHL back in 2012 in the Bombay High Court after they failed to submit a bank guarantee of R100 crore which led to BCCI’s terminating the franchise’s contract. The court had then appointed retired Supreme Court justice CK Thakkar as the sole arbitrator.Updated: Jul 17, 2020 22:56 IST
Deccan Chronicle Holdings Limited (DCHL), owners of Deccan Chargers who won the second edition of the Indian Premier League (IPL), won an arbitration decision that could cost the Indian cricket board Rs 4800 crore. The Board of Control for Cricket in India (BCCI) is expected to appeal, according to lawyers familiar with the matter. The BCCI refused to comment.
The arbitration proceedings were initiated by DCHL back in 2012 in the Bombay High Court after they failed to submit a bank guarantee of R100 crore which led to BCCI terminating the franchise’s contract. The court had then appointed retired Supreme Court justice CK Thakkar as the sole arbitrator.
“The arbitral tribunal found that the termination was premature and illegal,” confirmed Ashish Pyasi, associate partner of Dhir & Dhir Associates, who represented DCHL. A copy of the full judgment is awaited, but the Rs 4800 crore was arrived at as the perceived valuation if the team existed now.
BCCI terminated the franchise agreement with DCHL by a written notice with immediate effect on September 14, 2012. BCCI also charged them with failing to clear players’ dues and said it had an adverse effect on the reputation of the league.
The court stayed the termination, subject to DCHL furnishing an irrevocable and an unconditional bank guarantee of Rs 100 crore. Upon its failure to furnish a bank guarantee within the stipulated time, the interim stay order was vacated and the termination became effective on October 12, 2012.
Soon after, BCCI sold the Hyderabad franchise to Sunrisers Hyderabad for R425 crore (R85 crore a year) through an auction. DCHL, one of the original eight franchises which started IPL in 2008, had bought the rights for $107 million for 10 years. They won the IPL in 2009 in South Africa under Adam Gilchrist’s captaincy.
V Shankar, former chairman of Deccan Chargers Sporting Ventures, from 2008 to 2010, said this was not unexpected because, “the termination was without any basis”.
“The termination was done only to accommodate one of the teams who had decided to have a cricketing franchise. The law was thrown to wind, decency was thrown to wind in taking such a decision, and this is the fallout of such a decision for an institution,” said Shankar, who is part of the committee of creditors of DCHL under insolvency resolution and has lost money in this deal.
In 2017, a similar arbitration case was won by the owners of now terminated Kochi Tusker Kerala, and the BCCI was asked to pay Rs 850 crore. No payments have been made yet and the matter remains unresolved.