BCCI asked to pay INR 4800 Crore to Deccan Chargers; Here's what actually happened

In a favorable turn of events, the Deccan Chronicle Holdings Ltd. (DCHL) owned defunct IPL franchise, Deccan Chargers (DC), has won a substantial arbitral award in an age-old dispute involving BCCI. The court-appointed sole arbitrator and retired Supreme Court judge C.K. Thakkar held the termination of Deccan Chargers wrongful, illegal, and premature.

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 DC for a period of ten years.

The dispute arose in 2012 when the BCCI terminated the Hyderabad-based franchise following an emergency meeting of the 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 and the name of the franchise was subsequently changed to “Sunrisers Hyderabad” (SRH). Annoyed and disappointed by BCCI’s stand, DCHL knocked the doors of the Bombay HC with a plea that their termination was illegal and arbitrary.

Why was the franchise terminated?

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 by the Hon’ble Bombay High Court in 2012. Soon the BCCI issued a show-cause notice to DHCL to state reasons within 30 days about its failure to pay the sum of INR 100 Crore.

Owing to financial problems, the DCHL was unable to make the payments. It soon decided to auction the franchise, however, the auction received only one response from a company named PVP Ventures. The deal was not materialized as DCHL desired immediate lump sum payment whereas PVP Ventures were only willing to pay in installments.

What happened later?

The BCCI claimed that DCHL had pending dues to the tune of INR 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 matter went into arbitration and consequently, the court appointed Hon’ble Justice C.K. Thakker as the sole arbitrator to decide the matter.

In this context, the arbitrator had put a stay on the termination of DC. However, the BCCI appealed against this move of DCHL in the Bombay HC and the court overruled the arbitrator’s decision. The termination of DC was stamped finally.

Meanwhile, 5 years passed and the arbitration proceedings were still pending. 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 an arduous battle of 8 long years, the sole Arbitrator upheld the termination as illegal, premature, and arbitrary, and consequently awarded INR 4800 Crore, along with an interest of 10% since the arbitration commenced in 2012.

What will happen now?

BCCI, which has been asked to make the payment by the end of September, will surely challenge the decision in the Bombay HC and if the need arises, in the Supreme Court later. Meanwhile, the award has come as a massive relief for the bankrupt company DCHL.

Notably, the BCCI was involved in a similar arbitration case with the now-defunct Kochi Tuskers Kerala, wherein it was asked to pay INR 850 Crore after losing the case. The matter was later challenged by the BCCI and is pending to this day.