In a judgement that could reshape how sporting contracts are interpreted in India, the Bombay High Court has dismissed the BCCI’s challenge to a massive arbitral award, of which the BCCI loses ₹538 Crore. The verdict comes as a victory for the owners of Kochi Tuskers Kerala, an IPL franchise terminated by the board in 2011. Justice RI Chagla, who presided over the matter, ruled that the court cannot reassess the merits of the arbitral award, limiting Judicial review under Section 34 of the Arbitration Act. In 2015, an arbitral tribunal ruled in favor of Kochi Cricket Private Limited(KCPL), awarding it ₹384 crore and directing a refund of 154 crore to Rendezvous Sports World (RSW), a decision which was later challenged by BCCI in court.
Court Rejects BCCI’s Challenge
The BCCI had filed a plea challenging the arbitral awards granted to Kochi Franchise owners. However, Justice Chagla dismissed the challenge, directing the limited jurisdiction of courts under section 34 of the Arbitration and Conciliation Act, 1996.
“The jurisdiction of this court under Section 34 of the Arbitration Act is very limited. BCCI’s endeavour to delve into the merits of the dispute is in teeth of the scope of the grounds contained in Section 34 of the Act. BCCI’s dissatisfaction as to the findings rendered in respect of the evidence and/or the merits cannot be a ground to assail the Award,” the court said. In simple terms, the Court clarified that it is not an appellate body to re-examine or re-evaluate the facts of the case already decided by an arbitrator.
Background: What was the Dispute?
The conflict began when Kochi Cricket Private Limited (KCPL), missed the March 2011 deadline to provide a 10% bank guarantee, citing unresolved issues like limited stadium availability and a reduced match schedule as the reasons for the delay. Despite the missed deadline, the BCCI continued to work with the franchise and accepted payments for several months. However, in September 2011, the BCCI terminated the Kochi Tuskers Kerala’s contract and encashed a previously submitted guarantee. KCPL challenged the termination, arguing that the BCCI’s ongoing engagement after the deadline effectively waived the requirement and made the termination unlawful.
The Arbitration and Award
In 2015, an arbitrator ruled in favor of the Kochi Franchise, concluding that BCCI’s conduct amounted to the waiver of the strict deadline and that the termination was wrongful. The arbitrator directed the BCCI to:
- Pay ₹384 crore to KCPL for the wrongful termination.
- Return ₹153 crore to RSW
- Cover additional interest and legal costs, taking the total award value to ₹538 crore.
The BCCI challenged this award, arguing that the franchise’s failure constituted a fundamental breach and that the arbitrator had overstepped his jurisdiction.
Bombay High Court’s Final Word
Rejecting all claims of the BCCI, the court has ruled that:
- The arbitrator’s findings were within the legal framework
- BCCI had waived the strict performance clause by its own actions.
- There was no patent illegality in the arbitral award
The court permitted Kochi Tuskers and RSW to withdraw the awarded sums, while giving the BCCI six weeks to appeal the verdict.
Conclusion and way ahead
This case has been one of the longest legal battles in IPL history, spanning over a decade now. The Kochi Tuskers, who waited for over a decade, have finally been served with justice after nearly 14 years. On the other hand, for BCCI and other powerful sporting organizations, the court has sent a message that commercial contracts and fair play go hand in hand, even for all the superiors of the game.
