(Non-IP) This Just In: Kochi Tuskers IPL Team Wins 550-Crore Arbitral Award Against the BCCI

Harish S. Adwant

The Board of Control for Cricket in India (BCCI) has been directed to pay Kochi Tuskers Kerala (KTK) a whopping amount ofRs 550 crores (USD 87 Million approximately) as compensation by the court-appointed Tribunal.

This compensation was awarded in light of the termination of the franchisee agreement by the BCCI in September 2011. Incidentally, KTK has refused to accept the compensation, and has sought a re-entry in the coming Indian Premier League (IPL) season.

KTK is a consortium of five companies put together by Rendezvous Sports World which bid for the city franchise for Rs 1560 crore, the second highest bid following that of the Pune Warriors.

In 2011, the BCCI terminated the franchisee agreement based on the alleged non-payment of bank guarantee by the KTK franchise. In default to the payment, BCCI encashed the bank guarantee worth Rs 156 crores and terminated the agreement. KTK moved the Bombay High Court, inter alia objecting to the abrupt discontinuation of the contract.

BCCI clarified its stand by stating that the KTK franchise was controversially included in the 2010 IPL setup, making its debut in 2011. As a result of non-payment of bank guarantees, BCCI had asked KTK to issue a fresh bank guarantee in 2011.

KTK defaulted in re-issuing the 10% bank guarantee of the total franchisee fee ahead of the season. Therefore, BCCI felt that it had every right to terminate the contract as franchise had breached its terms of agreement. Eventually, both the parties agreed on dispute resolution through arbitration.

R.C. Lahoti, former Chief Justice of India, was appointed as the sole arbitrator (Tribunal) in the said proceedings. The Tribunal ruled in the favour of KTK and instructed BCCI to pay Rs 550 crores to KTK franchise. Should they fail to do so, 18 per cent of the penalty will be charged annually.

“We are in possession of the arbitrator Justice Lahoti’s report and a majority of the governing council members are in favour of appealing against it. We have sought an opinion from our legal team”, remarked Rajiv Shukla, IPL Chairman after the Governing Council Meeting in New Delhi on Tuesday.

An appeal to an award made by a Tribunal may be admitted by a High Court of competent jurisdiction if it feels that there has been arbitrary adjudication of the dispute. BCCI strongly believes that it has acted in accordance with the provisions of the agreement and rightly terminated the franchisee agreement with KTK.

In case the appeal is dismissed on merits, KTK will have to move a separate plea before the court for its reinstatement in the world’s biggest cricket tournament.

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