17 June 2025 Arbitration Law >> Business & Commercial Law  

In a significant ruling on June 17, 2025, the High Court of Judicature at Bombay, presided over by Justice R.I. Chagla, dismissed Arbitration Petition Nos. 1752 and 1753 of 2015, filed by the Board of Control for Cricket in India (BCCI) against Kochi Cricket Private Limited (KCPL) and Rendezvous Sports World (RSW) respectively. The petitions sought to challenge two arbitration awards dated June 22, 2015, which had ruled in favor of KCPL and RSW in disputes stemming from their respective Franchise Agreements related to the Indian Premier League (IPL).

Background of the Dispute:

The core of the dispute originated from Franchise Agreements: one dated March 12, 2011, between KCPL and BCCI, and another dated April 11, 2010, between RSW and BCCI. These agreements pertained to the Kochi IPL franchise. Due to commonalities in facts and an intrinsic linkage between the two entities, the disputes under both agreements were consolidated and adjudicated by the same arbitral tribunal through mutual consent.

A brief timeline of key events leading to the arbitration included:

• 2008 & 2010: BCCI issued Invitations to Tender (ITT) for IPL franchises.
• March 2010: RSW was declared the successful bidder for the Kochi IPL franchise.
• April 2010: BCCI and RSW entered into an interim Franchise Agreement.
• September 2010: BCCI informed franchisees, including KCPL, of a reduced number of matches for the 2011 IPL season.
• November 2010: The Kochi franchise began operating through KCPL.
• January-March 2011: KCPL repeatedly requested a reduction in franchise fees, which BCCI rejected.
• March 12, 2011: BCCI and KCPL entered into the KCPL Franchise Agreement, despite the prior rejection of fee reduction requests.
• March 22, 2011: KCPL was required to deliver a bank guarantee as per the KCPL Agreement. RSW also had an obligation to deliver a fresh bank guarantee by March 27, 2011.
• Throughout 2011: KCPL repeatedly assured BCCI it was in the process of obtaining the bank guarantee.
• September 19, 2011: BCCI terminated the KCPL and RSW Agreements due to the failure to provide the bank guarantees and encashed RSW's bank guarantee.
• January 2012: KCPL invoked arbitration, alleging wrongful termination.
• August 2012: RSW invoked arbitration.

Arbitration Awards and Subsequent Challenges:

On June 22, 2015, the learned Arbitrator passed two awards:

• KCPL Award: Dismissed BCCI's counter-claim and directed BCCI to pay KCPL Rs. 3,84,83,71,842/-, along with 18% interest from September 19, 2011, and arbitration costs of Rs. 72,00,000/-.
• RSW Award: Allowed RSW's claim for the return of its bank guarantee amount of INR 1,53,34,00,000/-, plus 18% interest from the date of wrongful termination.

BCCI challenged both awards on September 16, 2015, under Section 34 of the Arbitration and Conciliation Act, 1996. The Bombay High Court initially granted an unconditional stay on the KCPL Award in April 2018, which the Supreme Court later modified, directing BCCI to deposit Rs. 100 crores. A conditional stay was also granted for the RSW Award, contingent on BCCI depositing 50% of the awarded sum.

BCCI's Arguments in High Court:

Mr. Rafiq A. Dada, Senior Counsel for BCCI, argued that the awards were patently illegal, perverse, contrary to the contract terms, and against India's fundamental public policy. Key contentions included:

• Bank Guarantee: BCCI argued that the failure to furnish the bank guarantee was a fundamental breach, and any alleged extension or waiver was invalid as it was not in writing as required by the contract. BCCI asserted continuous insistence on the bank guarantee.
• Lalit Modi Tweets: BCCI contended that the arbitrator's finding that BCCI was bound by Lalit Modi's personal tweets was perverse and lacked evidence of actual loss to KCPL.
• Stadium Issue: BCCI argued that the non-availability of a new stadium in Kochi was not a breach as the contract provided for alternative arrangements, which BCCI followed.
• Reduction in Matches: BCCI stated it was entitled to change the IPL format at its sole discretion, and KCPL signed the agreement knowing their request for fee reduction was rejected.
• Damages and Costs: BCCI challenged the arbitrator's computation of damages and costs, alleging lack of justification and proper basis.

Mr. T.N. Subramanian, Senior Counsel for RSW, supported these arguments and additionally contended that the arbitration invocation by RSW was invalid under Section 19(2)(a) of the Indian Partnership Act, 1932, due to lack of express authorization from all partners. He also argued that RSW, an unincorporated body akin to an unregistered firm, was barred from making claims under Section 69(3) of the Partnership Act.

Court's Affirmation of Arbitral Findings:

The High Court acknowledged that its jurisdiction under Section 34 of the Arbitration Act is limited and does not permit a review on merits as if it were an appeal. The court highlighted precedents from the Supreme Court emphasizing that interference is warranted only for "patent illegality" and not mere errors in interpretation or appreciation of facts.

The learned Arbitrator's conclusion that BCCI had wrongfully invoked the bank guarantee, leading to a repudiatory breach of the KCPL-FA, was upheld by the High Court. This finding was based on a thorough appreciation of the evidence, including BCCI's conduct which suggested an acquiescence to KCPL's request for an extension of the bank guarantee deadline. The court noted that BCCI had not claimed any "irremediable breach" for non-furnishing the bank guarantee between April 2011 and September 2011, and had even received payments from KCPL after the stipulated deadline.

Furthermore, the Court found no merit in BCCI's challenge regarding the Section 69(3) of the Partnership Act, given that the reference to arbitration was by consent of the parties.

In conclusion, the Bombay High Court found no patent illegality in the impugned awards that would warrant interference. Consequently, both Arbitration Petition No. 1752 of 2015 and Arbitration Petition No. 1753 of 2015 were dismissed. KCPL and RSW have been permitted to withdraw the amounts deposited by BCCI after a period of six weeks from the uploading of the judgment and order.

Section 34, Arbitration and Conciliation Act - 1996  

Arbitration and Conciliation Act, 1996  

Section 19, Indian Partnership Act - 1932  

Section 69, Indian Partnership Act - 1932  

Indian Partnership Act, 1932