“No Patent Illegality”- Bombay High Court Upholds ₹538 Cr Arbitral Award Against BCCI, Dismisses Plea Against KCPL

The Bombay High Court has upheld Rs. 538 crores Arbitral Award against the Board of Control for Cricket in India (BCCI) and has ruled in favour of the Kochi Cricket Private Limited (KCPL).

An Arbitration Petition was preferred by the BCCI against the said arbitral award, arising out of a dispute involving a Franchise Agreement with KCPL.

A Single Bench of Justice R.I. Chagla observed, “I am of the considered view that there are no valid grounds raised in KCPL’s Petition and RSW’s Petition under Section 34 of the Arbitration Act to warrant an interference with the KCPL Award and the RSW Award, which have been impugned therein. There is no patent illegality in the impugned awards which requires an interference by this Court. In view thereof, the Arbitration Petition No. 1752 of 2015 and Arbitration Petition No. 1753 of 2015 are devoid of merit and are accordingly dismissed. KCPL and RSW are permitted to withdraw the amounts deposited by BCCI after a period of four weeks from the uploading of this judgment and Order.”

Upon considering that there has been a conditional stay of the impugned awards operating for a few years, the Bench extended the time by a further period of two weeks.

Senior Advocates Rafiq A. Dada and T.N. Subramanian represented the Petitioner while Senior Advocate Vikram Nankani represented the Respondents.

Case Background

The dispute in this case arose out of a 2011 Franchise Agreement entered into between KCPL and BCCI. The said dispute was adjudicated and consolidated by the Arbitral Tribunal, by mutual consent of parties. BCCI in the year 2008, had issued Invitation to Tender (ITT) for the initial eight franchises, which would comprise the Indian Premier League (IPL). It Operational Rules for the IPL Season 2010 and then issued ITT, inviting bids for upto two more franchises. Rendezvour Sports World (RSW) was declared the successful bidder for IPL franchise to be based in Kochi and entered into an Unincorporated Integrated Joint Venture Agreement (UJV Agreement). RSW furnished a bank guarantee in the sum of Rs. 153.34 crores and thereafter, it entered into a Franchise Agreement with BCCI on an interim basis, pending the incorporation of a joint venture company (JVC) i.e., KCPL that would take on the rights and obligations of the Kochi franchise as per the terms of the UJV Agreement. The RSW Agreement continued to govern the relationship between BCCI and the Kochi franchise till the final Franchise Agreement between BCCI and KCPL. BCCI addressed an e-mail to all the franchisees (including KCPL) informing them of the changed format for 2011 edition of the IPL, whereby the number of matches to be played in the season was reduced.

In 2011, KCPL addressed a letter to BCCI, requesting for reduction in the franchise fees. It further addressed a letter stating that they be allowed to play at the leased Jawaharlal Nehru Stadium till the Kerala Cricket Association makes an alternative site for the new stadium. KCPL’s request was rejected and subsequently, BCCI (through its Advocates) addressed a letter to KCPL/RSW and terminated the KCPL Agreement/the RSW Agreement in light of KCPL/RSW’s failure to deliver the requisite bank guarantee on or before March 2011. Consequently, BCCI encashed RSW BG. KCPL alleged that such a termination of agreement was wrongful and hence, invoked arbitration. The Arbitrator in 2015 passed the impugned award, directing BCCI to pay Rs. 384,83,71,842/; interest on the said amount at 18%; Rs. 72,00,000/- by way of arbitration costs; and further interest at 18% on the awarded amount.

Reasoning

The High Court after hearing the arguments from both sides, noted, “Considering the aforementioned findings of the learned Arbitrator in the Order dated 17th July, 2013, which is based on the material on record, I find no merit in the contention on behalf of RSW that the reference to arbitration is invalid. The plea as to material concealment of Filmwaves joining in the reference is a question of fact and BCCI not having produced evidence in support of the plea taken, the learned Arbitrator has arrived at a correct finding that this contention has no merit.”

The Court enunciated that Section 69(3) of the Partnership Act refers to proceedings to enforce a right arising from a contract and there being a bar to such proceedings being instituted by an unregistered partnership firm; however, this is not applicable to arbitral proceedings.

“Although in the judgment BCCI relied upon by viz. U.P. State Sugar (supra) at Paragraph 7, it is recorded that it is true that arbitral proceeding would not be maintainable at the instance of an unregistered firm having regard to the mandatory provision contained in Section 69 of the Partnership Act 1932, this cannot be considered to be a dictum of the Supreme Court or even an obiter dictum of the Supreme Court. It has been rightly held by the learned Arbitrator that in the impugned order that this merely expresses an assumption of the Supreme Court”, it added.

The Court further said that the Supreme Court has not ruled that reference of the Court to an Arbitral Tribunal and that to by consent would be hit under Section 69(3) of the Partnership Act.

“… the observations of the Supreme Court cannot be read to mean that the question regarding applicability of Section 69(3) of the Partnership Act is a jurisdictional issue. The bar under Section 69 is not absolute because it does not destroy every right arising under the contract. The Delhi High Court has gone on to hold that the impugned Order in the nature of interim award can be challenged under Section 34 of the Act and the Petition is maintainable. It has upheld the view of the learned Arbitrator on Section 69 of the Partnership Act having no application to the proceedings before the Arbitral Tribunal”, it also noted.

The Court remarked that the challenge to the finding of the Arbitrator is without any merit.

Accordingly, the High Court dismissed the Arbitration Petition.

Cause Title- Board of Control for Cricket in India v. Kochi Cricket Private Limited (Neutral Citation: 2025:BHC-OS:8865)

Appearance:

Petitioner: Senior Advocates Rafiq A. Dada, T.N. Subramanian, Advocates Aditya Mehta, Shivani Garg, Agneya Gopinath, Dhruv Chhajed, and Cyril Amarchand Mangaldas.

Respondents: Senior Advocate Vikram Nankani, Advocates Sajal Yadav, Rohan Rajadhyaksh, Sumeet Nankani, Anukula Seth, Aayushya Geruja, Vineetha Khandelwal, Gurdeep Singh Sachar, and Nipa S. Gupte.

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