In a significant setback for the Board of Control for Cricket in India (BCCI), the Bombay High Court has upheld arbitral awards totaling over ₹538 crore in favor of the now-defunct Indian Premier League (IPL) franchise, Kochi Tuskers Kerala. Justice R.I. Chagla, presiding over the case, dismissed the BCCI's petition challenging the awards, emphasizing the limited scope of judicial intervention in arbitration matters. The ruling underscores the autonomy of arbitral tribunals and restricts the ability of courts to act as appellate authorities over their findings.
The dispute dates back to September 2011 when the BCCI terminated the Kochi Tuskers franchise, citing the team's failure to provide a 10% bank guarantee. This termination occurred amidst internal ownership disputes within the franchise, which was initially awarded to a consortium led by Rendezvous Sports World (RSW) and later operated by Kochi Cricket Private Limited (KCPL). KCPL attributed the delay in furnishing the bank guarantee to several unresolved issues, including stadium availability, regulatory approvals concerning shareholding, and a reduction in the number of IPL matches.
Following the termination, both KCPL and RSW initiated arbitration proceedings in 2012, challenging the BCCI's decision. In 2015, the arbitral tribunal ruled in favor of the franchise, awarding ₹384 crore to KCPL for loss of profits and ₹153 crore to RSW for the wrongful encashment of the bank guarantee, along with interest and legal costs.
The BCCI contested these awards, arguing that the tribunal had exceeded its jurisdiction and misapplied legal principles. The cricket board insisted that KCPL's failure to provide the bank guarantee constituted a fundamental breach of contract, justifying the termination. They also objected to the award of damages for both loss of profits and wasted expenditure, claiming they were excessive and violated contractual limits. Furthermore, the BCCI challenged the validity of RSW's arbitration claim under the Indian Partnership Act.
However, the Bombay High Court rejected these arguments, affirming the arbitral tribunal's decision. Justice Chagla emphasized that the court's jurisdiction under Section 34 of the Arbitration Act is limited and does not allow it to function as an appellate authority over the arbitrator's findings. The court found no grounds to interfere with the arbitral findings, stating that the possibility of a different view would not warrant interference with the award.
KCPL and RSW countered that the BCCI had effectively waived the guarantee deadline through its conduct and that the termination was unjustified and disproportionate. They maintained that the arbitrator's ruling was based on an accurate assessment of evidence. The court agreed, noting that the arbitrator's conclusion that the BCCI's termination of the Kochi franchise was a repudiatory breach of contract called for no interference under Section 34 of the Arbitration Act, considering it was based on a correct appreciation of the evidence on record.
The Bombay High Court's decision is a significant financial and reputational blow to the BCCI. Besides the substantial payout, it reinforces the autonomy of arbitral tribunals and limits the scope of judicial intervention in such matters. This ruling could lead to increased scrutiny of how IPL contracts are managed and terminated in the future. The BCCI has six weeks to appeal the ruling.
