News

Judge reserves ruling in Chargers case

Deccan Chargers' hopes of staying in the IPL despite the BCCI terminating the franchise appear to have improved

Nagraj Gollapudi
26-Sep-2012
Deccan Chargers' hopes of staying in the IPL despite the BCCI terminating the franchise appear to have improved after the Bombay High Court raised the possibility of passing an order that would retain the status quo if the owners could furnish a bank guarantee of Rs 100 crores. If Deccan Chronicles Holdings Ltd. (DCHL), who own the Chargers, could satisfy that condition then the "rights and wrongs" of the termination dispute, the judge said, would be referred in front of an arbitrator.
Under the status quo, which was passed on September 17, the court had ordered the BCCI not to float a tender for a new franchise in Hyderabad. SJ Kathawalla, the judge hearing the case, concluded the hearing today but reserved his final judgement in the matter. He also appointed CK Thakkar, a former Supreme Court judge, as the arbitrator to find a solution to the dispute between the BCCI and DCHL. Thakkar's name was finalised after consent from both counsels.
"The matter was argued but the judgement has not yet been passed," a BCCI official said. "There was a discussion between the judge and both parties that if there was an order passed in favour of status quo, whether DCHL would be in a position to furnish 100 crore as bank guarantee within ten days."
On Monday, Kathawalla had suggested that both parties adopt the arbitration route to resolve the dispute but the BCCI's lawyers Rafiq Dada and Raju Subramaniam had sought an extra day to review the proposal. On Tuesday, YES Bank, one of the chief lenders to DCHL, filed an affidavit stating they would withdraw support to the franchise unless their conditions were met, including the one asking the BCCI to pay the money due to the Chargers directly to the bank. The bank's intervention forced the hearing to the next day. On Wednesday, however, YES Bank reversed its stance and told the court they would "unconditionally" lend support to DCHL.
Notwithstanding the distraction, Kathawalla sought details from both parties, including consent from DCHL legal counsel Zal Andhyrujina, who said his client would raise the bank guarantee within the stipulated deadline. The BCCI counsel made it clear that they were not ready to any "consent order" and that the judge would need to pass a judgement.
"One possible outcome is the judgement in favour of Deccan Chargers if they furnish the bank guarantee to satisfy the financial obligations," the board official said. "In the meantime the matter with regard to the rightness or wrongness of the termination would be tested in the arbitration."
The official said Kathawalla was made aware of DCHL's various financial problems, which had forced the BCCI to terminate the franchise. "He [the judge] has left all options open to us to again terminate in the event of there being an act of insolvency," the official said.
It is not clear by when Kathawalla will make his final judgement. "The DCHL counsel could even come and request for more time to get the bank guarantee," the BCCI official said. "There could be even further twists. It is easy to speculate now."
There is bound to be talk about the Chargers' ruling going on the lines of the verdict passed two years ago in the cases between the BCCI and IPL franchises Kings XI Punjab and Rajasthan Royals, who were terminated by the board for breach of contracts. Both franchises challenged the order in the Bombay High Court initially. The matter was referred to an arbitrator who stayed the termination, and that decision was upheld by the Bombay High Court.
However, according to the BCCI official, to assume the Chargers case was heading in the same direction was incorrect. "Simply because there was no financial instability in those two cases," the official said. "The inability to garner funds to meet with their obligations is what separates the Chargers' case. And the fact that there are winding up notices issued by some of the (DCHL) lenders. In the case of Rajasthan and Punjab, it was a simple case of shares transfer of the franchisee without the BCCI consent. The court prima facie held there was no such transfer and therefore the ground for termination was not correct."

Nagraj Gollapudi is an assistant editor at ESPNcricinfo