Defiant state associations face funding cuts

The Supreme Court has told the BCCI to stop issuing funds to state associations that will not comply with the Lodha Committee's recommendations. It told the board that no further money should be given unless the state association passes a resolution to implement the recommendations and submits an affidavit before the court.

In an interim order issued on Friday, the court also said that funds disbursed by the BCCI to certain state associations after the board's annual general meeting in November 2015, should go into a fixed-term deposit until further directions.

On Thursday, the court was told by amicus curiae Gopal Subramanium that the BCCI had disbursed "substantial sums" to state associations before putting in place a disbursement policy, which was one of the recommendations the board had to adopt by the September 30 deadline. Subramanium said the action was in defiance of the Lodha Committee's directives.

Kapil Sibal, the lawyer representing the BCCI, had said in his client's defence that the disbursement was an "ordinary and routine matter" and not "forbidden" by the Lodha Committee. The interim order said Sibal had revealed to the court that the BCCI had got INR 2500 crore as compensation from the broadcaster on account of termination of the Champions League T20, which was discontinued last year.

Sibal had told the court that about INR 1500 crore went towards taxes and other liabilities, leaving BCCI with a net amount of Rs.1036.78 crore. "He submitted that in terms of a decision taken in the AGM held on 09.11.2015, 70% of balance amount of Rs.718.24 crores was to be disbursed to 25 Associations in the country @ Rs.28.73 crores per Association," the order said. "A sum of Rs.12 crores out of the said amount was released to each one of the Associations pursuant to the said resolution leaving the balance amount of Rs.16.73 crores unpaid."

Subramanium contended that the disbursement of such large amounts was not a routine matter and was done on an "ad-hoc basis" with the intention to "appease and possible induce" the board members to "oppose" the Lodha Committee recommendations.

In its order, the court said it did not want to take a "final view" on whether any action should be taken against the BCCI and its office bearers.

However, the court found fault with the BCCI's position that it could not adopt the Memorandum of Association and Rules, a step that would signal it had adopted the Lodha Committee's recommendations, because of the "reluctance" of state associations to do so.

"If that be the position, there is no reason why the State Associations that are opposed to the reforms suggested by Justice Lodha Committee and accepted by this Court should either expect or draw any benefit from the release of grants by the BCCI," the order said.

Arvind Datar, another lawyer representing the BCCI, argued that only 13 state associations had received the balance amount of INR 16.73 crores each. The court said: "No further amount in terms of the Resolution passed in AGM on 09.11.2015 or any subsequent resolution by the BCCI or its Working Committee shall be disbursed to any State Association except where the State Association concerned passes a proper resolution to the effect that it is agreeable to undertake and to support the reforms as proposed and accepted by this Court in letter and spirit."

Such an "unequivocal" undertaking needed to be signed by the president of the state association and presented both to the Lodha Committee and the court.

"It is only after such affidavits are filed, that BCCI may transfer the balance amount of Rs.16.73 crores payable to the State Associations. As regards the 13 State Associations to whom the payment has already been disbursed, we direct that the State Associations concerned shall not appropriate the said amount except after they have passed a resolution and filed an affidavit as mentioned above before Justice Lodha Committee and before this Court. In case the affidavits are not filed, the amount disbursed to the State Associations shall be invested by the Associations in a term deposit subject to further directions of this Court."

On October 1, the BCCI had held a Special General Meeting to consider the Lodha Committee's recommendations and said it would only accept a selection of them. The board said it could not accept recommendations such as the age cap of 70 for office bearers, the nine-year limit for term of office broken into three, three-year terms with a cooling-off period between each term, and the one-state-one-vote policy. These recommendations, the BCCI said, had not been accepted by the board's members - the state associations.

It later emerged that the BCCI had also held an emergent working committee meeting on September 30. After hearing about decisions supposedly taken at that meeting, the Lodha Committee directed two banks to stop two specific transfers to the state associations because the BCCI had not put in place the new fund disbursement policy.

The BCCI responded by claiming the ongoing India-New Zealand series was under threat because the Lodha Committee had frozen its accounts. The committee said it had done no such thing and issued a clarification to banks to not freeze the board's accounts in total. However, several of the transfers the Lodha Committee had objected to had already been made, which prompted the committee to issue a directive to the states telling them not to touch these funds or risk being in contempt of court.

These events culminated in the hearing on October 6, when a three-judge bench headed by Chief Justice of India TS Thakur gave the BCCI a day to agree to fall in line with the Lodha Committee's recommendations. On Friday, however, the hearing was deferred to October 17 but the interim order was damaging to the financial future of the state associations, unless they adopted the Lodha Committee recommendations.