Bombay High Court upholds Rajasthan's return

The Bombay High Court has upheld the stay on the termination of Rajasthan Royals issued by the judge hearing the arbitration case between the franchise and the BCCI. The board had earlier appealed against the order issued by the arbitrator, Justice BN Srikrishna, on November 30 that gave the team back all its rights under the franchise agreement, allowing it to participate in the player auction currently scheduled for January 8 and 9. Justice S Vazifdar, who is hearing the case, ruled in Rajasthan's favour today.

The court, however, modified the arbitrator's order, adding conditions similar to those it issued in the Kings XI Punjab verdict last week, where it granted an interim stay on the franchise's expulsion, subject to certain stipulations. In Rajasthan's case, the court has asked for the owners - Manoj Badale, Suresh Chellaram and Lachlan Murdoch - to file an affidavit stating that "they are in control of their respective investment companies", and to specify how they control these companies, by January 3, 2011. The franchise will also have to provide a bank guarantee, from a nationalised Indian bank (a bank owned by the government of India), worth $20.83 million - $18 million to cover the players' salaries over two years and $2.83 million to cover their contract with the BCCI.

Rajasthan's lead counsel, Janak Dwarkadas, argued that the guarantee for players' salaries should be reduced to $11.8 million because the franchise had retained Shane Watson and Shane Warne at a stipulated cost of $3.1 million per year, and the pair had agreed to sign with them knowing that the team was involved in legal proceedings. The court responded by saying the two players could choose to provide no-objection certificates saying they did not need their salaries protected by the court. If they do so, Rajasthan will be free to deduct $6.2 million from the bank guarantee amount.

Rajasthan's IPL affiliation was terminated by the BCCI on October 10 on charges of transgression of shareholding and ownership norms that threatened to "shake the very foundation of the tender process", as the notice put it. The two sides then decided to settle their dispute over the termination through arbitration on November 15 after Rajasthan had filed a case in the High Court challenging the board's decision to take the step unilaterally.

Both parties argued their case over four days, after which Srikrishna ruled in Rajasthan's favour. The crux of his argument was that the BCCI all along knew Rajasthan's ownership patterns, and that by communicating with it for three-and-a-half years - and accepting the guarantee money - effectively approved of it.

The BCCI now has the option of appealing against the decision to the Supreme Court, but the court is closed for two weeks beginning December 17, meaning the franchise is practically guaranteed to take part in the auction, unless it is postponed again - something that the BCCI is reportedly considering. The decision is another blow to the board's attempts to host an eight-team IPL in 2011, as opposed to the original decision made in Lalit Modi's tenure - to field 10 teams from the fourth season onwards.

The arbitration proceedings between Rajasthan and the board will proceed independent of the court's decision on the issue of termination, and the stay will remain in place until six weeks after the arbitrator's final ruling on the case.