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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
B. P. Colabawalla, J.
World Sport Group (India) Private Ltd - Petitioner
Versus
Board of Control for Cricket in India - Respondent
Commercial Arbitration Petition(L) No. 6451 of 2020 With Interim Application (L)No.6456 of 2020
Decided On : 16-03-2022
Arbitration and Conciliation Act, 1996 - Section 34, 9, 31(3), 43(4) - Tamil Nadu Registration of Societies Act, 1975 - Contract Act, 1872 - Sections 64 and 65 - Amendment Act - Section 28(3) - Limitation Act, 1963 - Indian Premier League - Media Rights - Fraudulent Composite Transaction - Whether alleged benefit/advantage received by BCCI is a material piece of evidence - Whether said rescission could be held to be valid when BCCI had received a benefit - Whether ratification of 2nd BCCI WSGI MRLA was defective or not – Held, Affidavit is clear and especially given receipt and uncontroverted evidence Court cannot accept RW- 4’s version that he was not aware of terms of agreement – Court cannot ignore fact that agreement was in fact in his possession and every person can subsequently deny knowledge of a document received by him by saying he did not read it or only read select parts of it - This cannot be accepted - 2nd BCCI-WSGI MRLA, which admittedly was known to all, contained references to Facilitation Deed as well - Once again, at cost of repetition, Court must emphasize that Court haven’t reproduced parts of Minority Award to examine which view is correct but to only see whether material evidence, and which would go to root of matter, has been missed in Majority Award - When one compares Majority Award with Minority Award, Court have no hesitation in holding that huge chunks of important evidence are missed out and/or not even referred to in Majority Award - Such an Award, with greatest of respect to Arbitrators who passed Majority Award, cannot be allowed to stand - Considering that Majority Award has been set aside on ground that it fails to take into consideration material evidence which would have a bearing on outcome of dispute between parties, Court direct that in terms of Section 43(4) of Arbitration Act, if either party chooses to once again invoke arbitration or commence fresh proceedings, period between commencement of above arbitration, till today, shall be excluded in computing time prescribed by Limitation Act, 1963 for commencement of proceedings (including Arbitration) with respect to dispute so submitted - Petition disposed of.
Certainly. Based on the provided legal document, here are the key points:
The Court has set aside the Majority Award dated 13 July 2020 because it failed to consider material evidence that was crucial to the dispute, particularly the benefit received by BCCI from the Agreements entered into in 2009, which resulted in a significant increase in License Fee for the India Rights for 2009-2017. The omission of this benefit was viewed as a fundamental error that affected the validity of the rescission decision (!) (!) .
The Court observed that the Majority Award did not address or mention the benefit of Rs. 1791 crores that BCCI gained through the 2009 Agreements, despite this being a vital fact that went to the root of the matter and was specifically raised in post-hearing submissions (!) (!) .
The Court highlighted that the Agreements of 2009, including the DMAT, enabled BCCI to re-license the India Rights for 2009-2017 at a higher fee, and this benefit was retained by BCCI. The failure to consider this benefit was deemed a material oversight that compromised the Award's integrity (!) (!) .
The Court emphasized that the Arbitrators' findings regarding the purpose and object of the DMAT were contrary to the express terms and the plain language of the agreement. The interpretation given by the Majority Award was found to be perverse and not sustainable (!) (!) .
It was noted that the Majority Award did not consider the evidence from MSM’s Press Note, which provided an explanation for the transactions and the facilitation fee. Ignoring this document was seen as a significant omission that affected the assessment of fraud and the validity of the rescission (!) (!) .
The Court found that the Majority Award failed to properly analyze the knowledge and approval of the relevant Agreements at the governing body level, specifically the IPL Governing Council meeting held on 11 August 2009. This omission impacted the validity of the ratification and the overall findings related to the alleged fraud (!) (!) .
The Court pointed out inconsistencies between the findings of the Majority and Minority Awards regarding whether the Agreements entered into in 2009 were available at the relevant meetings and whether they were properly ratified. The Majority Award’s conclusion that there was no record of these Agreements being available was thus challenged (!) (!) .
The Court also noted that the evidence regarding the knowledge and involvement of key individuals, including IMG and Lalit Modi, was not properly considered or was misinterpreted, leading to flawed conclusions about the parties' awareness of the transactions (!) (!) (!) .
The Court held that the Arbitrators' failure to consider material evidence, such as the MSM Press Note and the benefit of Rs. 1791 crores, resulted in a perverse and patently illegal Award, which could not stand in law (!) (!) .
The order included a direction that if either party chooses to initiate fresh arbitration or proceedings, the period during which the arbitration was pending should be excluded from the limitation period for initiating such proceedings, in accordance with the relevant statutory provisions (!) .
In summary, the Court's decision to set aside the Award was grounded on the Arbitrators' failure to consider key evidence and material facts that directly impacted the legality and validity of the rescission and the underlying agreements, rendering the Award patently illegal and perverse.
JUDGMENT :
1. At the outset, I must mention that arguments in the above matter were concluded on 18th March 2021 and parties had also tendered detailed written submissions. However, due to the third wave of the COVID-19 pandemic and also other exigencies of work, there was a delay in pronouncing judgment in the above matter. I had, therefore, placed the matter on Board today (i.e. 16th March 2022) at 2:30 pm in chambers under the caption “FOR DIRECTION/PRONOUNCEMENT OF JUDGMENT”. I did this because almost a year has elapsed since the judgment was reserved, and I wanted to inquire from the parties if they wanted to make any further submissions. In these circumstances, I asked Mr. Chinoy, the learned senior counsel appearing on behalf of the Petitioner, as well as Mr. Dada, the learned senior counsel appearing on behalf of the Respondent, if they wanted to make any further submissions or whether I should proceed to pronounce judgment in the above matter. Both counsels stated before me that notwithstanding the delay, they do not want to make any further submissions and I should proceed for pronouncing the judgment. Accordingly, I have pronounced the judgment today.
2. The above Petition is filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for short “the Arbitration Act”) seeking to set aside the Majority Award of the Arbitral Tribunal dated 13th July 2020. The Majority Award is passed by Mrs. Justice Sujata Manohar (Retd.), a former Judge of the Supreme Court of India and Dr. Justice Mukundakam Sharma (Retd.), also a former Judge of the Supreme Court. The dissenting Award dated 20th July 2020 is given by a former Judge of the Supreme Court of India, Mr. Justice S. S. Nijjar (Retd).
3. By the Majority Award, the Petitioner’s challenge to the Respondent’s rescission of the Petitioner’s 2nd Media Rights License Agreement dated 25th March 2009 (for short, the “2nd BCCI-WSGI MRLA”) was rejected. Under the 2nd BCCI-WSGI MRLA, the Petitioner was granted Media Rights in relation to the Indian Premier League (for short the “IPL”) for the “Rest of the World” (“RoW”) territories (i.e. all territories other than the Indian Sub-Continent), for the period 2009- 2017. In the Majority Award, the Arbitrators upheld that the said rescission of the 2nd BCCI-WSGI MRLA by accepting the Respondent’s contention that the said MRLA was part of a fraudulent composite transaction. Since the said MRLA was part of a composite fraud, the Respondent's rescission of the said MRLA was upheld by the Majority Award.
4. Before I advert to the facts of the case, it would be necessary to set out the description of the parties. The Petitioner, World Sports Group (India) Private Limited (for short “WSGI”) is a company incorporated under the provisions of the Companies Act, 1956. It was part of the World Sports Group of companies which was subsequently acquired by the Lagardere Group which is engaged in the business of sports marketing, event management and media rights, specifically in relation to cricket, golf, and football. The Respondent, the Board of Control for Cricket in India (for short “BCCI”) is a society registered under the provisions of the Tamil Nadu Registration of Societies Act, 1975 and is the governing body for the sport of cricket in India. In fact, BCCI organizes cricket matches in India and abroad. For the sake of convenience, I shall refer to the Petitioner as “WSGI” and the Respondent as “BCCI”.
5. The facts to be noted to decide the present controversy are this. In September 2007, BCCI conceptualized and decided to launch the Indian Premier League (for short the “IPL”) which was the first of its kind, franchise-based, 20-over cricket tournament. The format of the IPL differed from the then existing structure of either the 5-day TEST MATCHES or the ONE-DAY INTERNATIONAL MATCHES. The IPL was to be administered by a sub-committee of BCCI known as the IPL Governing Council. Mr. Lalit Kumar Modi was appointed as the Chairman of the IPL
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