“Due to the third wave of the COVID-19 pandemic and also other exigencies of work, there was a delay in pronouncing judgment,” said justice BP Colabawala before quashing and setting aside an arbitral award which upheld rescission of media rights by the Board of Control for Cricket in India (BCCI) to World Sport Group (India) Pvt. Ltd. in relation to the Indian Premier League (IPL) for all territories other than Indian sub-continent.
Justice Colabawala had extensively heard the issue in 2021 and reserved it on 18 March 2021. The entire issue pertained to a tender issued by BCCI in 2007 for a period of 10 years starting from 2008 to 2017 regarding media rights for IPL. WSGI was the successful tenderor which was awarded the global media rights of IPL for approximately one billion USD.
Since WSGI was not a broadcaster but only a trader in Media Rights, it entered into pre-bid negotiations with MSM which had a broadcasting network in India.
During these negotiations, MSM, for its own commercial reasons, instead of entering into a sub-licensing Agreement with WSGI, desired to enter into a direct Media Rights License Agreement [MRLA] with BCCI for India rights till 2012 for USD 275.40 Million. Another MRLA was executed between BCCI and WSGI for India rights for a sum of $550 million and a ‘rest of world’ rights for $92 million till 2017.
However, after the first IPL happened to be a resounding success, on March 14 2009, BCCI terminated MRLA with MSM after which the India rights of IPL were reverted back to BCCI. The Board wanted to re-auction/re-sell the India Rights for the IPL for the entire period of 2009-2017 for a higher License Fee.
In light of this, BCCI at the outset entered into a Deed of Mutually Agreed Termination (DMAT) with WSGI in 2009. With this agreement, the composite MRLAs entered into by BCCI with WSGI came to be terminated. According to WSGI, it agreed to a mutual termination of the first MRLA only to enable BCCI to receive an enhanced License Fee for the India Rights for the period 2009-2017 on the condition that the India Rights for the period 2009-2017 would be licensed to WSGI, or its nominee – WSGM, thereby enabling WSGI to realize a premium for relinquishment of its India Rights for the period 2013-2017. The other condition that was laid down was that BCCI would reinstate WSGI’s RoW Rights for the period 2009-2017 by entering into a fresh MRLA with WSGI on the same terms and conditions as was recorded in the first BCCI-WSGI MRLA.
BCCI later alleged that all agreements of 2009 including the DMAT formed part of a fraudulent composite transaction which gave them the right to terminate the second MRLA with WSGI. BCCI alleged that all the agreements were executed only for the purpose of diverting funds to WSGM, a sister concern with WSGI, which showed that both companies were complicit. The fraud alleged by BCCI was that the monies under the facilitation deed were actually due to BCCI and since WSGI companies had indulged in fraud, BCCI was entitled to rescind the MRLA for RoW rights.
The rescission was challenged by WSGI in arbitration. Out of the 3-members on the tribunal, 2 members upheld the decision of BCCI to rescind the agreement.
This majority award was challenged in High Court by WSGI. WSGI contended that by virtue of the Agreements entered into in 2009, BCCI benefited to the tune of approximately ?1791 crores. Failing to consider this enormous benefit that inured to BCCI and the fact that BCCI retained the same, was a fundamental error on the arbitral tribunal, WSGI submitted.
Justice BP Colabawalla accepted the submission and opined that the benefit which BCCI received by virtue of the agreements ought to have been considered. “It is trite law that a party cannot be permitted to approbate and reprobate at the same time. A party cannot be permitted to blow hot and cold, fast and loose or approbate and reprobate. When one party knowingly accepts the benefits of a contract, it is estopped by denying the validity and binding effect of that contract on him. Once a party takes advantage of any instrument, he must accept all that is mentioned in the said document,” the Court emphasized.
Justice Colabawalla observed that failing to consider this fundamental issue which goes to the root of the matter, rendered the arbitral award susceptible to challenge as it clearly suffers from a patent illegality and is therefore liable to be set aside on this ground alone.
Justice Colabawala also noted that the majority award failed to explain why BCCI was entitled to the facilitation fee. He also deduced after perusing the minority award that huge chunks of important evidence was missed out in the majority award. “Such an Award with the greatest of respect to the arbitrators who passed the majority award, cannot be allowed to stand,” said Justice Colabawala.