Bombay High Court
Board Of Control For Cricket In India vs Kochi Cricket Private Limited on 17 June, 2025
Author: R. I. Chagla
Bench: R. I. Chagla
2025:BHC-OS:8865
901-ARBP-1752-1753-2015-J.doc
Gitalaxmi and Jitendra
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO. 1752 OF 2015
Board of Control for Cricket in India,
a Society registered under the Tamil Nadu
Societies Registration Act, 1975 and
having its head office at Cricket Centre,
Wankhede Stadium, Mumbai - 400 020. ...Petitioner
Versus
Kochi Cricket Private Limited,
a Company incorporated under the
Companies Act, 1956 and having its
registered office at 504, Churchgate
Chambers, 5th Floor, 57, New Marine Lines,
Mumbai - 400 020. ...Respondent
WITH
ARBITRATION PETITION NO. 1753 OF 2015
Board of Control for Cricket in India,
a Society registered under the Tamil Nadu
Societies Registration Act, 1975 and
having its head office at Cricket Centre,
Wankhede Stadium, Mumbai - 400 020. ...Petitioner
Versus
1. M/s. Rendezvour Sports World,
an unincorporated integrated joint
venture carrying on business at : B/53,
Indus House, Opp. Monginis Cage
Factory, Andheri (W), Mumbai - 400 053,
through its authorized representative Mr.
Chintan Vora.
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2. M/s. Anchor Earth Pvt. Ltd.,
registered office at : 33 Hughes,
N. S. Patkar Marg, Opp. Prempuri
Ashram, Grant Road (W),
Mumbai - 400 007.
3. M/s. Parinee Developers and Properties
Pvt. Ltd., registered office at : Smag
House, 1st Floor, Opp. Darshana
Apartment, Sarojini Road Extn.,
Vile Parle (W), Mumbai - 400 056.
4. M/s. Anand Shyam Estate Development
Pvt. Ltd., registered office at : 1,
Sun Villa, Peppermint Compound,
Lamington Road, Mumbai - 400 004.
5. M/s. Rendezvour Sports World Pvt. Ltd.,
registered office at : Pushp Anthrolikar
Nagar No. 2, Solapur - 413 003.
6. Mr. Vivek Venugopal,
residing at : Unit 1-B No. 9, Haris Road,
Denson Town, Mangalore - 46.
7. M/s. Filmwaves Combine Pvt. Ltd.,
registered office at : 7th Floor,
Mehta Mehal, Opera House,
Mumbai - 400 004. ...Respondents
----------
Mr. Rafiq A. Dada, Senior Advocate and Mr. T. N. Subramanian,
Senior Advocate a/w Mr. Aditya Mehta, Ms. Shivani Garg, Mr. Agneya
Gopinath and Mr. Dhruv Chhajed i/b Cyril Amarchand Mangaldas,
Advocates for the Petitioner in ARBP/1752/2015.
Mr. T. N. Subramanian, Senior Advocate a/w Mr. Aditya Mehta, Ms.
Shivani Garg, Mr. Agneya Gopinath and Mr. Dhruv Chhajed i/b Cyril
Amarchand Mangaldas, Advocates for the Petitioner in
ARBP/1753/2015.
Mr. Vikram Nankani, Senior Advocate a/w Mr. Sajal Yadav, Mr. Rohan
Rajadhyaksh, Mr. Sumeet Nankani, Mr. Anukula Seth, Mr. Aayushya
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Geruja and Ms. Vineetha Khandelwal i/b Mr. Gurdeep Singh Sachar,
Advocates for Respondent in ARBP/1752/2015.
Mr. Vikram Nankani, Senior Advocate a/w Mr. Sumit Nankani and
Mr. Rohan Rajadhyaksh i/b Ms. Nipa S. Gupte, Advocates for
Respondent Nos. 1, 2, 3, 5 and 6 in ARBP/1753/2015.
----------
CORAM : R. I. CHAGLA, J.
RESERVED ON : 12th November 2024.
PRONOUNCED ON : 17th June 2025.
JUDGEMENT :
1. By Arbitration Petition No. 1752 of 2015, the Award
dated 22nd June 2015 has been assailed (Arbitration Petition No.
1752 of 2015 of Kochi Cricket Private Limited is for convenience
referred to as “KCPL’s Petition”). By Arbitration Petition No. 1753 of
2015, the separate Award having the same date i.e. 22nd June 2015
has been assailed (Arbitration Petition No. 1753 of 2015 of M/s.
Rendezvour Sports World is for convenience referred to as “RSW’s
Petition”).
2. The Award assailed in KCPL’s Petition pertains to disputes
emanating out of Franchise Agreement dated 12 th March 2011
between KCPL and Board of Control for Cricket in India (“BCCI”),
whereas the Award assailed in RSW’s Petition pertains to disputes
emanating out of Franchise Agreement dated 11 th April 2010
between RSW and BCCI.
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3. In view of there being commonality of facts and
intrinsical linkage of both KCPL and RSW references, the disputes
under both, KCPL’s Franchise Agreement (“KCPL-FA”) and RSW’s
Franchise Agreement (“RSW-FA”) came to be consolidated and
adjudicated upon by the same Tribunal, by mutual consent of parties.
4. A brief background of facts is necessary and which are as
under :-
i. BCCI in the year 2008 issued Invitation to Tender (referred
to as “ITT”) for the initial eight franchises, which would comprise the
Indian Premier League (“IPL”).
ii. BCCI issued Operational Rules for the IPL Season 2010 on
26th February 2010.
iii. BCCI issued an Invitation to Tender (referred to as “ITT”)
on 9th March 2010, inviting bids for upto two more franchises.
iv. RSW was declared the successful bidder for IPL franchise to
be based in Kochi and entered into an Unincorporated Integrated
Joint Venture Agreement (“UJV Agreement”) on 17 th March 2010.
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v. BCCI issued Operational Rules for the IPL Season 2011 on
18th March 2011.
vi. RSW furnished a bank guarantee in the sum of Rs. 153.34
crores (“RSW BG”), as contemplated by the ITT on 27th March 2010.
vii. BCCI and RSW entered into a Franchise Agreement on an
interim basis, pending the incorporation of a joint venture company
viz. the Respondent-KCPL that would take on the rights and
obligations of the Kochi franchise as per the terms of the UJV
Agreement on 11th April 2010. The RSW Agreement continued to
govern the relationship between BCCI and the Kochi franchise till the
final Franchise Agreement between BCCI and KCPL (“KCPL
Agreement”) was signed.
viii. BCCI addressed an e-mail dated 5th September 2010 to all
the franchisees (including KCPL) informing them of the changed
format for 2011 edition of the IPL, whereby the number of matches
to be played in the season was reduced.
ix. The Kochi franchise began operating through KCPL on 27 th
November 2010.
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x. KCPL addressed a letter to BCCI, inter alia, requesting for
reduction in the franchise fees on 10th January 2011.
xi. KCPL addressed a letter dated 7 th February 2011 to BCCI,
inter alia, stating that they be allowed to play at the leased
Jawaharlal Nehru Stadium (“JN Stadium”) till the Kerala Cricket
Association makes an alternative site for the new stadium.
xii. BCCI addressed a letter dated 9th February 2011 to KCPL,
inter alia, rejecting the request of KCPL for reduction in franchise fees
on the ground that the same is contrary to the terms of RSW
Agreement or the to be signed the KCPL Agreement.
xiii. KCPL addressed another letter dated 16 th February 2011 to
BCCI reiterating its request for reduction in franchise fees.
xiv. KCPL addressed a letter dated 28 th February 2011 to BCCI
once again, inter alia, requesting for a reduction of franchise fee.
xv. BCCI addressed a letter dated 3 rd March 2011 to KCPL, inter
alia, confirming to KCPL that its stand on the reduction of the
franchise fee is the same as communicated vide letter dated 9 th
February 2011.
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xvi. KCPL addressed a letter dated 9th March 2011 to BCCI
urging BCCI to consider its request for reduction in franchise fee
whilst expressly stating that subject to such consideration the issue of
reduction of the franchise fee may be treated as closed. Vide the said
letter, KCPL also informed BCCI that it was upgrading the JN
Stadium.
xvii. BCCI and KCPL entered into KCPL Franchise Agreement on
12th March 2011 knowing that KCPL’s request for reduction of
franchisee fee has already been rejected.
xviii. On 22nd March 2011, KCPL was required to deliver to BCCI
a bank guarantee under the KCPL Agreement in the prescribed format
and for a specified sum, as per the terms of KCPL Agreement.
xix. At a meeting dated 25th March 2011 of the Board of
Directors, KCPL passed the necessary resolution for obtaining the
requisite bank guarantee.
xx. On 27th March 2011, RSW was obligated to deliver a fresh
bank guarantee as per the terms set out in the RSW Agreement.
xxi. From 22nd March 2011 onwards, the representatives of
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901-ARBP-1752-1753-2015-J.docRSW/KCPL kept on assuring BCCI that it was in the process of
obtaining the requisite bank guarantee and would furnish the same
as soon as possible.
xxii. Mr. Hemang Amin of BCCI addressed an e-mail dated 29 th
March 2011 to Mr. Saket Mehta of KCPL, inter alia, reminding that
the requisite bank guarantee must be given.
xxiii. Mr. Saket Mehta of KCPL replied to the aforesaid e-mail of
BCCI on 29th March 2011, inter alia, stating that the existing bank
guarantee was valid for 18 months and that KCPL had already
applied for extension.
xxiv. KCPL addressed a letter dated 2nd May 2011 to BCCI, inter
alia, admitting that it was required to furnish the requisite bank
guarantee whilst stating that KCPL was in the process of obtaining
the said bank guarantee and the same will be furnished as soon as
possible.
xxv. KCPL addressed a letter dated 1 st July 2011 to BCCI, inter
alia, admitting that some delay had occurred in furnishing the
requisite bank guarantee and requesting that permission for the
proposed transfer of Venugopal’s shares in KCPL to another company
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901-ARBP-1752-1753-2015-J.docbe granted at the earliest to enable KCPL to furnish the requisite bank
guarantee.
xxvi. KCPL addressed a letter dated 17 th September 2011, inter
alia, stating that it would submit the requisite bank guarantee by
5.00 p.m. on 21st September 2011 without making any reference to
extension of time.
xxvii. BCCI (through its advocates) addressed a letter dated 17 th
September 2011 to KCPL, inter alia, stating that as and by way of last
opportunity KCPL/RSW is required to furnish the requisite bank
guarantee on the same day.
xxviii. BCCI (through its advocates) addressed a letter dated 19 th
September 2011 to KCPL/RSW and terminated the KCPL
Agreement/the RSW Agreement in light of KCPL/RSW’s failure to
deliver the requisite bank guarantee on or before 22 nd March
2011/27th March 2011.
xxix. On 19th September 2011, BCCI encashed RSW BG.
xxx. KCPL addressed a letter dated 18th January 2012 to BCCI,
inter alia, alleging that the termination of the KCPL Agreement by
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BCCI was wrongful and invoked arbitration under the dispute
resolution clause of the KCPL Agreement.
xxxi. RSW on 4th August 2012 invoked arbitration under the
provisions of RSW-FA. During the course of arbitral proceedings,
BCCI has filed an Application under Section 16 of the Arbitration Act,
challenging the jurisdiction of learned Arbitrator to which
Respondent Nos. 1, 3, 5 & 6 filed the joint reply. Respondent No. 4
also subsequently filed its reply by adopting the contents of the
Section 16 reply filed on behalf of Respondent Nos. 1, 3, 5 & 6. In
the Section 16 Application, the learned Arbitrator passed an order
dated 17th July 2015, inter alia, rejecting BCCI’s Section 16
Application. The Section 16 order has also been challenged by BCCI
in RSW’s Petition.
xxxii. In KCPL Arbitration, the learned Arbitrator passed an Award
on 22nd June 2015, inter alia, dismissing BCCI’s counter-claim, and
directing BCCI to pay to KCPL (i) Rs. 384,83,71,842/-; (ii) interest on
the said amount at 18% from 19 th September 2011 till the date of the
Award; (iii) Rs. 72,00,000/- by way of arbitration costs; and (iv)
further interest at 18% on the awarded amount from the date of
Award to the date of its realization (the “KCPL Award”).
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xxxiii. In RSW Arbitration, the learned Arbitrator passed an Award
(“the RSW Award”) on the same date, i.e., 22 nd June 2015, wherein
the learned Arbitrator allowed RSW’s claim to the extent of “…….;
return of the amount of BG, which has been held to be wrongful
invoked and encashed by the BCCI…..”. BCCI was directed to pay to
RSW an amount of INR 1,53,34,00,000/- together with interest
thereon at 18% from the date of BCCI’s wrongful termination of
KCPL-FA until the date of the KCPL Award.
xxxiv. BCCI challenged the KCPL Award as well as the RSW Award
on 16th September 2015 and filed Arbitration Petition Nos. 1752 of
2015 and 1753 of 2015 under Section 34 of the Arbitration and
Conciliation Act, 1996 before this Court.
xxxv. KCPL filed its Affidavit in Reply on 21st June 2016 in KCPL’s
Petition.
xxxvi. BCCI filed its Affidavit in Rejoinder on 6 th August 2016 to
the Reply filed by KCPL in KCPL’s Petition.
xxxvii. BCCI filed Notice of Motion No. 531 of 2018 in KCPL’s
Petition on 16th March 2018, seeking stay of the KCPL Award.
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xxxviii. This Court by an order dated 13th April 2018 granted
unconditional stay of the KCPL Award.
xxxix. KCPL filed SLP (C) No. 11468 of 2018 before the Supreme
Court on 27th April 2018, challenging the order dated 13 th April 2018
granting unconditional stay of the KCPL Award.
xl. The Supreme Court modified the order dated 13 th April
2018 passed by this Court on 11 th May 2018 to the effect of directing
BCCI to deposit a sum of Rs. 100,00,00,000/- in this Court, within
two months. This Court by separate order dated 13 th April 2018 in
the RSW Petition passed conditional order of stay of the RSW Award
on the condition that BCCI deposited 50% of the awarded sum with
interest upto the date of deposit within a period of 8 weeks from the
date of said order. BCCI was permitted to deposit the respective
balance 50% with interest upto the date of deposit with the
Prothonotary and Senior Master, Bombay High Court, which was to
be kept alive for the period of 2 years and from that date after
obtaining orders of this Court. It was made clear in the event
conditions imposed by this Court for grant of stay are not complied
with, the order granted stay shall stand vacated without further
reference to the Court. RSW was permitted to withdraw 50%
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amount deposited upon furnishing BG for a period of 2 years and
which was to include interest at the rate of 10%.
xli. BCCI deposited a sum of Rs. 100,00,00,000/- with the
learned Prothonotary and Senior Master, Bombay High Court on 10 th
July 2018, by way of a demand draft.
5. Mr. Rafiq A. Dada, learned Senior Counsel appearing on
behalf of BCCI in KCPL’s Petition has submitted that KCPL’s Petition
is governed by Section 34 of the Arbitration Act as it stood on the
date of its filing, i.e., 16 th September 2015, i.e., prior to the
enactment of the Arbitration and Conciliation (Amendment) Act,
2015. He has placed reliance upon the decision of Supreme Court in
“Upendra Kantilal Thanawala v. Shreeram Builders“1.
6. Mr. Dada has submitted that the scope of interference
under Section 34 of the Arbitration Act is well settled. An Award
rendered contrary to the terms of contract or based on no evidence is
patently illegal and perverse and is open to interference by the Court
under Section 34 of the Arbitration Act.
1 2024 SCC OnLine Bom 730 @ Paragraph 90.
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7. Mr. Dada has placed reliance upon the following
decisions :-
i. Associate Builders v. Delhi Development Authority2;
ii. Rashtriya Chemicals and Fertilizers Limited v. Chowgule
Brothers and Ors.3;
iii. Hindustan Zinc Ltd. v. Friends Coal Carbonisation4;
iv. Rajuram Sawaji Purohit v. The Shandar Interior Private Ltd. 5
andv. Upendra Kantilal Thanawala v. Shreeram Builders (supra) at
Paragraph 95.
8. Mr. Dada has submitted that the above position of law
has been affirmed and applied by the Supreme Court in its decision
in “Delhi Metro Rail Corporation Ltd. v. Delhi Airport Metro Express
Pvt. Ltd.“6, wherein the Supreme Court, inter alia, has held that an
Award which (a) contains a finding based on no evidence; (b)
ignores vital evidence in arriving at its decision; or (c) contains a
construction of the contract that no fair or reasonable person would
take including, if the interpretation was not even a possible view, is
perverse and liable to be set aside under the head of ‘patent
2 (2015) 3 SCC 49 @ Paragraphs 29-34, 36, 42.1, 42.3 and 44.
3 (2010) 1 SCC 86 @ Paragraphs 20-25.
4 (2006) 4 SCC 445 @ Paragraphs 13, 14 and 24.
5 2024 SCC OnLine Bom 583 @ Paragraph 59.
6 2024 SCC OnLine SC 522 @ Paragraphs 40, 47, 55, 65, 66 and 67.
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illegality’.
9. Mr. Dada has submitted that the Impugned Award is contrary
to the provisions of the substantive law of India, the provisions of the
Arbitration Act, is ex facie perverse, contrary to and de hors the terms
of KCPL Agreement, patently illegal, prejudicial to the rights of BCCI,
contrary to the fundamental policy of Indian law, and against justice.
He has submitted that the Impugned Award is vitiated by several
errors apparent on the face of the record, which go to the root of the
Impugned Award and is also opposed to public policy of India. The
learned Arbitrator has (i) rendered findings, which are wholly
unsupported by evidence; (ii) taken into account irrelevant
considerations in arriving at findings; (iii) ignored vital evidence in
arriving at findings; and (iv) disregarded the express terms of KCPL
Agreement, from which his jurisdiction flowed. Accordingly, the
Impugned Award is one that warrants interference by this Court
under Section 34 of the Arbitration Act and is liable to be set aside.
10. Mr. Dada has submitted that another facet of Section 34
of the Arbitration Act must be borne in mind, namely, that the parties
are bound by their stance taken in the arbitration proceedings, and
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cannot detract from the same, as has been sought to be done by KCPL
during the course of the final arguments. He has submitted that it is
well settled, that a party who has succeeded before an Arbitral
Tribunal cannot be permitted to supplant those reasons in support of
the conclusion drawn by the Arbitrator/Arbitral Tribunal, as has
sought to be done by KCPL during the course of the final arguments.
He has in this context placed reliance upon the decision of this Court
in “Bhanumati Jaisukhbhai Bhuta v. Ivory Properties & Hotels Private
Limited and Anr.“7. He has submitted that in view thereof, this Court
wholly disregard KCPL’s inconsistent and conflicting contentions and
reasons sought to be provided to support the learned Arbitrator’s
finding that find no mention in the Impugned Award. He has
submitted that the Award must be upheld or set aside, basis only the
reasons and rationale contained therein.
11. Mr. Dada has submitted that the Impugned Award, in a
nutshell, is intrinsically flawed, insofar as it takes into account
numerous extraneous factors, irrelevant considerations, and mere
perceptions, rather than the terms of the binding contract, the
material on record, and the detailed evidence led in relation to the
7 2020 SCC OnLine Bom 157, Paragraph 171.
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issues framed. He has submitted that while deciding the initial core
issues, viz. the fundamental breaches, the learned Arbitrator has
unfortunately given a go-by to the terms of the contract(s) between
the parties, and has laid emphasis on several irrelevant factors, which
is contrary to settled legal principles.
12. Mr. Dada has submitted that while adjudicating on each
of these breaches, the learned Arbitrator has ruled against BCCI on
several grounds, which grounds may be easily neutralised basis the
explicit terms of the contract, and the evidence on record, thereby
rendering the Impugned Award liable to being set aside under
Section 34 of the Arbitration Act. He has submitted that thereafter,
with regard to the issue(s) pertaining to the furnishing of the bank
guarantee and the extension of time in relation thereto, the learned
Arbitrator has proceeded on an unsustainable and incorrect legal
basis qua basic and elementary legal principles such as waiver and
forbearance to sue, thereby causing the very basis of such findings to
warrant interference of this Court under Section 34 of the Arbitration
Act, having ignored the key terms of the contract between the
parties. He has submitted that while deciding the reliefs granted qua
damages, the learned Arbitrator appears to have granted the same in
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the teeth of settled legal principles, as also, in a manner which is
contrary to KCPL’s own pleadings, thereby resulting in the unjust
enrichment, on account of which the Impugned Award ought to be
set aside.
13. Mr. Dada has submitted that the learned Arbitrator’s
findings on the ‘Lalit Modi Issue’ are contrary to substantive law of
India and the evidence on record. He has submitted that with regard
to the Lalit Modi Issue, the tweets in question were made prior to the
signing of the KCPL Agreement, i.e., on 11 th April 2010. He has
submitted that therefore, KCPL is now estopped from raising the
aforesaid allegation after having played in the 2011 Season of IPL
and signed the KCPL Agreement, which fact the Arbitrator has
curiously failed to appreciate.
14. Mr. Dada has made submissions with regard to the Lalit
Modi Issue as well as referring to the finding of learned Arbitrator on
this issue. He has submitted that the finding of learned Arbitrator
that BCCI is bound by the consequences flowing from the tweets
made by Mr. Lalit Modi on the social networking website ‘Twitter’ is
perverse, because it is neither based on any sound legal principle nor
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on any fact or evidence. The tweets made by Mr. Lalit Modi were in
his personal capacity, and there is no evidence whatsoever to even
remotely suggest that Mr. Lalit Modi made those tweets in the course
of his duties as the Chairman of the Governing Council of the IPL
(“IPL Governing Council”). He has submitted that in absence of such
evidence, the learned Arbitrator’s finding that BCCI is bound by the
consequences flowing from the tweets made by Mr. Lalit Modi is
patently illegal/erroneous.
15. Mr. Dada has submitted that the learned Arbitrator’s
finding that the actions of Mr. Lalit Modi binds BCCI, is contrary to
law. He has relied upon Section 237 of the Indian Contract Act,
1872 (“Contract Act“), which provides that only if BCCI has, by its
words or conduct, induced third parties to believe that tweeting was
within the scope of Mr. Lalit Modi’s authority, would BCCI be bound
by the acts of Mr. Lalit Modi. In the absence of any evidence
whatsoever in this regard, the learned Arbitrator’s reliance on Section
237 of the Contract Act is perverse and cannot be sustained.
16. Mr. Dada has submitted that in any event, no evidence
has been led by KCPL to show any actual loss, harm or prejudice, if
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any suffered by it on account of tweet made by Mr. Lalit Modi. On
the contrary, the evidence on record shows that despite the tweets
made by Mr. Lalit Modi, KCPL was able to procure ‘star players’ and
also various sponsors. Further the representatives of RSW (the
predecessor of KCPL) were satisfied with the actions taken by BCCI
against Mr. Lalit Modi and even though the tweets were made by Mr.
Lalit Modi in April 2010, KCPL raised the issue for the first time only
by way of its letter dated 18 th January, 2012 (“Notice of
Arbitration”), i.e. around four months after BCCI had terminated the
KCPL Agreement, which shows that the same was mala fide and
clearly an afterthought.
17. Mr. Dada has submitted that it is KCPL’s case in its
arguments in Reply that it has not claimed any damages in relation to
this purported breach and this issue is not a fundamental or
repudiatory breach, but a mere incident or event, that occurred in the
parallel, which is a new stand, taken during the course of its oral
arguments in Reply. He has submitted that in view of KCPL’s new
stand in arguments, the learned Arbitrator’s finding on this issue
would now be redundant.
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18. Mr. Dada has then dealt with the findings of learned
Arbitrator on the Stadium issues. He has submitted that the findings
of the learned Arbitrator on the Stadium issues are perverse as the
same are not supported by any evidence and are in teeth of the terms
of KCPL Agreement. He has submitted that the issues pertaining to
the stadium pre-date the signing of KCPL Agreement on 12 th March
2011, and therefore, cannot, for any stateable reason, amount to a
breach thereof.
19. Mr. Dada has submitted that the learned Arbitrator’s
finding that the non-availability of a brand-new stadium at Kochi was
a breach on the part of BCCI is ex-facie materially contrary to the
terms of governing contracts/documents.
20. Mr. Dada has placed reliance on the Clause 1.1 of KCPL
Agreement. He has submitted that the definition of ‘Stadium’
expressly includes an alternative stadium at which the team may play
its home matches. He has also placed reliance on the Clause 2.1(b)
of KCPL Agreement, by which BCCI reserved its right to provide an
alternative stadium from the one named in the KCPL Agreement if
the same was “unavailable for any reason” and/or BCCI was
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unwilling to use it for any reason, or “unable to provide it”.
21. Mr. Dada has also placed reliance on the Clause 3(b) of
Schedule 2 of KCPL Agreement, by which KCPL agreed to stage its
home matches at such alternative stadium provided by BCCI if the
one named in KCPL Agreement was “unavailable for any reason”, and
had acknowledged that if such other stadium was unacceptable (with
KCPL acting reasonably in this regard) then it may play each home
match at the stadium used by the opposing team.
22. Mr. Dada has also placed reliance on the Clauses 3.8 and
9.1(b) of ITT read with Schedule 5 thereof. He has submitted that
though said provisions make it clear that the bidder had the right to
choose any of the stadiums mentioned in Schedule 5, the first of
which was the Motera Stadium at Ahmedabad (“Ahmedabad
Stadium”). Thus, even when a number of stadia already constructed
were available, including the Ahmedabad Stadium, KCPL, by its own
volition, chose the stadium at Kochi, despite being aware of the fact
that it was under the caption ‘stadia under construction’, and without
conducting any inquiry as to the state of the stadium.
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23. Mr. Dada has also placed reliance on the Clause 11.1 of
the ITT, wherein it is stated that “Each Bidder and Recipient of this
ITT shall be responsible for verifying the accuracy of all information
contained in this ITT and for making all necessary enquiries prior to
the submission of its Bid.”
24. Mr. Dada has submitted that the Impugned Award
manifestly ignores that the parties were aware that the stadium
chosen by KCPL was under construction. He has submitted that at
the very least, in March 2011, the parties were aware that the
stadium chosen by KCPL was not going to be ready for the 2011
Season of IPL, which commenced on 8th April 2011.
25. Mr. Dada has submitted that it is for this reason that the
KCPL Agreement sets out the exact process to be followed in the
event the said stadium was unavailable for any reason. In such
circumstance, BCCI had the right to provide an alternate stadium,
and if such stadium was unacceptable to KCPL, with KCPL acting
reasonably in this regard, KCPL could, with BCCI’s prior written
approval, play their home matches at the stadium used by the
opposing team for such match. In view of the KCPL Agreement
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providing for the process to be adopted in the event the new stadium
was unavailable, which process was followed by BCCI, it was not
open for the learned Arbitrator to hold that the “non-availability of a
brand new stadium [at] Kochi was a breach” that goes “to the root of
the matter”. Therefore, the finding of the learned Arbitrator is
wholly contrary to the express provisions of KCPL Agreement, and
hence, cannot be sustained.
26. Mr. Dada has submitted that the finding of the learned
Arbitrator as to BCCI being dogmatically determined to push KCPL to
the JN Stadium, which added to the gravity of the fundamental
breach is perverse, as it is contrary to the evidence on record. KCPL
vide a letter dated 7th February 2011 had itself requested that they be
allowed to play at JN Stadium, till Kerala Cricket Association made
an alternative site for the new stadium. This letter has, in fact, not
even been adverted to, or considered by the learned Arbitrator,
thereby displaying that relevant and material evidence on record has
been ignored.
27. Mr. Dada has submitted that BCCI had vide its letter
dated 3rd March 2011 accepted KCPL’s aforesaid request and stated
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that “your franchise can play in the Jawaharlal Nehru Stadium until
the new stadium is ready in Kochi”.
28. Mr. Dada has made submissions with regard to the
suitability of JN Stadium as well as placing reliance on the evidence
in support thereof. He has submitted that the learned Arbitrator has
ignored the contemporaneous evidence on record that the
representatives of KCPL had visited JN Stadium to check its
suitability for hosting cricket matches. News reports in several
credible newspapers quote Mr. Venugopal, that the representatives of
KCPL were happy with the stadium and would ensure that at least 7
home matches were played there. Thus the finding of the learned
Arbitrator that the JN Stadium and Holkar Stadium did not satisfy
the test of being ‘alternatives’, are not supported by any basis or
evidence, credible or otherwise.
29. Mr. Dada has submitted that KCPL entered into the its
Agreement with full knowledge and understanding that BCCI has
rejected its requests and grievances in relation to the Stadium, which
were not in accordance with the terms of KCPL Agreement. He has
submitted that in view thereof, the question of any breach on the part
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of BCCI does not arise at all, and the grievances sought to be made
by KCPL are nothing but an afterthought, which the learned
Arbitrator has failed to consider. He has placed reliance upon
Clauses 5.1 and 6.1 of the ITT and submitted that an Award rendered
contrary to the terms of the contract or based on no evidence is
patently illegal and perverse and is open to interference by the Court
under Section 34 of the Arbitration Act.
30. Mr. Dada has submitted that KCPL has sought to contend
that the Stadium issue is the reason as to why the learned Arbitrator
has held that the deadline of March 2011 for furnishing the bank
guarantee was given a go-by. This is contrary to the stand taken by
KCPL in its written submissions during the arbitration proceedings,
where the Stadium issue was considered as a fundamental breach on
part of BCCI. In view of the said pleadings, the learned Arbitrator
has held the same to be a breach on the part of BCCI going to the
root of the matter.
31. Mr. Dada has submitted that the findings of the learned
Arbitrator on the issues pertaining to reduction in number of
matches, are perverse as it contrary to the terms of KCPL Agreement,
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ITT and Operational Rules.
32. Mr. Dada has submitted that the issues pertaining to the
reduction in number of matches for the 2011 IPL Season pre-date the
signing of KCPL Agreement on 12 th March 2011, and therefore,
cannot, for any stateable reason, amount to a breach thereof.
33. Mr. Dada has placed reliance upon the Clause 13.1 of
KCPL Agreement and, inter alia, has submitted that the KCPL
Agreement and the IPL Regulations constituted the entire agreement
between the parties in relation to the franchise and supersedes any
negotiations or prior agreements in respect thereof. Further, in
entering into the KCPL Agreement each party confirmed that it has
not relied on any warranties or representations which are not
expressly set out in the KCPL Agreement. He has placed reliance
upon Clause 14.1 of KCPL Agreement and has submitted that under
this Clause KCPL has, inter alia, acknowledged that all or any
information of any kind relating to the operation of the franchise
provided to KCPL, whether before the signing of KCPL Agreement
(including without limitation in or related to the ITT), was provided
on the basis that such information was for KCPL’s guidance only and
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would in no way be treated by KCPL as a warranty, representation or
guarantee of kind, and that KCPL had not relied upon and would not
rely upon any such information.
34. Mr. Dada has submitted that the learned Arbitrator’s
finding that BCCI had made an express representation that the
format of the IPL would be on a home and away format, which
guaranteed a certain number of matches to each franchise is also ex
facie contrary to the express terms of the ITT and the Operational
Rules for the 2010 IPL Season.
35. Mr. Dada has referred to the clauses of ITT and the
Operational Rules for the 2010 IPL Season and submitted that from
these clauses, it amply clear that BCCI was entitled to change the
format of the IPL at its sole discretion. He has submitted that the
learned Arbitrator’s finding that by unilaterally reducing the number
of matches played, BCCI had acted against the “letter and spirit” of
the ITT and the KCPL Agreement, and thereby prejudiced the
revenue model of KCPL is perverse, inter alia, because it is ex facie
contrary to the express terms of KCPL Agreement.
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36. Mr. Dada has submitted that KCPL’s request for
reduction in the franchise fee had been rejected by BCCI before
signing of the KCPL Agreement. Being cognizant of this fact, KCPL
still entered into the KCPL Agreement, and it cannot be allowed to
now belatedly raise such allegations, as an afterthought.
37. Mr. Dada has submitted that the learned Arbitrator’s
finding on the issue pertaining to transfer of Mr. Vivek Venugopal’s
shares is perverse. He has submitted that the learned Arbitrator’s
finding, that BCCI’s inaction on KCPL’s prayer for approval of transfer
of shares of Mr. Venugopal amounted to a failure on the part of BCCI
to fulfill its obligations in the “commercial sense” is ex facie contrary
to the Clause 11.2(a) of KCPL Agreement. Clause 11.2(a) of KCPL
Agreement provides that KCPL’s approval was only required if the
transfer of shares amounted to a ‘Change of Control’, as defined in
the KCPL Agreement. Mr. Venugopal held only 5% shares of KCPL
and its transfer would not amount to change of control.
38. Mr. Dada has submitted that the findings by learned
Arbitrator that the process of furnishing the bank guarantee was
delayed on account of the pendency of Mr. Venugopal’s transfer
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request as a back to back counter-guarantee by Mr.
Venugopal/Playon was needed, is perverse, since Clause 8.4 of KCPL
Agreement imposes an unconditional obligation on KCPL to furnish
the bank guarantee. He has submitted that the aforesaid finding is
also contrary to the evidence on record. He has submitted that the
said finding has been arrived in an arbitrary, capricious and
whimsical manner. The said finding is not in consonance with the
Wednesbury principle of reasonableness, and is perverse, and cannot
be sustained. He has placed reliance upon ” Associate Builders v.
Delhi Development Authority“8 in this context.
39. Mr. Dada has submitted that the learned Arbitrator’s
finding that the time for submission of bank guarantee was deemed
to be extended, is contrary to the terms of KCPL Agreement. He has
submitted that Clause 21.5 of KCPL Agreement stipulates “No
variation of this Agreement will be effective unless it is in writing and
signed by or on behalf of the parties.” He has submitted that as per
the terms of Clause 21.5, the terms of Clause 8.4 of KCPL Agreement
cannot be amended unless they are in writing and signed by both the
parties.
8 (2015)3 SCC 49 @ Paragraph 28.
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40. Mr. Dada has submitted that the learned Arbitrator has
held that even if the extension of the deadline for submission of the
bank guarantee was not in writing and signed by both parties, does
not make a difference in the eyes of law. He has submitted that the
aforesaid finding clearly establishes that the learned Arbitrator has
acted beyond the terms of the contract. In any event, it is a settled
position of law that if the contract between the parties requires the
amendment thereof to be in writing and signed by both parties, such
a requirement is mandatory in nature and the terms of an agreement
cannot be amended by virtue of conduct of the parties. He has in this
context placed reliance upon ” Indiabulls Properties Pvt. Ltd. v.
Treasure World Developers Pvt. Ltd.“9; “Tulips Hotels Pvt. Ltd. & Anr.
v. Trade Wings Ltd. & Ors.“10 and “M.M.T.C. Ltd. v. G. Premjee
Trading P. Ltd.“11
41. Mr. Dada has submitted that the learned Arbitrator’s
finding that BCCI’s act of allowing KCPL to furnish the bank
guarantee after the stipulated deadline constituted a waiver is
perverse as it is based on erroneous considerations. He has placed
9 2014 SCC OnLine Bom 4768 @ Paragraph 18.
10 Civil Revision Application No. 7 of 2015 @ Paragraphs 50-51.
11 2010 SCC OnLine Del 397 @ Paragraph 18.
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reliance upon Clause 21.8 of KCPL Agreement, which provides that
“The failure to exercise a right or remedy provided by this Agreement
or by law does not constitute a waiver of the right or remedy or a
waiver of any other rights or remedies.” He has submitted that
waiver is consensual in nature and implies a meeting of the minds. It
is a matter of mutual intention and does not depend on
misrepresentation. He has placed reliance upon the decision of
Supreme Court in “P. Dasa Muni Reddy v. P. Appa Rao“12. He has
submitted that there has been no voluntary relinquishment of any
right by BCCI.
42. Mr. Dada has submitted that the findings of the learned
Arbitrator that (i) in view of BCCI’s purported non-insistence for
furnishing the bank guarantee, the time for furnishing the same stood
extended; and (ii) the requirement under Clause 8.4 of KCPL
Agreement was waived by BCCI; and (iii) KCPL’s failure to furnish
the bank guarantee within the time prescribed under Clause 8.4 did
not entitle BCCI to terminate the KCPL Agreement, unless a fresh
date was appointed by giving a reasonable notice to furnish the bank
guarantee, and yet KCPL defaulted; are contrary to the express terms
12 (1974) 2 SCC 725 @ Paragraph 13.
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of the contract. As a result, BCCI’s gesture of showing leniency and
not immediately terminating the KCPL Agreement by snatching at a
breach is nothing but forbearance to sue as opposed to waiver on the
part of BCCI.
43. Mr. Dada has submitted that the very fact that extensions
were sought by KCPL indicates that it was never in a position to
furnish the bank guarantee. Thus, a party that is itself in breach,
cannot now seek to argue that time for performance of the contract is
no longer sacrosanct. He has submitted that Clause 8.4 of KCPL
Agreement deems the non-furnishing of the bank guarantee to be a
fundamental breach of the agreement, on account of which the
question of any waiver and/or extension does not arise.
44. Mr. Dada has submitted that it is a settled position of law
that a party is not required to snatch at a breach and mere
forbearance to sue does not amount to a waiver. He has submitted
that it has been recognized that the injured party does not
automatically lose his right to treat the contract as discharged merely
by calling on the other to reconsider his position and discharge his
obligations. He has placed reliance upon ” Metrogem Limited & Anr.
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V. Paul Corett & Anr.”13 and “Bell Electric Ltd. v. Aweco Appliance
Systems GnbH & Co KG”14 in this context. He has accordingly
submitted that the findings of the learned Arbitrator are contrary to
law and the KCPL Agreement, and therefore, perverse.
45. Mr. Dada has submitted that the evidence on record
clearly indicates that it was possible for KCPL to either procure the
requisite bank guarantee on 17th September 2011 itself or, at the very
least, demonstrate that it had taken genuine steps to do so, i.e.,
displaying its readiness and willingness to furnish the bank
guarantee. He has submitted that this is supported by KCPL’s own
contention during the course of oral arguments that furnishing of
KCPL bank guarantee was a mere ministerial action on part of KCPL,
as all approvals and necessary arrangements were in place. He has
submitted that KCPL has failed to produce any material or evidence
to demonstrate its attempts to procure the bank guarantee, which
leads to be the incontrovertible conclusion that KCPL was not ready
or willing to do so.
46. Mr. Dada has referred to the correspondence exchanged
13 2001 WL 825051 @ Pg. No. 8.
14 2002 EWHC 872 (QB) @ Paragraphs 32-43.
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between KCPL and BCCI during the period between 22 nd March 2011
and 17th September 2011 and has submitted that from this
correspondence, it could only be interpreted to mean that BCCI
continuously insisted on the furnishing of bank guarantee. The letter
dated 17th September 2011 was a culmination of a significant amount
of time that had already been given to KCPL. He has submitted that
this aspect, however, has not been examined by the learned
Arbitrator.
47. Mr. Dada has submitted that KCPL has argued that BCCI
extended the time for furnishing the bank guarantee on account of
the Purported Breaches of KCPL Agreement by BCCI. He has
submitted that KCPL is precluded from relying upon these Purported
Breaches to justify its admitted failure to furnish the bank guarantee.
48. Mr. Dada has submitted that KCPL has consistently
contended that BCCI’s termination of KCPL Agreement on 19 th
September 2011 was wrongful, and amounted to a repudiation of the
said agreement. He has submitted that it is KCPL’s own case that it
was KCPL, who had validly terminated the KCPL Agreement vide the
Notice of Arbitration, whereunder it accepted BCCI’s repudiation. He
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has placed reliance on the Statement of Claim, in particular
Paragraphs 31 and 41 thereof, as well as Prayer Clause (ii). He has
submitted that it is not open for KCPL to, at this stage and in contrary
to its stance in the arbitral proceedings, contend that the KCPL
Agreement came to end on 19 th September 2011. The only logical
corollary to the said submission would be that the KCPL Agreement
remained alive in the interregnum, i.e., between 19 th September 2011
and 18th January 2012.
49. Mr. Dada has submitted that the learned Arbitrator finds
that KCPL was justified in accepting BCCI’s repudiation of KCPL
Agreement, thereby treating the agreement to have come to an end.
He has in this context placed reliance on Paragraphs 10(a) and (b) of
the impugned KCPL’s Award.
50. Mr. Dada has submitted that there was not even a
whisper between 19th September 2011 and 18th January 2012 or
during the proceedings filed by RSW under Section 9 of the
Arbitration Act before this Court, that RSW was ready or willing to
furnish the bank guarantee. He has submitted that consequently,
RSW would be entitled to damages only in the event RSW had
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performed its obligations under the RSW Agreement, i.e., it had
furnished the bank guarantee.
51. Mr. Dada has submitted that RSW has not demonstrated
its readiness and willingness to furnish the bank guarantee. Further,
RSW has not produced a shred of material or evidence to
demonstrate its readiness and willingness to furnish the bank
guarantee. Despite terming it a ministerial act, there is no
explanation, cogent or otherwise, to justify why RSW did not furnish
the bank guarantee between 22 nd March 2011 to 17th September
2011.
52. Mr. Dada has submitted that KCPL was required to show
it was always ready and willing to perform its contractual
obligations, during such period. He has submitted that the legal
position with regard to the above is clear. In order to sustain a claim
for damages, a party is not only required to prove a breach by the
counter-party, but must also show that they themselves were ready
and willing to perform their part of the contract. He has placed
reliance upon “Ram Chandra Sharma v. Kesar Sugar Mills Limited,
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Bombay”15. He has submitted that KCPL’s conduct evidences that
RSW was at no time ready and willing to honour its obligation to
provide the bank guarantee. It is settled law that the party claiming
breach must be ready and willing to perform the contract. He has
placed reliance upon the judgment of this Court in ” Arrow
Engineering v. Punit Jitendra Chande“16.
53. Mr. Dada has submitted that BCCI was, in fact, amenable
to granting a three day extension to KCPL for the furnishing of the
bank guarantee, on the condition that KCPL would waive its legal
right to seek legal recourse, if it failed to furnish the bank guarantee
within the extended time. He has placed reliance upon the Affidavit
in lieu of the Examination in Chief of Mr. Mukesh Patel, CW-3, in
particular Paragraph 24 thereof. He has submitted that this further
indicates KCPL’s lack of readiness and willingness to furnish the bank
guarantee. However, the learned Arbitrator has misconstrued this
evidence and erroneously records it as “Mr. Shashank Manohar was
agreeable to give an extension of 3 days conditional upon the
Claimant giving up its legal rights to which obviously KCPL was not
agreeable to do”. He has submitted that imposition of such condition
15 (1953)2 SCC 52, Paragraphs 17, 22 and 23.
16 2024 SCC OnLine Bom 595 @ Paragraphs 164-166 and 168-169.
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by BCCI was not onerous or prejudicial to the interests of RSW,
should it have submitted the bank guarantee. Consequently, the
learned Arbitrator did not evaluate the impact of grant of extensions
by BCCI, while arriving at the conclusion that no reasonable time was
granted by BCCI. He has submitted that it is, therefore, clear that the
findings of the learned Arbitrator are perverse, and liable to be set
aside.
54. Mr. Dada has submitted that non-furnishing of the bank
guarantee was termed as a material irremediable breach of the RSW
Agreement. Evidently, Clause 8.4 also does not require BCCI to
demand a bank guarantee from RSW in terms thereof. Additionally,
Clause 12.2 does not require BCCI to give any notice to KCPL prior to
termination. KCPL’s non-compliance with its obligation under the
KCPL Agreement cannot be sought to be evaded for want of notice,
which was not a requirement under the KCPL Agreement. Further,
the insistence of such a notice would amount to re-writing the
contract, which is impermissible in law.
55. Mr. Dada has submitted that the contention that the
learned Arbitrator’s Award of Damages was based solely on wrongful
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termination of KCPL Agreement is contrary to KCPL’s submissions
before the learned Arbitrator, as KCPL’s entire case before the
learned Arbitrator was based on the Purported Breaches committed
by BCCI. This was noted by the learned Arbitrator himself in
Paragraph 7.6.1 of the Award. It is a well settled principle of law
that a party who has succeeded before an Arbitral tribunal, cannot be
permitted to supplant reasons in support of the conclusions drawn by
the learned Arbitrator. He has placed reliance upon ” Bhanumati
Jaisukhbhai Bhuta v. Ivory Properties & Hotels Private Limited and
Anr.“17 in this context. He has submitted that notwithstanding the
above submission, if there were no fundamental breaches on the part
of BCCI, then there remains no justification whatsoever for KCPL not
furnishing the bank guarantee by the stipulated date i.e., 22 nd March
2011.
56. Mr. Dada has submitted that the Award of Damages by
the learned Arbitrator cannot be sustained as being patently illegal
and contrary to substantive law of India, fundamental policy of
Indian law and principles of natural justice.
17 2020 SCC OnLine Bom 157, Paragraph 171.
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57. Mr. Dada has submitted that the learned Arbitrator has
awarded General Damages of INR 153,33,31,800 and Special
Damages of INR 231,50,40,042. This is nothing but awarding to
KCPL, damages on account of loss of profit (under the guise of
general damages) as well as the purported wasted expenditure
(under the guise of special damages), concurrently. He has referred
to the relevant prayers in the Statement of Claim, namely, Clauses
(iii) and (iv), wherein KCPL had itself prayed for damages on account
of loss of profit, whilst in the alternative claiming damages on
account of wasted expenditure, which shows that even KCPL was
aware of the settled legal position, that both cannot be claimed
together, but must be claimed in the alternative.
58. Mr. Dada has submitted that it has been well settled by
the Supreme Court in “Kanchan Udyog Limited v. United Spirits
Limited“18 that an injured party has to elect/choose between claiming
damages either on the basis of loss of profit (i.e. expectation loss) or
on the basis of wasted expenditure (i.e. reliance loss) and cannot
claim both, simultaneously. He has submitted that the Supreme
Court has held that recovery for both expectation loss and reliance
18 (2017) 8 SCC 237 @ Paragraphs 30-33.
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loss is not possible and can only be awarded in alternative, as it
would result in a party being put in a better position than if the
contract had been fully performed. He has placed reliance upon
“Cullinane v. British “Rema” Manufacturing Co. Ltd. “19 and “Omak
Maritime Ltd. v. Mamola Challenger Shipping Co. Ltd.“20.
59. Mr. Dada has submitted that the learned Arbitrator has
proceeded to award INR 1,53,33,31,800/- as ‘general damages’
towards loss of profit whilst also awarding another INR
2,31,50,40,042/- as “special damages” towards wasted expenditure,
which goes far beyond what KCPL had even prayed for.
60. Mr. Dada has submitted that in ” Upendra Kantilal
Thanawala v. Shreeram Builders” (supra), it has been held by this
Court that if an Award, in addition to granting their primary claim,
grants damages in lieu of the alternate claim of KCPL, such Award of
Damages is contrary to the fundamental policy of Indian law.
61. Mr. Dada has submitted that without prejudice and in
the alternate to the submission set out above, it is submitted that
19 (1954) 1 QB 292 @ Pg. Nos. 302, 305-306.
20 2011 Bus LR 212 @ Paragraphs 18-19, 25-33, 59 and 65.
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even if KCPL’s contention that the learned Arbitrator has granted
“General Damages” and “Special Damages” is accepted, the same
would amount to a violation of principles of natural justice and has
resulted in miscarriage of justice. He has submitted that it is well
settled that when there is no prayer for a particular relief, no
pleadings/averments are made in support thereof, and when the
counter-party has no opportunity to resist or oppose such a relief, a
Court considering and then granting such a relief will lead to
miscarriage of justice. He has relied upon ” Bachhaj Nahar v. Nilima
Mandal“21. In view thereof, he has submitted that the learned
Arbitrator could not have awarded any amounts that were not prayed
for by KCPL.
62. Mr. Dada has submitted that it is a sine qua non that
special damages have to be specifically informed to the other side, at
the time of entering into the contract, and if it is not done, special
damages cannot be claimed in law. He has placed reliance upon
“N.K. Tomar v. Viraj Implex Ltd.“22.
63. Mr. Dada has submitted that the learned Arbitrator has
21 (2008) 17 SCC 491, Paragraphs 13, 22 and 23.
22 2012 SCC OnLine Del 5240, Paragraphs 18-19.
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awarded loss of profits on an irrational and self-contradictory basis.
He has submitted that it is well settled that computation of damages
should not be whimsical and absurd and should be commensurate
with the loss sustained. He has relied upon ” Batliboi Environmental
Engineers Limited v. Hindustan Petroleum Corporation Limited and
Another“23. He has submitted that a claim for loss of profit should be
supported by adequate evidence. He has placed reliance upon
“Unibros v. All India Radio 2023 SCC OnLine”24.
64. Mr. Dada has submitted that the learned Arbitrator
disregarded the detailed expert evidence led by the parties, without
providing any reasons, and instead chose to calculate “General
Damages” on the ‘rough and ready’ method. The learned Arbitrator
did not have the liberty to disregard the expert evidence and award
General Damages in a whimsical manner.
65. Mr. Dada has submitted that the learned Arbitrator’s
basis of calculating “General Damages”, i.e., the loss of profits, is self-
contradictory. This can be seen from Paragraph 8.1.21 of the
Impugned Award. The learned Arbitrator contradicts himself as at
23 (2015) 3 SCC 49 @ Paragraphs 16, 28 and 47.
24 SC 1366 @ Paragraphs 15-19.
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first, he says that it would meet the end of justice if 25% of the
franchise fee for 2 years is awarded and then goes on to award a sum
equal to 50% of the franchise fee for 2 years. He has submitted that
the grant of 50% is perverse as it is double of what the learned
Arbitrator himself states will be an amount that will meet the end of
justice. He has submitted that even if the aforesaid is viewed as a
typographical error, it was open for KCPL to seek correction of the
alleged typographical error. However, KCPL not having done so, is
now precluded from belatedly making the argument that the same is
a typographical mistake.
66. Mr. Dada has submitted that although the learned
Arbitrator states that he does not see merit in KCPL’s prayer for
refund of franchise fee because KCPL participated in the matches for
the 2011 Season of IPL and earned whatever benefit it could have
earned, he nevertheless awards the Respondent the amount of INR
2,31,50,40,042/- as wasted expenditure, the major chunk of which
comprises of the franchise fee paid by the Respondent of INR
1,53,33,31,800/-.
67. Mr. Dada has submitted that whilst awarding claim of
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damages based on wasted expenditure, the learned Arbitrator was
required to deduct therefrom, such amounts that were earned by
KCPL through participation in the 2011 Season of IPL, which he did
not do.
68. Mr. Dada has submitted that KCPL had admitted during
the arbitral proceedings that if the amount of revenues earned by
KCPL is deducted, the amount of wasted expenditure would stand
reduced to INR 176,65,42,535.28/-.
69. Mr. Dada has submitted that additionally, an amount of
INR 29,00,00,000/- paid by BCCI to KCPL towards central rights
income as well as any other income earned by KCPL pursuant to the
KCPL Agreement ought to have been deducted, in order to arrive at
the amount of compensation, if any, payable on account of wasted
expenditure.
70. Mr. Dada has submitted that the Award of INR
2,31,50,40,042/- as damages based on wasted expenditure has the
effect of putting KCPL in a significantly better position that it would
have been had the KCPL Agreement not been terminated.
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71. Mr. Dada has submitted that Clause 20 of KCPL
Agreement provides damages in excess of the limitation of liability
clause in the KCPL Agreement. He has submitted that Clause 20 of
KCPL Agreement, inter alia, limits the liability of BCCI to the sums
receivable under Clause 8.1 in the year, which amounts to INR
1,53,33,31,800/-, and further prohibits the parties from claiming
indirect loss or damages arising out of or in connection with KCPL
Agreement. This has been accepted by the learned Arbitrator in
Paragraph 8.2.2 of the Impugned Award as it has been concluded
that Clause 20 of KCPL-FA would not apply if the breach be
fundamental or repuditory.
72. Mr. Dada has submitted that the learned Arbitrator’s
reliance on the judgment of this Court in “Maharashtra State
Electricity Distribution Co. Ltd. v. DSL Enterprises Pvt. Ltd. “25 is
misplaced because the said judgment only deals with the issue on,
what is fundamental breach and whether it entitles the injured party
to repudiate the contract, however the said precedent does not deal
with the issue, whether the defaulting party’s liability for
fundamental breach can exceed the limitation of liability under the
25 2009 SCC OnLine Bom 413.
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contract.
73. Mr. Dada has submitted that even under English law, the
position is that a fundamental breach does not have the effect of
preventing the defaulting party from relying on an
exclusion/limitation clause in the contract. He has placed reliance
upon “Photo Production Ltd. v. Securicor Transport Ltd. “26. He has
submitted that in any event once it is established that no
fundamental breach has been committed by BCCI, Clause 20 of KCPL
Agreement would necessarily limit the damages awarded to the
Respondent to INR 1,53,33,31,800/-.
74. Mr. Dada has submitted that the Award of Damages by
the learned Arbitrator cannot be sustained as it is contrary to Clause
20 of KCPL Agreement. Respondent’s argument that the learned
Arbitrator split up the amount of INR 7000 million sought in Prayer
Clause (iii) is a mere afterthought, adopted after the Order dated 13th
April 2018 passed by this Court in the Section 36 Application filed by
BCCI, and is a telling attempt by KCPL to belatedly supplant reasons
to the Award, which is impermissible in law. He has placed reliance
26 (1980) 1 All ER 556 @ Pg. Nos. 287D-F, 288F-H, 289D-E, 294B-C, F, 295F, 298D-G.
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upon “Bhanumati Jaisukhbhai Bhuta v. Ivory Properties & Hotels
Private Limited and Anr.“27 in this context.
75. Mr. Dada has submitted that (i) the Award of interest is
contrary to the terms of the agreement; (ii) no basis for the Award of
Costs has been provided; and (iii) BCCI’s counter-claim has been
rejected summarily. He has submitted that though Clause 21.11 of
KCPL Agreement provides that “Interest shall be payable on all sums
due in accordance with this Agreement at the annual rate of four per
cent (4%) above the base lending rate from time to time of The State
Bank of India from the date the payment becomes due until payment
is received both before and after any judgment in respect of it”, the
learned Arbitrator has calculated interest at 4% above prime lending
rate. This is ex facie contrary to Clause 21.11 of KCPL Agreement.
76. Mr. Dada has submitted that in awarding of costs of INR
72,00,000/-, the learned Arbitrator has neither provided any
justification in relation thereto, nor has provided the
manner/computation basis for which such amount was arrived at.
He has submitted that the Award of Costs by the learned Arbitrator is
27 2020 SCC OnLine Bom 157, Paragraph 171.
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perverse and unsustainable as it based on no evidence and
unsupported by any reasons whatsoever.
77. Mr. Dada has submitted that the learned Arbitrator has
dismissed the counter-claim of BCCI summarily, inter alia, on the
basis of the learned Arbitrator’s perverse finding that BCCI had itself
committed breach of its obligations under the KCPL Agreement. He
has submitted that the issue of counter-claim ought to have been
considered on merits, in the absence of which the Impugned Award is
vitiated.
78. Mr. Dada has submitted that the learned Arbitrator’s
Award is perverse, not in consonance with the well-established
principles of judicial approach and unsustainable. He accordingly
has submitted that the Impugned Award warrants interference by this
Court under Section 34(2) of the Arbitration Act. He has submitted
that on the grounds set forth in the Petition and elucidated
hereinabove, the Impugned Award ought to be set aside.
79. Mr. T. N. Subramanian, learned senior Counsel appearing
for RSW in the RSW Petition has supported the submissions of Mr.
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Dada to the extent of the commonality of issues, which have been
determined in the Impugned Awards.
80. Mr. Subramanian has submitted that the reference to
Arbitration is invalid in view of Section 19(2)(a) of the Indian
Partnership Act, 1932. He has submitted that on 4th August 2012,
Respondent No. 1-RSW, on its letterhead, addressed the Notice
Invoking Arbitration to BCCI, i.e., invoking arbitration under Clause
22.2 of the RSW Agreement. He has submitted that it is an admitted
fact that Filmwaves Combing Pvt. Ltd. (“Filmwaves”), a constituent
of the Respondent No. 1, did not authorise/agree/join Respondent
No. 1 in the invocation of the arbitration proceedings. He has
referred to Section 19(2)(a) of the Partnership Act, which provides
that the “implied authority” of a partner does not empower him to
submit a dispute relating to the business of the firm to arbitration.
He has submitted that in the absence of any usage, custom or trade
(which does not exist), Respondent No. 1 could not have referred any
dispute to arbitration on behalf of the entire consortium, without
Filmwaves’ express authorisation. Thus, pursuant to Section 19(2)
(a) of the Partnership Act, the very invocation of arbitration
proceedings vide the Notice Invoking Arbitration is defective. He has
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submitted that such a defect goes to the root of the matter, cannot be
cured by subsequent acts and hence, vitiates the Award as being
patently illegal.
81. Mr. Subramanian has submitted that the crucial facts
make it abundantly clear that Filmwaves (i) did not join the
Respondent No. 1’s reference to arbitration; and (ii) did not expressly
authorize Respondent No. 1; and in fact, opted to pursue its claims
against BCCI independently. Filmwaves filed its independent suit
against BCCI. He has referred to those proceedings and has
submitted that the suit was finally withdrawn on 20th December
2013, i.e., more than a year after the reference to arbitration in
August 2012.
82. Mr. Subramanian has submitted that Filmwaves was
impleaded as the Respondent No. 2 in the arbitral proceedings, on
account of certain admitted differences between Filmwaves and other
members of the consortium. He has referred to the pleadings in this
context. He has submitted that Filmwaves was clearly not ad idem
with the Respondent No. 1 regarding the invocation of arbitration
against BCCI, and accordingly, BCCI filed the Section 16 Application.
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BCCI, in the Section 16 Application, submitted that it had been
misled into giving its consent for the reference of disputes to
arbitration on account of willful and deliberate misrepresentation
and/or suppression of material fact by the Respondent No. 1. The
learned Arbitrator, vide the Section 16 Order, rejected BCCI’s
contentions, inter alia, on the ground that Filmwaves ” does not
object to his non-joining in the reference, and he rather supports the
Claimants”.
83. Mr. Subramanian has submitted that the learned
Arbitrator’s finding that Filmwaves did not object to their non-joining
in the reference, is not based on material produced before the
learned Arbitrator, as Filmwaves did not, in any correspondence
during the arbitral proceedings or pleading therein, state that it does
not object to its non-joining in the reference.
84. Mr. Subramanian has submitted that pursuant to Section
19(2)(a) of Partnership Act, the reference to/invocation of arbitration
is bad in law, and thus warrants the setting aside of the resultant
award passed in such proceedings. He has placed reliance upon
“Maharashtra State Electricity Distribution Company Limited v.
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Godrej and Boyce Manufacturing Company Limited “28 and “J.J.L.B.
Engineers and Contractors v. Manmohan Harijinder & Associates &
Anr.“29.
85. Mr. Subramanian has submitted that it is the contention
of RSW that Filmwaves was a party to the arbitration agreement and
hence agreed to refer the dispute to arbitration. He has submitted
that Section 19(2)(a) of the Partnership Act which only applies
where there is a valid arbitration agreement, requires an express
authorization of all partners at the time of reference/submission of
the dispute to arbitration, i.e., at the time of notice invoking
arbitration, which was not present for Filmwaves.
86. Mr. Subramanian has relied upon the judgment of the
Punjab and Haryana High Court in ” Supreme Builders v. State of
Punjab & Anr., Arbitration Case No. 287 of 2016 (O&M) “30, which
holds at Paragraph 5 that, subject to any usage or custom of trade to
the contrary, “the mere existence of a valid arbitration agreement
between a firm and a third party does not entitle one or some of the
28 2019 SCC OnLine Bom 3920, Paragraphs 68, 97-99, 106 and 109-110.
29 2000 SCC OnLine Bom 670, Paragraphs 6-15.
30 2017:PHHC:114697.
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partners of the firm to submit the dispute to arbitration in accordance
with the arbitration agreement”. He has submitted that even in
“Maharashtra State Electricity Distribution Company Limited v.
Godrej and Boyce Manufacturing Company Limited ” (supra), there
was no dispute that the underlying contract contained an arbitration
agreement which had been consented to by all partners. However,
this Court still analysed whether all members had expressly
authorised the joint venture to submit the dispute to arbitration, and
upon finding none, set aside the Award.
87. Mr. Subramanian has submitted that in view thereof,
Filmwaves merely having signed the RSW Agreement, which
contained the arbitration clause, was insufficient to validate the
submission of disputes between the Respondent No. 1 and BCCI to
arbitration vide the Notice Invoking Arbitration.
88. Mr. Subramanian has submitted that the very invocation
of the arbitration proceedings vide the Notice Invoking Arbitration is
defective. He has submitted that such a defect goes to the root of the
matter and vitiates the Award as being patently illegal.
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89. Mr. Subramanian has referred to “Sanganer Dal and
Flour Mill v. F.C.I. and Others“31, which was cited on behalf of RSW.
He has submitted that in the cited case, the Respondents had filed an
Application under Section 20 of the Arbitration Act, 1940 before the
District Court for the Court to refer the said dispute to arbitration.
The Application had been filed by the Respondents and not by the
partnership firm, where Mr. Satya Narain, one of the partners, had
been expressly authorized to enter into the arbitration agreement.
He has submitted that this decision is not applicable to the present
Petition as Applications made under Sections 8 and 20 of the
Arbitration Act, 1940, operate in completely different and distinct
spheres. He has placed reliance upon “Jatinder Nath v. Chopra Land
Developers (P) Ltd.“32, wherein the Supreme Court has held that the
difference between Section 8 and Section 20 shows that the reference
flows from an agreement between the parties in the cases falling
under Section 8. In a proceeding under Section 8, disputes are
presented by the parties before the arbitrator, whereas in proceedings
under Section 20, the disputes are referred by the Court.
90. Mr. Subramanian has submitted that the Impugned
31 (1992)1 SCC 145.
32 (2007)11 SCC 453, Paragraph 17.
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Award having been passed in the arbitral proceedings commenced
pursuant to the defective Notice Invoking Arbitration, and hence
cannot be sustained and ought to be aside by this Court.
91. Mr. Subramanian has thereafter referred to the
Preliminary Issue B, i.e., Respondent No. 1 and its constituents are
not entitled to make any claims in view of the bar contained in
Section 69(3) of the Partnership Act. This was raised by BCCI before
the learned Arbitrator. He has submitted that as Respondent No. 1
was an unincorporated body and akin to an unregistered firm, the
present reference to arbitration on its behalf vide the Notice Invoking
Arbitration is invalid under Section 69(3) of the Partnership Act.
Further, Respondent No. 1 is not entitled to make any claims in view
of the bar contained in Section 69(3) of the Partnership Act. He has
referred to this provision, which provides for the effect of non-
registration. He has submitted that the learned Arbitrator in
rejecting BCCI’s preliminary objection, has rendered findings that are
contrary to the judgements of Supreme Court in “Jagdish Chander
Gupta v. Kajaria Traders (India) Ltd.“33 and “UP State Sugar
Corporation v. Jain Construction“34. He has submitted that the
33 1964 SCC OnLine SC 50, Pr. 5-10.
34 2004 7 SCC 332, Pr. 7.
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arbitral proceedings cannot be maintainable at the instance of an
unregistered firm, keeping with the mandatory provisions under
Section 69 of the Partnership Act and the learned Arbitrator has thus
erred in rejecting BCCI’s Section 16 Application.
92. Mr. Subramanian has without prejudice to the above
submissions, has submitted that the finding of learned Arbitrator that
the KCPL Agreement replaced the RSW Agreement and from 12 th
March 2011 onwards, the rights and obligations were to be worked
out between KCPL and BCCI, is wholly contrary to and in the teeth of
Clause 13.1 and Clause 21.15 of KCPL Agreement. He has referred to
Clause 21.15 of KCPL Agreement to submit that it is abundantly clear
that the RSW Agreement shall cease to have effect only upon BCCI
confirming in writing that (a) franchise fee being paid by KCPL in
respect of 2011; and (b) the bank guarantee deliverable by KCPL by
22nd March 2011, being duly and properly delivered to BCCI. He has
submitted that provision has been completely ignored by the learned
Arbitrator.
93. Mr. Subramanian has submitted that, given that KCPL
did not deliver the bank guarantee to BCCI, the RSW Agreement
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continued to remain in force. Consequently, as per Clause 8.4 of the
RSW Agreement, the Respondent No. 1 remained obligated to furnish
a fresh bank guarantee to BCCI, on or before 27 th March 2011. He
has submitted that by merely forbearing to sue, i.e., BCCI not
exercising its right or remedy under RSW and KCPL Agreements,
does not constitute a waiver of any breaches or default by RSW and
KCPL, in accordance with Clause 21.8 in both the RSW Agreement
and the KCPL Agreement.
94. Mr. Subramanian has submitted that the learned
Arbitrator’s finding that RSW bank guarantee should have been
returned once the franchise fee for 2011 was received by BCCI is
wholly contrary to the terms of the contract. He has submitted that
there is no inter-linkage between returning RSW bank guarantee and
KCPL’s obligation to pay the franchise fee. This finding is also
contrary to Clause 21.15 of KCPL Agreement. This is also supported
by KCPL’s letter dated 2nd May, 2011 where it requests BCCI to return
RSW bank guarantee on KCPL furnishing a bank guarantee. He has
submitted that the learned Arbitrator’s conclusion regarding the
invocation of RSW bank guarantee being illegal and unauthorised is
premised on the above flawed and incorrect reasons/inferences, and
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a misreading of the terms of RSW Franchisee Agreement and
ignoring the terms of KCPL Agreement, and hence, ought to be set
aside.
95. Mr. Subramanian has submitted that in rendering a
finding that the invocation of RSW bank guarantee is illegal and
unauthorised is perverse and contrary to the terms of RSW
Agreement and RSW bank guarantee. The learned Arbitrator has
ignored Respondent No. 1’s independent obligation to furnish the
bank guarantee on or before 27th March 2011, with the failure to do
so constituting an irremediable material breach of the RSW
Agreement. Further, the finding that RSW bank guarantee could not
have been invoked and encashed by BCCI proceeds on the erroneous
finding that Respondent No. 1 cannot be said to be in default for not
furnishing the bank guarantee for the 2012 IPL Season. He has
submitted that the liability of BCCI to furnish a bank guarantee for
each of the years of 2011-2019 (inclusive) would have been
discharged only on the satisfaction of the conditions set out in Clause
21.15 of KCPL Agreement. He has referred to the RSW Section 9
Order. This interpretation of the KCPL Agreement and the RSW
Agreement have been upheld by this Court in the RSW Section 9
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Order. He has submitted that though the above order being an
interim order rendering prima facie observations, is not binding on
the learned Arbitrator, or even on this Court, the learned Arbitrator,
ought to have at the very least, considered the said order in view of
BCCI’s submissions. This was clearly not done and no reasons have
been provided in the Impugned Award in relation to this aspect.
96. Mr. Subramanian has submitted that RSW was under an
obligation to furnish a bank guarantee on or before 27 th March 2011,
which admittedly it did not. BCCI was entitled to invoke RSW bank
guarantee and keep the amount of INR 153,34,00,000/- towards its
counterclaim amounting to INR 1,22,66,54,400/-. The learned
Arbitrator has summarily dismissed BCCI’s counterclaim stating that
the KCPL Agreement would govern the rights and obligations of the
parties, with effect from 12th March 2011 and therefore, this issue
had become “virtually redundant”. This finding is perverse and
cannot be sustained as it is wholly contrary to Clause 21.15 of KCPL
Agreement.
97. Mr. Subramanian has submitted that the learned
Arbitrator’s finding that encashment of RSW bank guarantee amounts
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to unjust enrichment is contrary to terms of the RSW Agreement and
hence perverse. The said finding is not supported by any reasons and
at best is based on the patently illegal/perverse finding that the
encashment was illegal and unauthorised.
98. Mr. Subramanian has submitted that Respondent No. 1
has erroneously attempted to rely on the latter half of Clause 21.15,
to contend that the RSW Agreement was kept alive for the limited
purpose of safeguarding BCCI from any breach by Respondent No. 1
of the RSW Agreement. He has submitted that the above cannot be
countenanced in view of Respondent No. 1 not being permitted to
raise this contention for the first time at the stage of Section 34
proceedings. Further, Respondent No. 1 is not permitted to make an
attempt to supplant reasons, when the learned Arbitrator has arrived
at his conclusions. Nowhere in the Impugned Award has the learned
Arbitrator analysed Clause 21.15 of KCPL Agreement, let alone stated
the purported purpose for the continued operation of the RSW
Agreement.
99. Mr. Subramanian has submitted that it is not permissible
for an Arbitrator or this Court, to add additional
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obligations/requirements, which are not originally spelt out under
the contract, as the same will amount to re-writing the same. In the
same breath, it is submitted that the jurisdiction of the learned
Arbitrator is limited only to the terms of the contract, and nothing
more. He has submitted that it cannot be the case that BCCI
reminding KCPL to furnish a bank guarantee amounted to giving a
go-bye to the deadline for furnishing the bank guarantee, and not
giving a reminder to the Respondent No. 1 amounts to a breach of its
obligations.
100. Mr. Subramanian has supported the submissions of Mr.
Dada on the damages and interest and costs awarded, being perverse
and liable to be set aside.
101. Mr. Subramanian has submitted that the learned
Arbitrator has failed to consider the counter-claim of BCCI and has
rejected the counter-claim in a summary manner, which is bad in law.
He has submitted that admittedly, KCPL/Respondent No. 1 never
submitted the bank guarantee and accordingly an amount of INR
1,22,66,54,400/- remained due and payable by Respondent No. 1, in
view of the remaining 8 installments of the franchise consideration
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payable each year. The learned Arbitrator ignored the fact that BCCI
was entitled to claim the said amount from the Respondent as the
amount reflects the sum that BCCI would have received if RSW
would not have committed an irremediable breach.
102. Mr. Subramanian has submitted that non-consideration
of the Counter Claim goes to the root of the matter and makes the
Impugned Award liable to be set aside. Mr. Subramanian has
submitted that the Impugned Award warrants interference by this
Court under Section 34(2) of the Arbitration Act. He has submitted
that on the grounds set forth in the Petition and elucidated
hereinabove, the Impugned Award ought to be set aside.
103. Mr. Vikram Nankani, learned senior Counsel appearing
on behalf of KCPL and RSW in the above Petitions, has submitted that
none of the grounds, which have been raised in the above Petitions,
pass any muster under Section 34 of the Arbitration Act.
104. Mr. Nankani has submitted that the fundamental basis on
which BCCI terminated KCPL-FA, as set out in BCCI’s Termination
Letter dated 19th September 2011, was on account of “…KCPL’s and
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RSW’s (alleged) failure to provide the said bank guarantee…”, which
failure, according to BCCI, constituted an “irremediable material
breach” of both, KCPL-FA and RSW-FA.
105. Mr. Nankani has referred to the statement of claim of
KCPL, which inter alia impugns BCCI’s termination of KCPL-FA, as
being premature and wrongful, which wrongful termination
resultantly amounted to BCCI being in repudiatory breach thereof.
He has submitted that BCCI did not insist on the furnishment of the
bank guarantee on or before 22nd March 2011 and in fact, kept
granting extensions for the same, due to various unresolved issues in
relation to BCCI’s failure to fulfill its obligations under the Invitation
to Tender dated 2nd March 2010 (“ITT”) and KCPL-FA. These
unresolved issues included: i) the unilateral reduction in the number
of matches; (ii) failure to provide a Stadium at Kochi and/or a
suitable “alternative”; and (iii) failure to approve the transfer of
shares of Vivek Venugopal.
106. Mr. Nankani has submitted that the parties however
continued to act on the basis that KCPL-FA was valid and subsisting
despite the fact that KCPL did not furnish the bank guarantee on or
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before 22nd March 2011. This is evinced by the fact that payments
were made by BCCI to KCPL under Article 9.3(a) of KCPL-FA in April
and July 2011 respectively coupled with the fact that BCCI accepted
payments made by KCPL towards Franchise Fee for the 2011 season
on 18th April 2011 and 29th April 2011 respectively.
107. Mr. Nankani has submitted that at no point of time
between April 2011 and 17th September 2011, i.e., the date of BCCI’s
wrongful termination of KCPL-FA, did BCCI claim any breach, much
less an irremediable breach by KCPL of KCPL-FA. BCCI did not even
call upon KCPL to furnish the bank guarantee during this period.
108. Mr. Nankani has submitted that BCCI waived the
requirement under Clause 8.4 of KCPL-FA for furnishment of the
bank guarantee for the 2012 season on or before 22nd March 2011.
BCCI in its Statement of Defense, inter alia, conceded that it
acquiesced to the request for extension of the deadline.
109. Mr. Nankani has submitted that BCCI’s invocation of the
bank guarantee furnished by RSW for securing payment of the
Franchise Fee for the 2011 season, which Franchise Fee had
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admittedly been paid by KCPL on the basis that KCPL had committed
an “irremediable material breach” of KCPL-FA by not furnishing the
bank guarantee for the 2012 season on or before 22nd March 2011, is
a malafide and premeditated act on the part of BCCI. He has
submitted that at no point of time did BCCI call upon RSW to renew
the said bank guarantee or contend that RSW was in breach of RSW-
FA, particularly Clause 8 thereof.
110. Mr. Nankani has submitted that BCCI’s termination of
KCPL-FA was wrongful and malafide. It constituted a repudiatory
and fundamental breach of KCPL-FA entitling KCPL to accept the
same and sue for damages, as it has done.
111. Mr. Nankani has submitted that BCCI’s endeavour for the
bulk of the hearings before this Court, has been to impress upon this
Court that the unresolved issues between BCCI and KCPL, which
included: (i) the unilateral reduction in the number of matches; (ii)
failure to provide a Stadium at Kochi or an appropriate “alternative”;
and (iii) failure to approve the transfer of shares of Vivek
Venugopal, were infact the ‘fundamental breaches’ complained of by
KCPL which lay at the heart of the dispute between the parties. He
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has submitted that this contention is utterly misconceived. He has
referred to Paragraph 18 of KCPL’s Statement of Claim, wherein it is
stated that whilst the issues were being discussed between the
parties, they continued to remain outstanding and unresolved.
Therefore, BCCI did not insist on the bank guarantee being provided
by KCPL by 22nd March 2011 but infact gave a go by to that date.
112. Mr. Nankani has submitted that KCPL’s challenge to
BCCI’s termination of KCPL-FA was entirely premised on BCCI’s
wrongful invocation of the bank guarantee, which in turn amounted
to BCCI being in repudiatory breach of KCPL-FA.
113. Mr. Nankani has referred to Paragraph 7.6.13 of the
impugned KCPL Award, wherein the learned Arbitrator has also
observed that “BCCI was holding KCPL guilty of breach of agreement
on account of failure of [the latter] to furnish the bank guarantee. It
has already been held that time of furnishing the bank guarantee was
extended from time to time and abruptly brought to an end without
giving a reasonable time for performance, apart from termination of
the agreement having been done without giving 30 days notice or
even a reasonable notice to remedy the so-called breach by KCPL.”
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114. Mr. Nankani has submitted that a conjoint reading of
Causes 10(b) and 10(c) of Schedule 5 to RSW-FA makes clear that
RSW-BG was to remain in force upto 27th March 2011, with a claim
period of six months thereafter, i.e., upto 27th September 2011.
115. Mr. Nankani has submitted that BCCI decided to
schedule the commencement of the 2011 season on 8th April 2011,
rather than sometime in early March 2011, as was done for, inter
alia, the 2010 season. It was solely for this reason that the bank
guarantee issued by RSW did not end up covering the entirety of
KCPL’s obligation under Clause 8.1(a) of KCPL-FA. Had the 2011
season commenced in or around early March 2011, RSW-BG would
have covered the entirety of KCPL’s obligation under Clause 8.1(a) of
KCPL-FA.
116. Mr. Nankani has submitted that BCCI invoked the bank
guarantee issued by RSW on 17th September 2011, i.e., 10 days prior
to the expiry of six month claim period under Clause 10(c) of
Schedule 5 to RSW-FA. He has submitted that although BCCI
invoked RSW-BG by its letter dated 17th September 2011, it curiously
called upon KCPL to comply with its obligations under Clause 8.4 of
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KCPL-FA. BCCI did not, at any point of time call upon RSW to renew
the bank guarantee issued by it and/or contend that RSW was in
breach of RSW-FA, particularly Clause 8 thereof.
117. Mr. Nankani has submitted that extensions for the
furnishment of the bank guarantee kept being agreed upon for the
reason that there were various unresolved issues as between KCPL
and BCCI including that of: the stadium; reduction in match fee and
number of games; Mr. Lalit Modi’s tweets etc. Secondly, BCCI has
itself on record, inter alia, accepted that “…all the arrangements for
procuring the requisite bank guarantee were already in place. All
that KCPL needed to do was address a letter to the bank asking for
the issuance of the said bank guarantee….”. Thus, BCCI contradicts
its own argument that KCPL was not in a position to furnish the bank
guarantee by 22nd March 2011. In so doing, BCCI fortifies KCPL’s
argument that all that remained for the purposes of furnishing the
said bank guarantee (for the 2012 season) was merely a “ministerial
act”.
118. Mr. Nankani has submitted that BCCI’s next contention,
in this regard, to the effect that the deadline for furnishing the bank
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guarantee cannot be deemed to be extended absent any variation in
writing to Clause 8.4 of KCPL-FA, is equally untenable. BCCI is
estopped by its own conduct from contending that the deadline for
furnishing the bank guarantee can only be varied/extended in
writing. Amongst other concessions, BCCI is on record to say that it
“…acquiesced to the request for extension of the deadline….”. BCCI
then contends that on KCPL’s own showing, BCCI acceded to KCPL’s
request for 3 day extension to furnish the bank guarantee, which fact
is borne out from part of Paragraph 24 of Mukesh Patel’s (CW-3)
Examination-in-Chief.
119. Mr. Nankani has submitted that this contention is
canvassed on a complete misreading of Mukesh Patel’s deposition by
relying on the phrase “in the event they failed to provide the bank
guarantee within three working days” in isolation. A proper reading
of the excerpt clearly suggests that BCCI’s “accession”, if any or at all,
is contingent on KCPL’s “legal right to seek legal recourse”. Notably,
Mukesh Patel was not even cross-examined on this part of his
deposition. His testimony on this aspect, therefore, remains
untested.
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120. Mr. Nankani has submitted that in any event, extensions
of time in regard to, inter alia, furnishment of a bank guarantee not
only have to be reasonable, they also have to be unconditional. He
has submitted that no reasonable time was given by BCCI for KCPL to
furnish the bank guarantee at the time of fixing the deadline for
furnishing the same. In the pleadings, and evidence of Sunder
Raman (BCCI’s witness), as well as the correspondence addressed by
its Advocates, BCCI has unequivocally admitted (notwithstanding its
attempt during the hearings to disown the said admissions) that the
time for submission of the bank guarantee was indeed extended by it
after 22nd March 2011 and that the deadline of 17th September 2011
was set by it on 17th September 2011 itself.
121. Mr. Nankani has submitted that by invoking the bank
guarantee issued by RSW on 17th September 2011, BCCI has unjustly
enriched itself to the extent of INR 153 crores at the cost of RSW.
Having done so and in turn having accelerated the performance of
KCPL-FA in respect of the 2012 season, it was incumbent on BCCI to
perform its obligations under the KCPL-FA vis-à-vis the 2012 season,
inter alia, by not depriving KCPL from participating in the 2012
season. Having failed to perform its obligations under the KCPL-FA
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and by having wrongfully terminated the same, BCCI is in
repudiatory breach thereof.
122. Mr. Nankani has submitted that BCCI had no right to
unilaterally retain and appropriate the said amount of INR 153
crores, absent an adjudication in respect thereof, to the effect that it
suffered damages to that extent. Admittedly, no claim and/or
counter-claim to this effect was filed by BCCI.
123. Mr. Nankani has submitted that BCCI’s reliance in regard
to the foregoing on the Order dated 21st September 2011 passed by
this Court is misplaced. The observations and findings contained
therein were only prima facie and made in an Application for ad-
interim reliefs, whereby KCPL sought to restrain BCCI from
encashing the bank guarantee issued by RSW. Quite apart from the
fact that prima facie findings in an interlocutory order do not bind
this Court, the principles applicable in an Application of this nature
stand on an entirely different footing.
124. Mr. Nankani has submitted that though KCPL-FA has not
furnished the bank guarantee on or before 22 nd March 2011 as per
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Clause 8.4 of KCPL-FA, BCCI did not terminate the KCPL-FA on expiry
of 22nd March 2011 and instead opted to perform the KCPL-FA. BCCI
allowed KCPL to play the matches for the 2011 season from 8th April
2011 to 15th May 2011; BCCI paid KCPL its share of the Franchise
Fee between June and July 2011; BCCI and KCPL continued to deal
with the unresolved issues, particularly with regard to Home
Stadium and correspondence between BCCI and KCPL shows that
there were discussions in respect of various unresolved issues
between April and August 2011, but the same remained inconclusive.
125. Mr. Nankani has referred to the material events, which
occurred between 17th September 2011 and 19th September 2011.
He has submitted that these material events show that post the
expiry of 22nd March 2011, the parties did not by mutual consent
agree to or fix any time for furnishing the bank guarantee, as
required under Clause 8.4 of KCPL-FA. He has submitted that what
happened was the unilateral fixation of time by BCCI. No reasonable
notice was given by BCCI to KCPL. The notice for furnishing the
bank guarantee on the same day within two working hours has been
held to be unreasonable. He has submitted that KCPL was at all
times ready and willing to furnish the bank guarantee and equally so
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on 17th September 2011, by seeking reasonable time of three working
days to do so. BCCI once again unreasonably rejected the request
and sought to use the request made by KCPL to pressurize KCPL in
giving up its claim against BCCI.
126. Mr. Nankani has submitted that the learned Arbitrator
has considered all the relevant facts, and on true and correct
appreciation of the evidence on record, including the depositions of
Mr. Saket Mehta and Mr. Mukesh Patel and the evidence of Mr.
Sunder Raman. The conclusion of the learned Arbitrator is also in
consonance with the principles of Section 55 of the Contract
Act,1872. He has submitted that the findings of learned Arbitrator
on these issues and the consequential wrongful termination by BCCI
do not call for interference under Section 34 of the Act.
127. Mr. Nankani has referred to Clause 21.15 of KCPL-FA.
He has submitted that BCCI sought to justify invocation of the bank
guarantee issued by RSW by relying on the said clause. He has
submitted that the plain reading of said clause shows that KCPL
would be liable for non-compliance of RSW’s obligations under RSW-
FA. Indisputably RSW-FA covered only the 2011 Season. All dues in
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respect of the 2011 Season were paid to BCCI. There is no allegation
of breach under RSW-FA. Hence, Clause 21.15 is of no assistance to
BCCI. He has submitted that in any event the interpretation of KCPL-
FA and RSW-FA lies exclusively within the domain of the learned
Arbitrator.
128. Mr. Nankani has submitted that the damages awarded to
KCPL are reasonable and calls for no interference. He has referred to
Prayer Clause (iii) of the Statement of Claim, wherein KCPL sought
an amount of INR 7000 million “…or such other amount as may be
quantified…” towards “losses/damages” on account of BCCI’s
repudiatory breach. Quite clearly, therefore, KCPL has not restricted
its claim for damages to any particular type of damages.
129. Mr. Nankani has submitted that KCPL’s claim for
damages merely includes a claim for loss of business opportunity and
of profits, i.e., general damages. Such an inclusive claim cannot be
read in the manner, as contended by BCCI so as to proscribe KCPL
from being awarded any additional type of damages.
130. Mr. Nankani has submitted that at Prayer Clause (iv) of
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its Statement of Claim, KCPL has made a claim for the expenditure
incurred by it. Whilst this claim was in the alternative, the learned
Arbitrator has, in addition to having noted that such claim was made
in the alternative, inter alia, observed that “In support of the
expenditure incurred, voluminous documents have been filed which
have been supported and substantiated by the evidence of Saket
Mehta …”. He has submitted that having considered such
“voluminous documents” and the evidence of Saket Mehta on this
aspect, the learned Arbitrator, in his discretion, deemed it fit to grant
KCPL’s alternate claim for expenditure incurred, as well. This claim
was taken into consideration by the learned Arbitrator upon him
having exercised his discretion to adopt his own approach for the
purposes of computing the damages payable by BCCI to KCPL.
Indeed, as noted in the Award, the consideration by the learned
Arbitrator of what was styled by KCPL as a claim, in the alternative,
for expenditure incurred, was in furtherance of having resorted to
“another method available” for the purposes of computing the
damages suffered by KCPL, instead of the methodologies adopted by
both parties’ experts. On this basis, the learned Arbitrator ultimately
found that KCPL is entitled to: (i) General damages, i.e. loss of
profits/business opportunity, to the tune of INR 153,33,31,800/-; and
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(ii) Special damages, i.e. expenditure incurred, to the tune of INR
231,50,40,042/-, together with interest at 18% per annum from the
date of termination, i.e. 19th September 2011, upto the date of the
Award.
131. Mr. Nankani has submitted that the learned Arbitrator did
not deem it fit to consider and/or grant KCPL’s (primary) claim for
general damages to the tune of INR 700 crores. Having found, by
adopting a “rough and ready” method, that “…investors in franchisee
expect to gain at least 50% of the franchisee figures as net
revenue…”, the learned Arbitrator held that KCPL was duty-bound to
mitigate its damages. On this basis, 50% of the annual Franchise
Fee for 2 years, as against the entire term of KCPL-FA, was awarded
towards loss of profits/business opportunity, i.e. general damages.
Having granted ‘general damages’ by adopting its own approach and
on a rough and ready basis to the limited extent of approximately
INR 153 crores (as against the claim of INR 700 crores), the learned
Arbitrator also deemed it fit to grant ‘special damages’ to KCPL. For
this purpose, the learned Arbitrator decided to treat KCPL’s alternate
claim for expenditure incurred as being one for ‘Special Damages’,
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having considered and appreciated the “…voluminous documents…”,
which included invoices, vouchers, receipts, bank statements, and
ledger accounts that were on record, which were “…supported and
substantiated by the evidence of Saket Mehta…”.
132. Mr. Nankani has submitted that BCCI assails the learned
Arbitrator’s computation of general damages on the basis that
despite the learned Arbitrator having observed that it would meet the
ends if 25% of the Franchise Fee of two years is granted to KCPL, he,
instead, goes on to award an amount of 50% of the Franchise Fee of
two years. He has submitted that this contention is a desperate
attempt at taking advantage of what is, in fact, a typographical
error. A conjoint reading of Paragraphs 8.1.20 and 8.1.21 of the
Award puts this issue into perspective. The Award of ‘General
Damages’ was to the tune of 50% of the annual Franchise Fee
(quantum/measure) for a period of 2 years (period). Accordingly,
the featuring of 25% (instead of 50%) at Paragraph 8.1.21 is
nothing but a typographical error, of which, capital is sought to be
made by BCCI.
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133. Mr. Nankani has submitted that BCCI’s contention that
KCPL is somehow precluded from terming the aforesaid to be a
typographical error since it did not prefer an Application under
Section 33 of the Act applies equally to it. The ambiguity, if any, cuts
both ways. Insofar as KCPL is concerned, 50% of the Franchise Fee
for 2 years is what should have been granted and, indeed, what was
granted.
134. Mr. Nankani has submitted that Prayer Clause (iii) of the
Statement of Claim is not restricted to any particular type of
damages. It is, in fact, wide enough to cover any type of damages. It
follows that the grant of damages, whether general or special, in
favour of KCPL, is and can only be in terms of Prayer Clause (iii).
The grant of such relief cannot be construed pedantically, as
canvassed by BCCI, to suggest that the learned Arbitrator simplicitor
granted both, the primary [Prayer Clause (iii)] and alternate [Prayer
Clause (iv)] reliefs sought by KCPL.
135. Mr. Nankani has submitted that it is trite that the manner
in which damages are to be computed/quantified, including the
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methodology adopted for such computation/quantification, falls
entirely within the domain of the arbitral tribunal. He has placed
reliance upon “McDermott v. Burn Standard“35.
136. Mr. Nankani has submitted that equally trite is the
proposition that Courts and arbitral tribunals have the power to
mould final reliefs. He has placed reliance upon ” Samir Narain
Bhojwani v. Aurora Properties“36. He has submitted that it has also
been held that Courts and arbitral tribunals can resort to “honest
guesswork”/”rough and ready methods” in computing damages
where: (i) no specific evidence of loss suffered is led, but it can be
inferred that loss has been suffered by reason of breach; or (ii) the
extent of loss suffered is difficult to quantify and/or prove; or (iii) the
breaching party leads no specific evidence to show that no loss
was suffered by the party complaining of such breach. He has in
this context placed reliance upon ” Construction and Design Services
v. DDA”37 and “Cobra v. HVPNL“38.
35 (2006) 11 SCC 181, Paragraphs 103-110.
36 (2019) 17 SCC 203, Paragraph 24.
37 (2015) 14 SCC 263, Paragraphs 14-18.
38 2024 SCC Online Del 2755, Paragraphs 32-35.
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137. Mr. Nankani has submitted that the learned Arbitrator has
comprehensively considered the expert evidence led. His
observations in respect thereof are at Paragraphs 8.1.9 to 8.1.13 of
the Award. He has further submitted that the learned Arbitrator
furnishes reasons for not going by the expert evidence at Paragraph
8.1.14 of the Award. He has submitted that the learned Arbitrator is,
in any event, as a matter of law, not bound by such expert evidence,
inter alia, in terms of Section 19 of the Act.
138. Mr. Nankani has submitted that this is not a case where
loss of profits and wasted expenditure have, stricto sensu, been
claimed concurrently. This is a case where the learned Arbitrator, in
his discretion, decided to factor in the expenditure incurred by KCPL
as being the ‘special damages’ suffered by them, in addition to
awarding General Damages (loss of profits) to the extent of 50% of
the Franchise Fee of 2 years, by having adopted a ‘rough and ready
method’. Be that as it may, the grant of special damages is not
unknown to law. He has placed reliance upon the excerpt of Pollock &
Mulla, 14th Edn., which inter alia states that “However a mixed claim
for capital expenditure and for loss of profits (seeking reliance losses
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and expectation losses) may lie in appropriate cases.” He has also
placed reliance upon the judgment of the King’s Bench in ” Victoria
Laundry v. Newman Industries”39 , wherein it is inter alia held that
“But to this knowledge, which a contract-breaker is assumed to
actually possesses it or not, there may have to be added in a
particular case knowledge which he actually possesses of special
circumstances outside the “ordinary course of things,” of such a kind
that a breach in those special circumstances would be liable to cause
more loss. Such a case attracts the operation of the “second
rule” so as to make additional loss also recoverable.”
139. Mr. Nankani has submitted that BCCI has treated this
Court’s jurisdiction under Section 34 of the Act much like a First
Appeal. Through its arguments, which spanned across a series of
hearings/sessions, BCCI has implored this Court to: (i) venture into a
fact-finding exercise by revisiting and re-appreciating the record, on
the misplaced pretext that the learned Arbitrator has ignored vital
evidence; and (ii) accept competing interpretations of various clauses
of the agreements between the parties, by invoking, albeit baselessly,
the ground of perversity.
39 [1949] K.B. 528 at P. 539.
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140. Mr. Nankani has submitted that the jurisdiction conferred
on this Court under Section 34 of the Act is very limited. He has
relied upon the judgment of Supreme Court in ” Associated Builders
v. Delhi Development Authority“40 in this context.
141. Mr. Nankani has submitted that the manner in which
BCCI has delved into the merits of the dispute, notwithstanding
the fact that BCCI’s case is not premised on the Award being in
conflict with the public policy of India, is in the teeth of the scope of
the grounds contained in Section 34(2)(a) of the Act.
142. Mr. Nankani has submitted that the Award is a reasoned
one, and deals with the entirety of what was a voluminous record.
Evidence of the parties and testimony of all witnesses has been duly
considered. BCCI’s dissatisfaction as to the findings rendered in
respect of the evidence and/or the merits cannot be a ground to
assail the same. He has placed reliance upon the judgment of
Supreme Court in “Swan Gold Mining Ltd. v. Hindustan Copper
Ltd.“41, wherein it is held that ” It is equally well settled that the
40 (2015)3 SCC 49, Paragraph 17.
41 (2015)5 SCC 739, Paragraph 12.
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arbitrator appointed by the parties is the final judge of the facts.
The finding of facts recorded by him cannot be interfered with on
the ground that the terms of the contract were not correctly
interpreted by him.” He has submitted that this view was upheld
and applied by the Supreme Court in ” Maharashtra State Electricity
Distribution Co. Ltd. v. Datar Switchgear Ltd. & Ors.“42.
143. Mr. Nankani has also placed reliance upon the judgment
of Supreme Court in “MMTC Ltd. v. Vedanta Ltd.“43, wherein it is
held that ” the conduct of parties and correspondence exchanged
would also be relevant factors and it is within the A rbitrator’s
jurisdiction to consider the same.”
144. Mr. Nankani has also placed reliance upon the judgment
of Supreme Court in “Atlanta Limited v. Union of India“44, wherein it
is held that “It is also a well-settled principle of law that
challenge cannot be laid to the Award only on the ground that the
Arbitrator has drawn his own conclusion or failed to appreciate the
relevant facts. Nor can the Court substitute its own view on the
42 (2018)3 SCC 13, Paragraph 51.
43 (2019)4 SCC 163, Paragraph 16.
44 (2022)3 SCC 739, Paragraph 19.
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conclusion of law or facts as against those drawn by the Arbitrator,
as if it is sitting in appeal.” Further it is held that “As long as the
Arbitrator has taken a possible view, which may be a plausible
view, simply because a different view from that taken in the Award,
is possible based on the same evidence, would also not be a ground
to interfere in the Award. …”.
145. Mr. Nankani has submitted that on the finality to be
afforded to the findings returned by an arbitrator on aspects
concerning interpretation of contracts, the Supreme Court in “UHL
Power Co. Ltd. v. State of H.P.“45, inter alia, placed reliance upon its
decision in “Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd.“46,
wherein it was held that ” It has also been held time and again by
this Court that if there are two plausible interpretations of the terms
and conditions of the contract, then no fault can be found, if the
learned Arbitrator proceeds to accept one interpretation as against
the other.” The Supreme Court has held that “If the Courts were to
interfere with the Arbitral Award in the usual course on factual
aspects, then the commercial wisdom behind opting for alternate
45 (2022)4 SCC 116, Paragraph 18.
46 (2019)20 SCC 1.
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dispute resolution would stand frustrated. ”
146. Mr. Nankani has submitted that the grounds of patent
illegality and perversity have been invoked by BCCI on the basis of
imploring this Court to embark on a fact-finding exercise by
undertaking a long-drawn analysis of the pleadings and evidence.
Such an approach has been deprecated by the Supreme Court in
147. Mr. Nankani has accordingly submitted that the
captioned Petitions, therefore, warrant dismissal, inter alia, in terms
of the catena of authorities circumscribing the remit of a Court’s
jurisdiction under Section 34 of the Act.
148. Having considered the submissions, BCCI has in both
KCPL’s Petition and RSW’s Petition drawn emphasis on the fact that
the unresolved issues between BCCI and KCPL which included (i)
The Tweets of Lalit Modi; (ii) Failure to provide a Stadium at Kochi
or an appropriate “alternative”; (iii) the unilateral reduction in the
number of matches and (iv) failure to approve the transfer of shares
47 (2024)1 SCC 479, Paragraph 57.
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of Vivek Venugopal were infact the ‘fundamental breaches’ as
complained of by KCPL and which lay at the heart of the dispute
between the parties. However, BCCI overlooks KCPL and RSW’s
contention in the statement of claim viz. that the aforementioned
issues were being discussed between the parties and continued to
remain outstanding and unresolved. Further, it was the contention
of KCPL and RSW that, BCCI did not insist on the bank guarantee
being provided by KCPL by 22 nd March, 2011, but infact, gave go by
to that date. This has been specifically pleaded in Paragraph 18 of
KCPL’s statement of claim.
149. It is pertinent to note that the learned Arbitrator in the
impugned KCPL Award and RSW Award has considered the
aforementioned issues as being the reason for BCCI not insisting on
the furnishing of the bank guarantee by KCPL by 22 nd March, 2011.
This finding was in the perspective of KCPL and RSW’s challenge to
BCCI’s termination of the KCPL-FA being entirely premised on
BCCI’s wrongful invocation of the bank guarantee, which in turn,
amounted to BCCI being in repudiatory breach of the KCPL-FA.
150. It is not for this Court to go into whether the learned
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Arbitrator was right in considering the aforementioned issues as
fundamental breaches as this was not the basis for the claim of
KCPL and RSW, namely the wrongful invocation of the bank
guarantee which amounted to BCCI being in repudiatory breach of
KCPL-FA having been upheld. The arguments of BCCI have been
centered upon the aforementioned issues having been held to be
fundamental breaches contrary to the evidence on record. This
Court exercising jurisdiction under Section 34 of the Arbitration
Act cannot act as a Court of First Appeal. A review on merits is
largely proscribed. This has been held by the Supreme Court in
Associated Builders (supra) at Paragraph 17. BCCI has called upon
this Court to venture into a fact finding exercise by revisiting and
re-appreciating the record and accepting competing interpretations
of the various clauses of the agreements between the parties, by
invoking the ground of perversity. The jurisdiction of this Court
under Section 34 of the Arbitration Act is very limited. BCCI’s
endeavour to delve into the merits of the dispute, is in teeth of the
scope of the grounds contained in Section 34 of the Act. BCCI’s
dissatisfaction as to the findings rendered in respect of the evidence
and/or the merits cannot be a ground to assail the Award.
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151. It has been held by the Supreme Court in a catena of
judgments that the Arbitrator appointed by the parties is the final
judge of the facts and the finding of facts recorded by him cannot
be interfered with on the ground that the terms of the contract
were not correctly interpreted by him. These judgments of the
Supreme Court have been relied upon on behalf of the KCPL and
RSW and which include Swan Gold Mining Ltd. (supra) at
Paragraph 12, Maharashtra State Electricity Distribution Co. Ltd.
(supra) at Paragraph 51, MMTC Ltd. (supra) at Paragraph 16,
Atlanta Limited (supra) at Paragraph 19 and UHL Power Co. Ltd.
(supra) relying upon Dyna Technologies (P) Ltd. (supra).
152. The Supreme Court in a recent decision in Reliance
Infrastructure (supra) has held in Paragraph 57 as under :-
“57. As noticed, arbitral award is not an
ordinary adjudicatory order so as to be
lightly interfered with by the Courts under
Sections 34 or 37 of the Act of 1996 as if
dealing with an appeal or revision against a
decision of any subordinate Court. The
expression “patent illegality” has been
exposited by this Court in the cases
referred hereinabove. The significant aspect
to be reiterated is that it is not a mere
illegality which would call for interference,90/107
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obviously signifies that it ought to be
apparent on the face of the award and not
the one which is culled out by way of a
long-drawn analysis of the pleadings and
evidence.
153. Thus, it is not open for this Court to revisit the findings
of facts arrived at by the Arbitral Tribunal after the appreciation of
evidence and documents on record or to interfere with the Award
on the ground that the terms of the contract were not correctly
interpreted by the learned Arbitrator.
154. The learned Arbitrator has in the impugned KCPL and
RSW Awards decided the core issue, viz., whether BCCI has
wrongfully invoked the bank guarantee furnished by RSW and
whether this amounted to a repudiatory breach of KCPL-FA, by
considering the material facts and documents on record as well as
the evidence recorded. The learned Arbitrator has further
considered whether the non furnishing of bank guarantee by KCPL
by 22nd March, 2011 constitutes an “irremediable material breach”
of the both KCPL and RSW-FA. There is a finding in the impugned
Awards that the material on record militated against a finding of
“irremediable material breach”.
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155. It has been duly considered by the learned Arbitrator
that BCCI had at no point of time between April, 2011 and 17 th
September, 2011, when BCCI terminated the KCPL-FA, claimed any
breach, much less an irremediable breach by KCPL of the KCPL-FA by
non-furnishing of the bank guarantee. It is pertinent to note that
BCCI did not even call upon KCPL to furnish the bank guarantee
during this period. There were various extensions granted which the
learned Arbitrator has held were due to the unresolved issues as
aforestated. There were payments made by BCCI to KCPL under
Article 9.3 (a) of the KCPL-FA in April and July, 2011 respectively.
This is coupled with the fact that BCCI accepted payments made by
KCPL towards the Franchise Fee for the 2011 season on 18 th April,
2011 and 29th April, 2011 respectively. These payments were made
by the KCPL and received by BCCI after the stipulated deadline for
furnishing of the bank guarantee i.e. on 22 nd March, 2011. Thus,
based on these material facts and documents on record, the finding
of the learned Arbitrator that BCCI waived the requirement under
Clause 8.4 of the KCPL-FA for furnishment of bank guarantee for
2012 season on or before 22 nd March, 2011 cannot be faulted.
Further, BCCI has on record conceded that it acquiesced to the
request for extension of the deadline.
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156. It is the contention of BCCI that Clause 8.4 of the KCPL-
FA requires that any variation of the terms of KCPL-FA, is to be in
writing. Further, it is the contention of BCCI that mere forbearance
on the part of BCCI to sue does not constitute a waiver in terms of
Clause 21.8 of the KCPL-FA. These contentions are untenable in view
of the conduct of BCCI which was to acquiesce in the request of
KCPL for extension of the deadline for furnishing of the bank
guarantee and thus BCCI is estopped by such conduct from making
such contentions.
157. BCCI had not terminated the KCPL-FA on expiry of
deadline for furnishing of bank guarantee i.e. 22 nd March, 2011 but
had as aforementioned, opted to perform the KCPL-FA. Mr. Sunder
Raman (RW1) of BCCI had all of sudden on 17 th September, 2011
called upon Mr. Saket Mehta (CW1) of KCPL to furnish the bank
guarantee on that very day. It is pertinent to note that 17 th
September, 2011 was a Saturday. Mr. Sunder Raman made the call to
Mr. Saket Mehta at 11.00 a.m., though the banks were opened only
until 1.00 pm. This had given KCPL only two hours to furnish the
bank guarantee. Mr. Mukesh Patel (CW3) upon having been
informed by Mr. Saket Mehta of the demand of BCCI called the then
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BCCI President Mr. Shashank Manohar and had requested for time of
three working days to be given to KCPL to furnish the bank
guarantee. This was responded to by Mr. Shashank Manohar
agreeing to give time of three working days to KCPL for furnish the
bank guarantee provided that the KCPL waives all its claims against
BCCI. This is stated in the Examination in Chief of Mr. Mukesh Patel
(CW3) at Paragraph 24. This was followed by a formal written
request of KCPL vide letter dated 17 th September, 2011 which was
rejected by BCCI by its Advocates’ letter of even date.
158. The learned Arbitrator has after considering the
aforementioned material on record and appreciating the evidence
came to a finding that no reasonable notice was given by BCCI to
KCPL for furnishing of a bank guarantee. The learned Arbitrator has
further considered that KCPL’s request for three working days time
for furnishing a bank guarantee was well before the expiry of the
claim period under the existing bank guarantee issued by RSW (for
the 2011 season) which was valid until 27 th September, 2011. Thus,
no prejudice would have been caused to BCCI if extension of three
working days time from 17th September 2011 had been granted.
Further, the learned Arbitrator has also considered the material facts
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and subsequent correspondence on record. This included BCCI’s
Advocates’ letter dated 19 th September, 2011, received by KCPL
around 9.30 a.m., terminating the KCPL-FA which rejected the
aforementioned request of KCPL. Further, BCCI by a separate letter
addressed to the bank dated 17 th September, 2011, but
acknowledged as being received on 19 th September, 2011 at 10.30
a.m., invoked the bank guarantee. Thereafter, KCPL by letter dated
18th January, 2012 treated the termination of KCPL-FA by BCCI as
amounting to a repudiatory breach and therefore, terminated the
KCPL-FA.
159. The conclusion of the learned Arbitrator namely that
BCCI had wrongfully invoked the bank guarantee which amounted
to a repudiatory breach of the KCPL-FA would call for no
interference under Section 34 of the Arbitration Act considering that
this is based on a correct appreciation of the evidence on record.
160. BCCI has contended that it was justified in invoking the
bank guarantee issued by RSW and has placed reliance on the Clause
21.15 of KCPL-FA. Clause 21.15 of the KCPL-FA reads as under :-
“21.15 It is agreed that upon BCCI confirming to the
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901-ARBP-1752-1753-2015-J.docFranchisee in writing that (A) payment in full has
been made by the Franchisee to BCCI-IPL of the sum
due to BCCI-IPL in respect of 2011 under Clause 8.1
(a) (ii) and (B) the bank guarantee referred to in
Clause 8.4 deliverable by the Franchisee to BCCI-IPL
by 22nd March, 2011 has been duly and properly
delivered to BCCI-IPL in accordance with Clause 8.4,
the Existing Franchise Agreement shall cease to have
any further force and effect and the Franchisee
agrees to be obliged and liable to BCCI-IPL to
comply fully with all outstanding and / or
unperformed obligations thereunder and to be fully
liable BCCI-IPL in respect of any of RSW’s liabilities
or breaches under or of the Existing Franchise
Agreement.
(emphasis supplied)
161. Clause 21.15 of the KCPL-FA provides that KCPL would
be liable for non compliance of RSW’s obligations under the RSW-FA.
The RSW-FA covered only the 2011 season. The learned Arbitrator
has found from the material on record that all dues in respect of
2011 were paid to BCCI. Further, there was no allegation of breach
of the RSW-FA. Hence, Clause 21.15 of the KCPL-FA does not assist
BCCI. The interpretation of Clause 21.15 by the learned Arbitrator is
a possible interpretation which cannot be interfered with by this
Court under Clause 34 of the Arbitration Act.
162. The challenge of BCCI to the damages awarded by the
learned Arbitrator on the ground that the learned Arbitrator has
erroneously awarded damages on account of loss of profits as well as
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wasted expenditure which cannot be cumulatively granted cannot be
accepted. The manner in which BCCI has read the claim for
damages of KCPL is misconceived. This can be seen from the prayer
Clause (iii) of the statement of Claim, where KCPL has claimed an
amount of INR 700 Crores “… or such other amount as [may] be
quantified …” towards losses/damages on account of BCCI’s on
repudiatory breach. Therefore, KCPL has not restricted its claim for
damages to any particular type of damages. KCPL’s claim includes a
claim for business opportunities and profits i.e. general damages.
Whereas at prayer Clause (iv), KCPL has made in a claim for the
expenditure included by it. Whilst the claim was in the alternative,
and the learned Arbitrator upon observing the same, has considered
the voluminous documents filed by KCPL in support thereof and
which is further supported and substantiated by the evidence of
Saket Mehta and deemed it fit to grant KCPL’s alternate claim for
expenditure incurred, as well. The learned Arbitrator has in
exercising his discretion adopted his own approach for the purpose
of computing the damages payable by BCCI to KCPL. Further, the
learned Arbitrator has resorted to ‘another method’ available for the
purpose of computing damages suffered by KCPL, instead of the
methodologies adopted by both parties experts. The learned
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Arbitrator has found that KCPL is entitled to general damages as well
as special damages together with interest.
163. The learned Arbitrator by adopting such ‘rough and
ready method’ and instead of granting general damages to the tune
of INR 700 crores has awarded damages of 50% of the annual
franchisee fee for 2 years, as against the entire term of the KCPL-FA,
which had been claimed by KCPL. Further, the learned Arbitrator has
decided to treat KCPL’s alternate claim for expenditure incurred as
being one for ‘special damages’, based on the voluminous documents
and supported by the evidence of Saket Mehta.
164. The contention of BCCI that the learned Arbitrator
having observed that it would meet the ends of justice if 25% of the
franchise fee for two years is granted to KCPL has gone on to award
an amount of 50% of the franchise fees of two years, overlooks the
fact that the mention of 25% is obviously a typographical error in
the impugned award. This is apparent from the conjoint reading of
Paragraphs 8.1.20 and 8.1.21 of the Award. In Paragraph 8.1.20
there is a finding of the learned Arbitrator that the investors in the
franchisee expect to gain at least 50% of the franchisee figures as net
revenue and in Paragraph 8.1.21 there is a finding that the parties
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are ad idem as to the appropriate ‘period’ for which the quantum
and/or measure of general damages is to be computed; having been
found to be two years. I do not find merit in the submission on
behalf of BCCI that KCPL is precluded from terming the error in the
award as a typographical error, since it did not prefer an application
under Section 33 of the Arbitration Act. I find that the award of
damages by the learned Arbitrator is unambiguous.
165. In prayer Clause (iii) of the statement of claim KCPL has
claimed INR 700 Crores “… or such other amount as (may) be
quantified towards the losses/damages suffered by (KCPL) on
account of the repudiatory breach committed by the (Petitioner)…”.
This leaves it open to the learned Arbitrator to grant a lesser amount
than that claimed by KCPL as general damages and in addition
award special damages. The manner in which the damages are to be
computed/quantified, including the methodology adopted for such
computation/quantification, falls entirely within the domain of the
Arbitral Tribunal. This has been held by the Supreme Court in
McDermott (supra) at Paragraphs 103 – 110 relied upon on behalf
of the KCPL. Further, the Courts and Arbitral Tribunals have the
power to mould the reliefs as held in Samir Narain Bhojwani
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(supra). The Courts and Arbitral Tribunals can also resort to ‘honest
guesswork’/’rough and ready methods’ in computing damages where
no specific evidence of loss suffered is led, but it can be inferred that
loss has been suffered by reason of breach or the extent of loss
suffered is difficult to quantify and/or prove, or the breaching party
leads no specific evidence to show that no loss was suffered by the
party complaining of such breach. The decision of the Supreme
Court in Construction and Design Services (supra) at Paragraphs 14-
18 and Cobra (supra) at Paragraphs 32-35 relied upon on behalf of
KCPL are apposite.
166. Further, BCCI’s contention that the learned Arbitrator
ought to have furnished reasons for not having granted damages in
terms of the expert evidence led, overlooks the fact that the learned
Arbitrator has considered the expert evidence led and in Paragraph
8.1.14 of the KCPL Award opined, it will not be advisable to go by an
expert assessment, which at the end would only be an option. There
is another method available and relied on in the alternative on
behalf of KCPL. The learned Arbitrator in any event is not bound by
the expert evidence as has been held by the Supreme Court in
McDermott (supra) at Paragraphs 106-107.
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167. Further, the grant of special damages in addition to
general damages is not unknown to law. In Pollock & Mulla, 14th
Edition, relied upon on behalf of the KCPL, it has been observed that
a mixed claim for capital expenditure and for loss of profits (seeking
reliance losses and expectation losses) may lie in appropriate cases.
This type of additional loss has been recognized in the judgment of
the King’s Bench in “Victoria Laundry V/s. Newman Industries “48 at
Page 539.
168. BCCI has relied upon the decision of the Delhi High
Court in N.K. Tomar (supra) in support of its submission that special
damages cannot be granted, if the counter party is not informed as
to such likelihood at the time of entering the contract. This reliance
is misplaced. In the said judgment at Paragraph 19, the learned
Single Judge has observed that the party seeking special damages
had failed to file concrete evidence or credible evidence. The
Defendant therein cannot be said to have discharged the onus of
proving the loss as alleged in the Written Statement in those
circumstances.
169. Further, BCCI has also relied upon judgment of the
Supreme Court in Kanchan Udyog Ltd. (supra) in support of its
48 (1949) K.B. 528.
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submission that both, loss of profits and wasted expenditure cannot
be granted. The Supreme Court has extracted a portion of the
treaties in Pollock & Mulla (14th Edition) which was relevant to the
facts before it. However, the next paragraph of treaties which has
been referred to states that a mixed claim of capital expenditure and
for loss of profits may lie in appropriate cases.
170. It is relevant to deal with the additional grounds raised
by BCCI in the RSW Arbitration Petition viz. that the reference to
arbitration being invalid in view of Section 19(2)(a) of the Indian
Partnership Act, 1932 as Filmwaves which was a constituent of RSW
did not authorize, agree, join RSW in the invocation of arbitration.
Section 19(2)(a) of the Partnership Act provides that the implied
authority of a partner does not empower him to submit a dispute
relating to the business of the firm to arbitration. There are
submissions made with regard to Filmwaves having adopted its own
proceedings including filing of Suit and taking out Notice of Motion.
Reference is also made to Filmwaves having withdrawn the Suit on
20th December, 2013 i.e. more than the year after the reference to
arbitration in August, 2012. There is further reference to Filmwaves
having been impleaded as Respondent No. 2 in the arbitral
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proceedings on account of differences between Filmwaves and other
members of the consortium. Reliance is placed on certain pleadings
filed in the arbitral proceedings. BCCI has also relied on MSEDCL
(supra) and J.J.L.B. Engineers and Contractors (supra) in support of
its submission that a reference and/or invocation of arbitration if
bad in law warrants the setting aside of resultant Award passed in
such proceedings.
171. The learned Arbitrator in its order dated 17 th July, 2013,
which has been impugned by BCCI has considered the submissions
of RSW including that there was a clear admission on the part of
BCCI that the reference to arbitration was by consent and that such
reference would be valid and maintainable but for the fact that there
was an alleged material concealment of the fact by RSW of
Filmwaves not consenting to the reference. BCCI having not opted
for adducing any oral evidence in support of its plea of ‘material
concealment’ taken in the application, which was a question of fact,
the Arbitral Tribunal records a finding on the issue of ‘material
concealment’ viz. that there is no merit in the plea that the fact of
Filmwaves not joining the reference had been concealed from BCCI.
Further, the learned Arbitrator has held that Filmwaves has not
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objected to its non-joinder of the reference and has infact supported
RSW in its claim as can be seen from the pleadings filed by
Filmwaves in the Arbitration Petition.
172. Considering the aforementioned findings of the learned
Arbitrator in the Order dated 17 th July, 2013, which is based on the
material on record, I find no merit in the contention on behalf of
RSW that the reference to arbitration is invalid. The plea as to
material concealment of Filmwaves joining in the reference is a
question of fact and BCCI not having produced evidence in support
of the plea taken, the learned Arbitrator has arrived at a correct
finding that this contention has no merit.
173. The other issue raised by BCCI is on the entitlement of
RSW to make claims in view of Section 69(3) of the Indian
Partnership Act, 1932. This issue has been correctly answered by the
learned Arbitrator. Section 69(3) of the Partnership Act refers to
proceedings to enforce a right arising from a contract and there
being a bar to such proceedings being instituted by an unregistered
partnership firm. However, this is not applicable to arbitral
proceedings as held in Komal Kush Enterprises (supra). Although in
the judgment BCCI relied upon by viz. U.P. State Sugar (supra) at
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Paragraph 7, it is recorded that it is true that arbitral proceedings
would not be maintainable at the instance of an unregistered firm
having regard to the mandatory provision contained in Section 69 of
the Partnership Act 1932, this cannot be considered to be a dictum
of the Supreme Court or even an obiter dictum of the Supreme
Court. It has been rightly held by the learned Arbitrator that in the
impugned order that this merely expresses an assumption of the
Supreme Court.
174. Further, the judgment of the Supreme Court in
Jagdishchandra Gupta (supra) relied upon by BCCI, which holds
that ‘other proceedings’ occurring in Section 69(3) of the Partnership
Act must receive a full meaning untrammeled by the words ‘a claim
or set off’ is to be read in the context of the facts of that case. The
Supreme Court has not ruled that reference of the Court to an
Arbitral Tribunal and that to by consent would be hit under Section
69(3) of the Partnership Act. This judgment has been considered by
the Delhi High Court in “Noida Toll Bridge Company Ltd. v/s. Mitsui
Marubeni Corporation “49 and it has been held that the observations
of the Supreme Court cannot be read to mean that the question
regarding applicability of Section 69(3) of the Partnership Act is a
49 OMP No.65 of 2005 decided on 16th September, 2005.
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jurisdictional issue. The bar under Section 69 is not absolute
because it does not destroy every right arising under the contract.
The Delhi High Court has gone on to hold that the impugned Order
in the nature of interim award can be challenged under Section 34
of the Act and the Petition is maintainable. It has upheld the view of
the learned Arbitrator on Section 69 of the Partnership Act having no
application to the proceedings before the Arbitral Tribunal. The
Delhi High Court has in so holding also considered the earlier
decision of the Supreme Court in U.P. Sugar (supra).
175. The learned Arbitrator in the impugned Order has
considered the settled law laid down by the Supreme Court and
Delhi High Court in holding that the arbitral proceedings are not hit
by Section 69(3) of the Partnership Act. Further, the reference to
arbitration was by consent of parties. Thus, I find that the challenge
to this finding of the learned Arbitrator is without any merit.
176. I am of the considered view that there are no valid
grounds raised in KCPL’s Petition and RSW’s Petition under Section
34 of the Arbitration Act to warrant an interference with the KCPL
Award and the RSW Award, which have been impugned therein.
There is no patent illegality in the impugned awards which requires
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an interference by this Court. In view thereof, the Arbitration
Petition No. 1752 of 2015 and Arbitration Petition No. 1753 of 2015
are devoid of merit and are accordingly dismissed. KCPL and RSW
are permitted to withdraw the amounts deposited by BCCI after a
period of four weeks from the uploading of this judgment and Order.
177. There shall be no order as to costs.
[R. I. CHAGLA, J.]
178. Mr. Rafiq Dada, learned Senior Counsel appearing for the
Petitioner-BCCI has applied for further time to be granted to the
Petitioner in order that they may prefer an appeal from this
Judgment and Order, considering that in Paragraph 177 of this
Judgment and Order, KCPL and RSW have been permitted to
withdraw the amounts deposited by the BCCI after a period of four
weeks from uploading of this Judgment and Order.
179. Upon considering that there has been a conditional stay
of the impugned Awards operating for a few years, time is extended
by a further period of two weeks and accordingly KCPL and RSW are
permitted to withdraw the amounts deposited by BCCI after a period
of six weeks from uploading of this Judgment and order.
[R. I. CHAGLA, J.]
Digitally signed
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by GITALAXMI
GITALAXMI KRISHNA
KRISHNA KOTAWADEKAR
KOTAWADEKAR Date:
2025.06.17
18:35:58 +0530
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