Any extension of time for the company to give bank guarantee will amount to resurrecting the lease, says Bench

The Deccan Chargers is out of the Indian Premier League for the next season, as the Supreme Court on Friday refused to interfere with the Bombay High Court’s order on Thursday that upheld the termination of the franchise by the Board of Control for Cricket in India (BCCI).

A Bench of Chief Justice Altamas Kabir and Justices S.S. Nijjar and J. Chelameswar dismissed a special leave petition filed by Deccan Chronicle Holdings Ltd., or DCHL, (which runs the Deccan Chargers) against the High Court order that said: “An arbitrator [who ordered status quo in the time limit for the franchise to furnish the BCCI with a bank guarantee] cannot overrule an order passed by the court.”

The Bench passed the order after hearing senior counsel Mukul Rohatgi, appearing for DCHL, and senior counsel Aryama Sundaram and counsel P.R. Raman for the BCCI, which now can go ahead with its auction scheduled for October 25 to fill the vacancy caused by the Deccan Chargers’ exit. Mr. Rohatgi said DCHL was now in a position to give the bank guarantee for Rs. 100 crore by October 22 and sought a stay on the termination order. He said the company had found a buyer for Deccan Chargers for Rs. 1,200 crore, and this sale would come off only if the franchise was allowed to remain in the IPL. However, Mr. Sundaram argued that the order of termination became final on October 12 when the High Court refused to extend the time, and this order was not challenged before the Division Bench. Instead, DCHL went to the arbitrator, who ordered status quo; this order was quashed on October 18.

He said the BCCI could not keep Deccan Chargers in the IPL as the company had a total debt of more than Rs. 4,500 crore. It had not paid salary to its players and charges to suppliers and had incurred multiple charges on its assets without informing the BCCI.

Since the continuance of the franchise had international ramifications, it would not be possible to continue with this team.

Further, Mr. Sundaram argued that no mandamus could be given by the court for specific performance when the franchise was terminated, and the order was not challenged.

In a brief order, the Bench said the position till date was that the lease stood terminated. Any extension of time by this court for the company to give the bank guarantee would amount to resurrecting the lease. The court could not be forced to continue the lease that had been terminated. “We are not inclined to entertain the SLP and it is dismissed. The arbitrator can continue… the proceedings.”

The BCCI terminated the franchise last month as a severe financial crisis gripped the company. A single judge of the Bombay High Court granted the company time till October 12 for furnishing the BCCI with a Rs.100-crore bank guarantee; but made it clear that if the company did not comply with the order, the termination order would become final.

On October 15, the BCCI terminated the contract. On a petition from DHCL, the arbitrator ordered status quo till October 17. As the BCCI appealed, the High Court quashed the arbitrator’s order October 18.

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