Case Note & Summary
The High Court of Judicature at Bombay, Commercial Division, pronounced judgment on 16 March 2022 in a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996. The petitioner, World Sport Group (India) Private Limited (WSGI), sought to set aside the Majority Award of the Arbitral Tribunal dated 13 July 2020. The respondent was the Board of Control for Cricket in India (BCCI). The Majority Award, passed by Justice Sujata Manohar (Retd.) and Justice Mukundakam Sharma (Retd.), rejected WSGI's challenge to BCCI's rescission of the second Media Rights License Agreement dated 25 March 2009. The Tribunal accepted BCCI's contention that the agreement was part of a fraudulent composite transaction. A dissenting award was given by Justice S.S. Nijjar (Retd.) on 20 July 2020. The underlying dispute concerned media rights for the Indian Premier League (IPL). In 2007, BCCI conceptualized the IPL, a franchise-based 20-over cricket tournament administered by the IPL Governing Council chaired by Lalit Kumar Modi. BCCI entered into a memorandum of understanding with International Management Group (UK) Ltd for media rights services. In November 2007, BCCI floated a tender for IPL media rights for 10 years (2008-2017) for the Indian Sub-Continent and Rest of the World territories. WSGI was awarded the global media rights package for approximately USD one billion. Because WSGI was not a broadcaster, it negotiated with MSM Satellite (Singapore) Pte Ltd. In January 2008, BCCI executed a media rights licence agreement with MSM for Indian Sub-Continent rights for 2008-2012 for USD 275.40 million. On the same day, BCCI executed a composite media rights licence agreement with WSGI covering India rights for 2013-2017 for USD 550 million and Rest of World rights for 2008-2017 for USD 92 million. WSGI and MSM also entered into an option agreement giving MSM the option to acquire India rights for 2013-2017 from WSGI for up to USD 60 million. These 2008 agreements were not challenged. After the first IPL season in 2008, disputes arose between BCCI and MSM, leading BCCI to terminate the BCCI-MSM media rights licence agreement on 14 March 2009. MSM filed a Section 9 petition in the High Court. BCCI then desired to re-auction India rights for 2009-2017 as a single package to obtain a higher licence fee. BCCI requested WSGI to mutually terminate the 2008 composite agreement so that India rights for 2013-2017 could be unbundled and aggregated with 2009-2012 rights. According to WSGI, it agreed on condition that India rights for 2009-2017 would be licensed to WSGI or its affiliate World Sport Group (Mauritius) Limited (WSGM), enabling WSGI to realize a premium, and that BCCI would reinstate WSGI's Rest of World rights for 2009-2017. On 15 March 2009, BCCI, WSGI, and WSGM entered into a Deed of Mutually Agreed Termination. The same day, BCCI entered into a media rights licensing agreement with WSGM for India rights for 2009-2017 for Rs. 4791.89 crores, an increase of Rs. 1791 crores over the earlier amount. WSGM was required to enter into a sub-license with a broadcaster within 72 hours. An affidavit was filed by Lalit Modi on behalf of BCCI in MSM's Section 9 petition stating that an agreement had been executed. The 72-hour period was extended due to pending litigation. The main legal issue before the High Court was whether the Majority Award, which upheld the rescission on the ground of fraudulent composite transaction, should be set aside under Section 34 of the Arbitration Act. The petitioner challenged the award; the respondent defended the rescission. The court heard arguments on 18 March 2021, received written submissions, and reserved judgment. Due to the COVID-19 pandemic and other exigencies, judgment was delayed. On 16 March 2022, the matter was placed on board for pronouncement, and both counsel indicated they did not wish to make further submissions. The final decision of the court is not included in the provided excerpt.
Headnote
A) Arbitration - Setting Aside of Arbitral Award - Section 34, Arbitration and Conciliation Act, 1996 - Challenge to Majority Award - Petitioner filed petition under Section 34 seeking to set aside Majority Award dated 13 July 2020 which rejected challenge to rescission of 2nd BCCI-WSGI MRLA; Arbitral Tribunal held that rescission was valid because MRLA was part of fraudulent composite transaction; petition was heard and judgment reserved; final decision not stated in provided excerpt (Paras 2-3). B) Contract - Rescission - Fraudulent Composite Transaction - The 2nd BCCI-WSGI MRLA dated 25 March 2009 was rescinded by BCCI on the ground that it was part of a fraudulent composite transaction; Majority Arbitrators upheld the rescission; dissenting arbitrator disagreed; the High Court was to examine whether this finding was liable to be set aside under Section 34 (Paras 3, 14-15). C) Arbitration - Dissenting Award - Dissenting award by Justice S.S. Nijjar dated 20 July 2020 disagreed with majority; text does not provide details of dissent (Para 2).
Issue of Consideration
Whether the Majority Award upholding rescission of the 2nd Media Rights License Agreement as part of a fraudulent composite transaction is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996.
Law Points
- Section 34 Arbitration and Conciliation Act
- 1996 challenge to arbitral award
- Rescission of contract on ground of fraud
- Majority and dissenting arbitral awards
- Composite transaction doctrine
- Media rights licensing agreements
- Arbitral tribunal findings subject to limited judicial review
