In the backdrop of Rs 2000 crore legal dispute involving the Indian cricket board and Nimbus Communication Ltd, three banks have informed the Bombay High Court that they do not intend to return margin money placed by Nimbus with them in respect of guarantees issued in favour of the BCCI for the telecast of cricket rights.
A statement to this effect was made by Nishit Dhruva, counsel for Union Bank of India, Punjab National Bank and Indian Bank before Justice S. F. Vajifdar who placed it on record on December 19.
The court was hearing an arbitration petition filed by BCCI to restrain the three banks from refunding to Nimbus any portion of the margin money of the guarantees which the cricket board is now invoking.
The HC adjourned the petition for admission to February 7, 2012, observing that the matter may be disposed of finally at the admission stage itself after putting the parties on notice.
BCCI and Nimbus had entered into a Media Rights Licence Agreement on October 15, 2009 for the telecast of cricket matches and the value of telecast of each Test was fixed at Rs 31.25 crore. Nimbus had given bank guarantees of paying Rs 31.25 crore for each match to BCCI for telecast rights.
The agreement provided that altogether Nimbus would pay an amount of Rs 2000 crore for the whole year to BCCI.
As and when the matches were held, Nimbus started paying for each match Rs 31.25 crore as agreed upon. Accordingly, the amount came down to Rs 1600 crore from the total Rs 2000 crore.
However, Nimbus did not pay the stipulated amount for telecast of a few matches and their liability to that extent soared to Rs 137 crore. Of this, Nimbus paid Rs 50 crore bringing the liability down to Rs 87 crore.
As Nimbus failed to clear the dues of Rs 87 crore as demanded by BCCI, the latter terminated the contract on December 12 this year. On the next day, BCCI invoked bank guarantees for the remaining amount of Rs 1600 crore.
Banks' counsel Nishit Dhruva of a Mumbai-based legal firm argued that when the current liability of Nimbus towards telecast rights to BCCI was Rs 137 crore, why was the Board asking for the entire amount of Rs 1600 crore due to them as all the matches have not been played so far.
Dhruva further contended that under the bank guarantee, once the contract was terminated there was no liability because the guarantee automatically stands cancelled as per the agreement between the two sides.
Aggrieved, Nimbus filed a petition in the High Court seeking an injunction to restrain the banks from making payment of Rs 1600 crore to BCCI.
The BCCI also filed a petition urging the HC through its counsel Rafiq Dada to restrain the banks from paying margin money to Nimbus.
The three banks, however, argued that they would not pay the margin money to any of the parties as they may have to recover from Nimbus some amount.
Counsel for Nimbus Iqbal Chhagla argued that after securing the BCCI contract for telecast rights, his client had launched Neo channels and employed 200 people.
If stay was not granted on termination of the agreement, it would result in closure of its subsidiary, Neo Sports and the jobs of their staff would be at stake.