A Bench, headed by Justice Aftab Alam, while asking the PSU banks to collectively deposit the amount in BCCI's bank account, either in HDFC Bank or Bank of India (as desired by the board), said that the cricket body will have to pay back the entire amount with interest, as it may have accrued in a fixed deposit, subject to outcome of the suit in the Bombay High Court.
The bank guarantees worth Rs 1,602 crore were issued by the banks in consideration towards the contract executed in consideration of the Master Rights Licensing Agreement (MRLA), between BCCI and Nimbus broadcasting the cricket matches.
BCCI has challenged the High Court's December order that asked PNB and Indian Bank to deposit with the court Rs 150 crore (35%) each, while UBI was asked to fork out Rs 100 crore (25%) of their respective guaranteed amounts.
The HC had also directed that the money, so deposited with it, will again be redeposited with the same banks, BCCI said.
Counsel CA Sundaram, appearing for the cricket body, argued that the bank guarantees were unconditional, irrevocable and independent contracts between it and Nimbus and they are payable on demand. Besides, the banks' obligations under the bank guarantees was sacrosanct and they cannot be allowed to renege on their unconditional obligations.
Nimbus had signed a four-year deal with BCCI valued at Rs 1,602 crore on October 15, 2009, to telecast all domestic and international matches played by India at home between April 1, 2010, and March 31, 2014.
However, BCCI, in December 2011, cancelled the domestic broadcasting rights given to Nimbus Communication after it defaulted on the payment of Rs 63.78 crore towards BCCI, which was part of a six-year contract.
Nimbus filed an arbitration petition seeking to restrain BCCI from receiving any amount under the bank guarantees and also restraining the banks from paying any amounts under the bank guarantees.
BCCI had filed a suit against three public sector banks after they refused to encash the guarantees worth Rs 1,602 crore in 2011. While PNB and UBI sanctioned financial bank guarantee of Rs 750 crore in January 2010 in favour of BCCI with respect to the media rights agreement of October 2009 after charging a 1.5% commission and against telecast rights as collateral, Indian Bank had sanctioned a one-time bank guarantee of Rs 500 crore, charging an interest of 1.5% a year. But the latter extracted the first charge on all fixed assets of Nimbus as security.
The banks, however, argued that once the contract is terminated by BCCI the liability of the banks under the act come to an end. Also, as per the demands made by BCCI, their claim over Nimbus was not more than Rs 63 crore and, therefore, the invocation for Rs 1,600 crore was unjustified, they told the Bombay HC.