SC notice to PNB, others on BCCI plea

Written by Indu Bhan | Indu Bhan | New Delhi | Updated: Feb 9 2013, 07:23am hrs
The Supreme Court on Friday sought explanation from three nationalised banks Punjab National Bank (PNB), Indian Bank and Union Bank of India (UBI) allegedly for failing to collectively deposit around R400 crore to secure the claim of the Board for Control of Cricket in India (BCCI).

A Bench headed by Justice Aftab Alam issued notices to the banks after BCCI sought a direction to them to deposit the entire amount under the bank guarantees in the SC with liberty to the cricket body to withdraw the same.

The bank guarantees worth R1,602 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 Bombay High Court's December order that asked PNB and Indian Bank to deposit with the court R150 crore (35%) each, while UBI was asked to fork out R100 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.

The cricket body said that the bank guarantees were unconditional, irrevocable and independent contracts between it and Nimbus and the same 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 R1,602 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 2011cancelled the domestic broadcasting rights given to Nimbus Communication after it defaulted on the payment of R63.78 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 R1,602 crore in 2011. While PNB and UBI sanctioned financial bank guarantee of R750 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 R500 crore, charging an interest of 1.5% a year. But the latter extracted the first charge on all fixed assets of Nimbus as security.