Banks to not return margin money in BCCI-Nimbus dispute

In the backdrop of a Rs 2,000 crore legal dispute between the BCCI and Nimbus Communication Ltd, three banks have told the Bombay High Court that they do not intend to return margin money placed by Nimbus in respect of guarantees issued in favour of the Indian Cricket Board for the telecast 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 SF 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 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 Rs 31.25 crore for each match to BCCI for telecast rights.

The agreement provided that altogether Nimbus would pay an amount of Rs 2,000 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 1,600 crore from the total Rs 2,000 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. The next day, BCCI invoked bank guarantees for the remaining amount of Rs 1,600 crore.