Bombay High Court Orders PNB, Indian Bank & Union Bank to Pay Rs.386 Crore to BCCI in Nimbus Case
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The Bombay High Court has ordered three government-owned banks—Punjab National Bank (PNB), Indian Bank, and Union Bank of India—to pay a total of ₹386 crore to the Board of Control for Cricket in India (BCCI). This order is related to a legal dispute involving a 2011 media rights agreement between BCCI and the now-closed company Nimbus Communications.
What Was the Dispute About?
In 2009, BCCI signed a Media Rights Licence Agreement (MRLA) with Nimbus Communications. Under this deal, Nimbus got exclusive rights to broadcast cricket matches played in India from April 2010 to March 2014. The total value of the agreement was ₹2,000 crore. To secure this deal, Nimbus had to give bank guarantees for the full contract value. These guarantees were meant to protect BCCI in case Nimbus failed to make the payments.
Initially, some payments were made. But later, Nimbus started defaulting on its dues. As a result, BCCI cancelled the agreement in December 2011. After this, BCCI tried to recover the remaining amount—around ₹1,600 crore—by encashing the bank guarantees. However, the banks refused to release the money.
Why Did the Banks Refuse?
The three banks—PNB, Indian Bank, and Union Bank—said the guarantees were no longer valid after the agreement between BCCI and Nimbus was cancelled. They claimed that since the contract had ended, they were not required to pay.
But BCCI argued that the bank guarantees were unconditional. This means the banks had promised to pay BCCI on demand, no matter what happened with the actual contract. So, even if there was a dispute between Nimbus and BCCI, the banks were still supposed to release the guaranteed funds.
What Did the Court Decide?
Justice Manish Pitale, who heard the case, supported BCCI’s claim. He said the wording in the bank guarantees clearly showed that the banks had agreed to pay without any conditions. The judge pointed out that the banks were legally bound to honour their guarantees once BCCI asked for the money.
How Much Will Each Bank Pay?
According to the court’s ruling:
- Punjab National Bank will pay 37.5% of ₹386 crore
- Union Bank of India will also pay 37.5% of ₹386 crore
- Indian Bank will pay the remaining 25% of ₹386 crore
Apart from this, each bank must also pay ₹25 lakh to BCCI to cover the legal costs.
