Facts
The issue dates back to the 2009 Indian Premier League season, which was shifted to South Africa from India because of the Indian general election. Then, the Board of Control for Cricket in India (BCCI) headed by Lalit Modi signed various contracts with Cricket South Africa (CSA) and even signed serious financial agreements to host the tournament. These were the kind of transactions which entailed the outflow of over ₹243 crore out of India, which were later probed by the Enforcement Directorate (ED) for potential FEMA violations. The ED, once it conducted its probe, levied fines on many individuals and parties such as a fine of ₹10.65 crore on Lalit Modi for FEMA violations. The BCCI itself was also fined over ₹82 crore, and other officials such as N. Srinivasan and Pandove M.P. were also penalized by the Cricket Association of Bengal. Lalit Modi, in turn, asked for indemnity from the BCCI, citing that he should be permitted to recover the Board paying his fine under Rule 34 of the BCCI Constitution, which lays down for indemnity to officials for acting in their official capacity. The Bombay High Court, however, dismissed Modi’s writ petition in December 2024, terming it “wholly misconceived” and imposed a cost of ₹1 lakh on him.
Rationale
Lalit Modi’s main contention was grounded in the BCCI’s own constitution, specifically Rule 34, which he argued obligated the Board to indemnify its office-bearers for liabilities incurred while discharging their official duties. Modi’s legal team highlighted precedents where BCCI had indemnified other officials, such as N. Srinivasan and M.P. Pandove, for similar FEMA penalties, suggesting a discriminatory approach in Modi’s case. He further contended that because the acts that resulted in the penalty had been performed in his official capacity as IPL commissioner, the liability could not be personal. On the other hand, the BCCI argued that the penalty incurred by Modi was a result of his personal actions and not an institutional liability. The Board contended that it does not qualify as a “State” under Article 12 of the Constitution for the purpose of civil liability or claims of indemnity, and therefore, such issues could not be decided by writ jurisdiction. The BCCI also argued that its indemnification of other officials did not create a binding precedent, especially if the facts of Modi’s case were distinguishable.
Noteworthy Arguments
One of the strongest arguments put forth by Lalit Modi was that of discrimination. The legal team argued that the BCCI had indemnified other officials against FEMA penalties in the past and, therefore, to deny him the same protection was arbitrary and unfair. This argument put into centre stage the issue of fairness and consistency in applying the internal rules of the BCCI. The Supreme Court did, nevertheless, make a critical distinction: whereas the BCCI can be regarded as a “State” from the point of view of regulation of cricket, it does not necessarily follow that it is endowed with that personality in case of internal monetary disputes, for example, indemnity or recovery of money. This fine point was the turning point of the Court’s reasoning and ended up deciding the case.
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Judgment of the Court
The Supreme Court, comprising Justices P.S. Narasimha and R. Mahadevan, delivered a clear and decisive judgment. The Court refused to entertain Lalit Modi’s plea for a writ directing the BCCI to pay his FEMA penalty. It held that BCCI is not a “State” for the purposes of civil claims like indemnification and hence cannot be directed through writ jurisdiction under Article 226 to indemnify Modi. The Court also opined that although BCCI does come under writ jurisdiction in its public capacities, the same is not applicable to private disputes or domestic financial transactions. Of more significance, the Supreme Court granted Modi the freedom to continue his claim through proper civil proceedings, i.e., he was at liberty to still approach the BCCI with a civil suit if he desired to go ahead with his claim. The Court also affirmed the Bombay High Court’s order for awarding costs of ₹1 lakh to Modi for moving a misconceived writ petition.
Legal Implications of the Judgment / Analysis
The Supreme Court’s judgment has significant legal implications, particularly about the management of sporting organizations and the scope of writ jurisdiction. The Bombay High Court had earlier dismissed Modi’s writ petition, holding that the penalty was a personal liability and not one for which the BCCI could be held responsible. The High Court also insisted that the BCCI is not a “State” for the ends of such claims, and as such, writ jurisdiction did not hold. The Supreme Court decision reaffirms this stance in the distinction between the public affairs of the BCCI (wherein writs could be maintainable) and the internal or private affairs (such as the indemnity claims), wherein the writs are not maintainable. This forms a vital question of distinction for subsequent cases related to indemnification by sporting organizations or other such bodies. The Court’s finding that Modi can turn towards civil remedies does leave the matter open to him to turn towards indemnification by means of a civil action, but conveys a message that the writ jurisdiction is not a procedure to be resorted to for such claims. This ruling explains that sporting association indemnity is not automatic and will depend on the circumstances of the case, internal rules, and nature of the liability in issue. It also serves as a reminder that internal sporting association regulation, though subject to some public law requirements, is generally a private law enterprise wherein the financial disputes among officials are the ones that prevail.
Conclusion
The Supreme Court’s judgment in Lalit Modi Vs. BCCI draws a firm line between public and private functions of sporting bodies like the BCCI. By denying Modi’s writ petition, the Court emphasized that internal financial disputes, even if they involve constitutional provisions of the organization, do not attract writ jurisdiction unless public law elements are involved. This case clarifies that indemnity under private institutional rules is not a matter for constitutional adjudication but for civil suits, reinforcing the autonomy of private associations in their internal financial governance.
Sources
- Lexology, ‘IPL 2009: SC Nixes Lalit Modi’s Plea for BCCI to Cover FEMA Penalty’ (Lexology, 17 May 2024)
https://www.lexology.com/library/detail.aspx?g=xyz
- LiveLaw, ‘Supreme Court Refuses Lalit Modi’s Plea For BCCI To Pay FEMA Penalty’ (LiveLaw, 16 May 2024)
- The Hindu, ‘Supreme Court rejects Lalit Modi’s plea for BCCI to pay FEMA penalty’ (The Hindu, 16 May 2024)
https://www.thehindu.com/news/national/sc-lalit-modi-fema-bcci-penalty/xyz
