Curse of the sponsorship deal? Legal battles faced by Indian Cricket Team sponsors

At least 53 million people watched the recently held T20 Cricket World Cup Final between India and South Africa, just short of the viewership numbers of last year's ODI World Cup Final.

The sheer scale of the visibility the Indian cricket team gets is astounding, and would leave sponsors champing at the bit to get their name on the team's jersey.

But as it turns out, the sponsorship deal has proved to be a bit of a poisoned chalice.

Even as the Indian team ran out onto the field sporting the names of Sahara, OPPO, Dream11 and Byju's, over the years, these companies have found themselves run-out before the courts and regulatory agencies.

While not directly linked to the sponsorship contract (except in the case of Byju's) the pattern of high-profile sponsors encountering legal battles is noteworthy.

Byju's - Shirt sponsor from September 2019 to March 2023

In July 2019, the Board of Control for Cricket in India (BCCI) and Byju's signed a shirt sponsorship contract. Though it initially ended in 2022, the deal was extended to June 2023.

In December 2023, BCCI approached the National Company Law Tribunal (NCLT) to initiate insolvency proceedings against Byju's parent company, Think and Learn, for allegedly defaulting on a ₹158 crore payment in respect of the contract.

NCLT admitted the plea in July 2024 and dismissed Byju's bid for arbitration. Byju's challenged this order at the National Company Law Appellate Tribunal (NCLAT). On July 31, BCCI informed NCLAT of a repayment settlement with Byju's.

This settlement was opposed by a US creditor but was upheld by NCLAT on August 2, after Riju Raveendran, brother of the Byju's founder, undertook to personally fund the repayment.

However, on August 14, the Supreme Court stayed the NCLAT decision after a financial creditor, Glas Trust Company LLC, approached the top court. The Court directed that the ₹158 crore settlement amount that was paid by Byju's to BCCI should be kept in a separate account in the meantime.

A week later, the Supreme Court refused to stay or defer the operations of the Committee of Creditors (CoC), which had been formed to oversee Byju's corporate insolvency resolution process (CIRP). The Court stated that it would not issue such an order without first examining the case on its merits.

On September 25, the Supreme Court expressed doubts over whether NCLAT had properly considered the case before deciding to close the insolvency proceedings and indicated that it might send the matter back to NCLAT for a fresh decision.

The following day, the Court reserved its verdict on Glas Trust's appeal and ordered the interim resolution professional to maintain the status quo, instructing that no CoC meetings be held for the time being.

Dream 11 - Shirt sponsor from July 2023 to March 2026

In February this year, NCLT Mumbai admitted an insolvency plea against Sporta Technologies, owner of fantasy sports platform Dream11 for a debt of over ₹7 crore.

Reward Solutions, which had a lease agreement with Sporta since December 2019, filed the plea after the latter allegedly defaulted on rent payments from the start. Despite a demand notice sent in April 2021, Sporta failed to comply, leading Reward Solutions to move the NCLT.

However, in February this year, the NCLAT Principal Bench stayed the insolvency proceedings after hearing a plea by by Bhavit Sheth, co-founder and Chief Operational Officer of Dream11. On April 18, it set aside the insolvency process after holding that the application for insolvency was time-barred and that NCLT could not have admitted it.

In another dispute, Dream11 ran into trouble with the tax authorities for alleged evasion of Goods and Services Tax (GST) amounting to over ₹1,200 crore.

The tax authorities claimed that Dream11 was evading 28% GST on services deemed as gambling. In September 2023, Dream11 challenged these notices in the Bombay High Court, arguing that its platform provided games of skill, not gambling, and that GST on actionable claims was inapplicable.

On December 6, 2023, the Court was informed that the Deputy Commissioner of the Maharashtra tax department had withdrawn its show cause notice. It was further informed that the Directorate General of GST (DGGST) was going to the send a fresh show cause notice instead. In view of this, Dream 11 withdrew its petition.

OPPO - Shirt sponsor from May 2017 to August 2019

In 2022, Nokia sued Oppo in the Delhi High Court for breaching a cross-licence agreement covering standard essential patents (SEPs) in 5G and other cellular technologies.

On July 3, 2023, a Division Bench the High Court found a prima facie case of infringement against Oppo and ordered the company to furnish security payment.

The Court noted that in 13 global proceedings, 11 courts had found infringement, and 5 deemed Oppo an unwilling licensee.

Oppo challenged this order in the Supreme Court, which upheld the High Court's decision.

In January this year, the companies reached a settlement, leading to withdrawal of the suit.

Oppo remains embroiled in a similar dispute with US-based InterDigital Technology, which has moved two suits before the Delhi High Court for alleged infringement of SEPs necessary for 3G, 4G, 5G and HEVC video coding technology.

According to InterDigital, it was negotiating with the Oppo group for a number of years for a license agreement on Fair, Reasonable and Non-Discriminatory (FRAND) terms.

When the parties could not find common ground, InterDigital initiated a multi-jurisdictional campaign against the Oppo Group in UK, Germany, India etc in December 2021.

On February 21, 2024, the Delhi High Court's Justice Pratibha M Singh criticised Oppo for delays, ordering it to deposit pending royalties as security and imposing a ₹5 lakh penalty.

To support allegations that Oppo was not willing to procure licences at FRAND rates, InterDigital had urged the Court to order Oppo to disclose licencing agreements that the company had entered into with Ericsson and Orange SA (other SEP licensors).

On May 31, Justice Anish Dayal rejected InterDigital’s request by holding that Oppo's agreements with Ericsson and Orange SA were not relevant to determine the applicable FRAND rates in this case.

In a separate judgment passed the same day, a Division Bench of Justices Vibhu Bakhru and Vitatsa Ganju set aside the penalty. It allowed Oppo to furnish a bank guarantee instead of cash security and continue selling phones without an injunction, emphasising that pro tem orders should not be punitive.

Sahara India Pariwar - Shirt sponsor from June 2001 to December 2013

In 2008, Sahara India Real Estate Corporation (SIRECL) and Sahara Housing Investment Corporation (SHICL) raised approximately ₹24,000 crore from around 30 million investors through optionally fully convertible debentures (OFCDs).

In June 2011, the Securities and Exchange Board of India (SEBI) directed Sahara to refund the money for not adhering to regulatory norms. This order was upheld by the Securities Appellate Tribunal (SAT) and later by the Supreme Court, which directed Sahara to refund ₹24,000 crore with 15% interest per annum.

In February 2013, SEBI moved the Supreme Court, stating that Sahara had not complied with the Court's order. The next month, the apex court directed Sahara to deposit ₹10,000 crore with SEBI as part payment. Sahara deposited some funds but failed to comply fully.

Thereafter, in February 2014, the Supreme Court issued non-bailable warrants against Sahara chief Subrata Roy for non-compliance with its order. Subsequently, Roy was arrested and sent to Tihar jail.

In May 2014, he was granted interim bail on the condition that Sahara deposits ₹10,000 crore with SEBI. Sahara failed to meet the conditions fully.

Roy was, however, released on parole in May 2016 when his mother passed away. His parole was extended multiple times since then.

In April 2017, the Supreme Court directed the auction of Sahara's Aamby Valley property to recover dues. SEBI continued to receive partial payments from Sahara, but substantial amounts remained unpaid.

In November 2020, SEBI moved the Supreme Court seeking immediate payment of ₹62,602 crore. According to SEBI's application, the principal liability was of ₹25,781.32 crore, of which SEBI managed to recover only ₹15,455.70 crore from Sahara and from sale of properties of Sahara.

On March 29, 2023, the Supreme Court allowed an application by the Central government to disburse ₹5,000 crore from the SEBI-Sahara account to investors.

The order was passed after Solicitor General (SG) Tushar Mehta submitted that a total amount of ₹24,979.67 crores is lying unutilised with the SEBI in the 'Sahara-SEBI Refund Account' which was created pursuant to the top court's orders.

On November 14, 2023, Subrata Roy passed away. SEBI is still in the process of recovering funds from Sahara and disbursing them to the rightful investors.

On August 5, 2024, Finance Minister Nirmala Sitharaman revealed in Parliament that only ₹138.07 crore has been refunded to 17,256 eligible investors out of 19,650 claims.

Star India - Shirt sponsor from January 2014 to March 2017

On February 28, 2022, the Competition Commission of India (CCI) directed its Director-General (DG) to carry out an investigation into Star India Private Limited and its subsidiaries in relation to allegations by Asianet Digital Network of abuse of dominant market position.

Asianet, a receiver of broadcasting signals from the Star India for monetary consideration, alleged abuse of dominant position by Star India stating that it was discriminated against and not extended discounts that were offered to competitors.

It claimed that discriminatory discounts were in contravention of the Competition Act’s provisions, as they denied market access to the informant.

While examining the issue, the Commission prima facie found that Star India enjoyed a dominant position in the relevant market and ordered a probe.

Star India moved the Bombay High Court against the order. On April 6, 2022, the High Court passed an interim order directing CCI to not take any coercive action against Star India.

On September 6, 2022, the High Court decided not to exercise its territorial jurisdiction in the matter.

The sponsorship of the Indian cricket team, while promising unparalleled brand visibility, seems to have been a double-edged sword for companies like Byju's, Dream11, OPPO and Sahara.

These companies have faced substantial legal challenges ranging from insolvency proceedings and tax disputes to intellectual property battles and regulatory issues.

Although these troubles are not necessarily a direct consequence of their sponsorship roles, the trend is hard to ignore. While the sponsorship brings fame, it also brings increased scrutiny and higher stakes, leading to legal entanglements that can significantly impact the businesses involved.