Pro Volleyball League Dispute: Madras High Court Upholds ₹4 Crore Award Against Volleyball Federation Of India

The Madras High Court on Tuesday refused to interfere with an arbitral award directing the Volleyball Federation of India to pay Rs.4 crore as loss of profits to Baseline Ventures, the former promoter of the Pro Volleyball League, holding that the federation's termination of the 2018 agreement was unjustified.

Justice N. Anand Venkatesh held that the award dated November 21, 2020 “does not suffer from any perversity or patent illegality warranting the interference of this Court."

The Court made it clear that its role under Section 34 of the Arbitration and Conciliation Act is limited. It observed that the arbitrator's conclusions were “certainly possible views on appreciation of evidence” and that merely because another view is possible, that cannot be a ground to set aside the award.

The dispute stemmed from a February 21, 2018 agreement under which Baseline agreed to conduct ten seasons of a professional volleyball league over ten years. The federation was entitled to a one time fee of Rs.2.5 crore, a minimum guaranteed amount per season and 50 percent of net profits. The first season was held in February 2019.

Baseline's audited statements reflected a loss of about Rs.1.66 crore. The federation alleged that the accounts were manipulated to deny it its profit share. It also claimed breach on the ground that no league was conducted in 2018, that women's and beach volleyball leagues were not held, that there was a delay in payment of fees, and that Baseline had wrongly applied to register the league's trademark and logo.

The federation terminated the agreement in November 2019. Subsequently, Baseline invoked arbitration and sought damages.

The arbitrator rejected the federation's case on the 2018 season. It found that the contract did not specifically mandate that season one must be conducted in 2018 and that the federation was aware, through its conduct and communications, that the first season would take place only in 2019. The High Court held that this was a plausible interpretation of the agreement and did not warrant interference.

On the failure to conduct the women's and beach volleyball leagues, the arbitrator held that the agreement did not prescribe a specific timeline and that the federation itself had not insisted on their conduct before termination. The Court found this reasoning to be supported by the record.

The allegation of manipulation of accounts was one of the core allegations of Federation. The arbitrator noted discrepancies in certain expenses but concluded that they did not establish manipulation.

It also observed that the Audit Committee contemplated under the agreement never meaningfully functioned and that the federation did not seek an independent audit during the proceedings. The High Court held that the arbitrator's reasoning was detailed and could not be termed perverse.

On the issue of delay in payment of the one-time fee and minimum guarantee, the arbitrator found that invoices were required to be raised by the federation and that payments were made once invoices were issued. The Court saw no patent illegality in that finding

Turning to termination, the arbitrator held that the contractual procedure was not followed and that the earlier communication relied upon “cannot be certainly treated as a notice of termination."

The High Court agreed that this conclusion flowed from the record.

Having found the termination unlawful, the arbitrator awarded Rs.4 crore towards loss of profits. The Court endorsed the approach adopted for quantifying damages, reiterating that arbitrators are permitted “to employ an honest guesswork and a rough and ready method for quantifying the damages."

The arbitrator had also dismissed the federation's substantial counterclaims for loss of profits and reputation, observing that the federation had “killed the goose that laid golden eggs” by terminating the agreement to interfere with that assessment.

Concluding that none of the challenged findings disclosed perversity or patent illegality, the Court dismissed the federation's petition and imposed costs of Rs.2.5 lakh payable to Baseline Ventures

For Petitioner (Volleyball Federation of India): Advocates Mr. P. V. Balasubramanian, Mr. P. Siddharth for BFS Legal

For Respondent (Baseline Ventures (India) Pvt. Ltd.): Advocates Mrs. Elizabeth Seshadri and Mr. H. Karthik Seshadri