Preity Zinta files appeal against stake sale in Punjab Kings (PBKS). The dispute is between co-owners Preity Zinta and businessman Mohit Burman.
The Punjab Kings (PBKS) franchise, one of the original eight teams in the Indian Premier League (IPL), is currently embroiled in a legal dispute between its co-owners. This internal conflict has escalated high, reaching the Chandigarh district and sessions court ahead of the IPL 2025 auction.
Legal Battle between Co-owners
The central issue is a dispute between co-owners of PBKS, Bollywood actress Preity Zinta and businessman Mohit Burman, which has raised critical questions about the franchise's ownership dynamics and future.
The Punjab Kings ownership is split among four main stakeholders. Mohit Burman holds the largest share with a 48 per cent stake, making him the majority shareholder. Preity Zinta and Ness Wadia each hold a 23 pc share, while Karan Paul owns the remaining 6 pc. The conflict centres on Burman's purported intention to sell a portion of his shares, which Zinta has challenged through legal action.
Understanding the Legal Battle
The dispute first came to light when Zinta, who owns her shares through KPH Dream Cricket Private Limited, sought a court order to prevent Burman from selling a part of his stake. Zinta's move was driven by concerns that Burman’s sale of his shares to an external party would violate an internal agreement among the owners.
According to this agreement, if any of the owners wish to sell their shares, they must first offer them to the existing co-owners before seeking external buyers. This arrangement is intended to ensure that any changes in ownership do not disrupt the internal balance of power within the franchise.
Zinta’s legal actions include filing an appeal seeking an injunction from the Chandigarh district and sessions court to block Burman from proceeding with the sale. The actress argues that Burman’s alleged decision to sell a portion of his shares, reportedly around 11.5 pc, to an outside party breaches this agreement. The court proceedings have highlighted the complexities of the ownership structure, and the legal obligations tied to share transactions.
Burman denies selling any stake in August 20 Court Hearing
During a court hearing on August 20, 2024, Burman responded to Zinta’s petition by denying any plans to sell his shares. He informed the Chandigarh district and sessions court that he had no intention of divesting any part of his stake in the team. This denial adds a layer of uncertainty to the situation, as the conflict now hinges on whether Burman will proceed with the sale, if at all he has decided to sell, or if the issue will be resolved through legal channels.
"Preity has filed the petition under Arbitration and Conciliation Act, which states any shareholder can sell their shares outside the group only if remaining shareholders refuse to buy them. Thus far, this scenario has not occured in the present case," told Zinta's lawyer to reporters.Zinta's lawyer has requested a new date to present additional arguments and seek instructions from the petitioner who is currently overseas.
The additional district and sessions judge Sanjay Sandhir set the next hearing on September 2.
What does the Rule Book say?
The legal framework governing the sale of shares in the Punjab Kings is crucial to understanding the current dispute. According to the internal bylaws of the franchise, any owner wishing to sell their shares must first offer them to the other co-owners. If the existing owners decline to purchase the shares, then and only then can the seller seek external buyers. Additionally, the offer to sell must be time-bound, meaning that the seller cannot indefinitely wait for a response from the current owners before looking for external parties.
Zinta's petition emphasises Article 19 of the association's bylaws, which grants existing directors the right of first refusal (ROFR) before shares can be sold to outsiders. Zinta claims that Burman initially offered his shares to the other directors but subsequently retracted this offer while continuing to seek a sale to a third party, allegedly a US-based company. This alleged breach of protocol is at the heart of Zinta’s legal action, as she seeks to enforce her rights and prevent any external sale that could undermine the stability of the franchise’s ownership.
The involvement of the Board of Control for Cricket in India (BCCI) adds another dimension to the dispute. Any transaction involving the sale of shares in an IPL franchise requires BCCI’s approval. The regulator is entitled to receive five percent of the transaction value. With IPL franchises' valuations soaring, this percentage represents a substantial amount. Given that moderately successful franchises are valued between $650-700 million (approximately INR 5,300-5,800 crore), even a small portion of Burman’s stake could be worth hundreds of millions of dollars. Burman has reportedly set a price of around $85 million (over INR 700 crore) for his shares.
Larger Aspect of the Dispute
The resolution of the dispute could impact not only the internal dynamics of the Punjab Kings but also its strategic planning for the upcoming season. The franchise has struggled to achieve consistent success in the IPL, reaching the final only once and the semifinals once in its 17-year history. As a result, there are ongoing discussions about replacing current coach Trevor Bayliss with a new Indian coach to bolster the team’s performance. The legal uncertainty surrounding the ownership could complicate these efforts and affect the franchise’s ability to make strategic decisions effectively.
The outcome of this legal battle will have broader implications for the Punjab Kings and the IPL. If Zinta’s claims are upheld and Burman is prevented from selling his shares, it will reinforce the importance of adherence to internal agreements among franchise owners. Conversely, if Burman proceeds with the sale and it is approved by the BCCI, it could lead to shifts in the franchise’s control and potentially impact its operations and strategies.
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