Does the termination of East Bengal agreement absolve Quess of all financial liabilities?

The Quess-East Bengal saga looks to be drawing to a premature end with the Bengaluru-based business service provider looking to pull out of the I-League club by the end of May.

However, there is plenty of confusion with regards to the status of the club and other finer points including player contracts, financial liability and more.

The joint venture between Quess and East Bengal, enforced at the beginning of the 2018-19 season, had seen the former hold 70 per cent of the stakes while the latter was given 30 per cent of the new entity called Quess East Bengal. Quess were expected to provide the finances for the operations of the club as part of the agreement.

It has to be noted that all existing contracts between players and East Bengal at that point in time were redrawn, so that the contracts came under the aegis of Quess East Bengal.

Now Quess have been harping repeatedly that they will have no financial liability post May 31, 2020, with respect to East Bengal.

On May 28, Quess held their Q4 2020 earnings conference call which was attended by Ajit Issac (Chairman and Managing Director), Krishna Suraj Moraje (Group CEO & Executive Director) and other top officials. 

During the meeting, Moraje stated, "We will conclude the termination of our partnership with QEBFC as of end of May, and we will make sure there are no further liability on that front."

Goal had reported earlier that Quess was looking to divest shares of East Bengal to minimise losses and strike an early exit. On each occasion, Quess kept specifying the fact they will have no financial liability.

However, it might not be as simple as it sounds. One of the termination clauses in the agreement signed by Quess and East Bengal reads - "The termination of this agreement shall not relieve any party of any obligation or liability accrued prior to the date of termination."

As per this clause, the existing contracts entered into by Quess East Bengal that run beyond the end of this season could be a liability for Quess since the contracts were signed prior to the date of termination of the agreement. There is a lack of clarity here.

Once again, it is not clear if May 31 is really the date of termination. It remains to be seen of the agreement is really terminated by May 31. Whether the issue continues to drag on until the time Quess and East Bengal strike an exit deal is also something to keep an eye out on.