The decision to terminate Deccan's contract was taken at an emergency governing council meeting of the IPL in Chennai.
The BCCI President N Srinivasan took the final call to end Charger's contract after discussing the issue with other members, a top BCCI official said. BCCI's working committee will meet tomorrow to decide the future course of action.
The committee will decide whether to float a fresh tender for a new team or allow PVP Ventures, a Hyderabad-based urban infrastructure and film production company, whose Rupees 900 crore bid was rejected by Deccan at the auction yesterday, to take the team.
Deccan Chronicle Holdings, the owner of Deccan Chargers, received a bid of Rs 900 crore by PVP Venture Capitals but surprisingly chose to reject it at the auction as it considered the price and terms unsuitable.
The development brought the BCCI back into the picture. PVP Ventures may be given the team now. The late night development comes as a setback for Deccan Chargers which was trying to resolve its financial problems ahead of the 5 pm deadline tomorrow.
BCCI sources said that a fresh tender for a new IPL team could be issued.
"This option would be discussed when the governing council meet tomorrow as we want nine teams to take part in the next edition of the IPL" the source said.
The BCCI it is learnt also took legal opinion before deciding to terminate the Deccan contract mainly on the ground that it mortgaged the team to a consortium of banks.
The Deccan Chargers owned by Deccan Chronicle Holdings, was hoping to resolve its financial problems by selling the team but it rejected the sole bid it received at the auction yesterday.
PVP Ventures Limited, the Hyderabad-based urban infrastructure and film production company, had offered Rupee 900 crores but Deccan rejected it finding the terms of payment and the amount unacceptable.
It is said that the banks were primarily unhappy with the mode of payment which ultimately led to the deal falling through.
There were also reports that one of the banks was willing to bail out Deccan Chargers by making the payment to the players. But with the BCCI terminating the contract, the gesture would serve no purpose now.
Deccan Chronicle Holdings purchased the Hyderabad franchise for Rs 428 crore in 2008. At the auction, the base price was said to be around Rs 750 crore.
The winning bidder had to meet BCCI's eligibility criteria and other requirements. This was the first time an entire IPL franchise has been put on the block by its owners, although Rajasthan Royals sold a small stake in 2009 to the actress Shilpa Shetty and her husband Raj Kundra.
PVP Ventures Group is owned by Potluri Vara Prasad, a successful entrepreneur having interests in infrastructure, movies and financing.
He was named as accused number 19 in the alleged disproportionate assets case against Y S Jaganmohan Reddy.