The IPL Governing Council, after an emergency meeting to discuss the issue, served a 30-day termination notice to the franchise to sort out its differences failing which it would stand cancelled.
"The Governing Council received replies from two parties, the Rendezvous group and the other co-owners, and they both felt that the dispute still exists," BCCI President Shashank Manohar told reporters after the meeting.
"The Governing Council has invoked clause 12 (1) and given them a 30 days notice that in case they don't remedy these disputes in the 30 days, the franchise would stand cancelled on the 31st day," he said.
The emergency meeting was convened by Manohar due to the lingering dispute over who will run the affairs of the franchise, bought from the Cricket Board for USD 333 million, once the joint venture was formed.
The investors in the Kochi consortium include corporate firms Anchor Earth, Parinee Developers, Rosy Blue and Film Wave - who hold 75 per cent of the equity.
The remaining 25 per cent has been given to the family of Gaekwads - Shailendra, his brother Ravi and their parents plus a few others, all part of the group of promoters - Rendezvous Sports World - as free equity for services rendered in successfully bidding for the franchise.
Asked why Kochi had been given more time after two other franchises -- Rajasthan Royals and Kings XI Punjab -- were terminated over ownership issues, Manohar said both the cases were different from Kochi.
"This not an intermediary breach that has been committed like in the case of Rajasthan Royals and Kings XI Punjab so that is why they have been given 30 days time to remedy this," he explained.
"According to me the two cases are altogether are different. As far as Rajasthan Royals and Kings XI Punjab are concerned there was transfer of ownership but as far as Kochi is concerned there is no transfer of ownership therefore 30 days time for the agreement has been given," he said.
On what the BCCI thought of former Governing Council member and ex-India captain Sunil Gavaskar's name being linked to the Kochi franchise, Manohar said the matter was not Board's concern.
"What discussion took place between Mr Gavaskar and Mr (Satyajit) Gaekwad is known only to Mr Gavaskar and Mr Gaekwad, the BCCI does not know," he said.
Pressed further on the issue, Manohar said, "We are not aware of that, we are not an investigative agency."
The BCCI's action today was being interpreted as a reprieve for Kochi, which has been courting controversies ever since it won the bid. There was speculation ahead of the meeting that the team could be scrapped.
Welcoming the BCCI decision, Satyajit Gaekwad, Rendezvous Group CEO, which is one of the co-owners of Kochi, said the matter would be resolved at the earliest.
"BCCI has given us enough time. I think, our investment partners also appreciate this. I hope the issue would be sorted out in the shortest possible time," he said.
"We are very sure that we will definitely come up with a rapprochement. Either way I am thankful to Shashank Manohar and the Governing Council and BCCI in general for giving us an opportunity to sort out the differences or come out with a solution which would be conducive to the IPL Kochi team to conduct its business in a structure laid out by the IPL," he added.
A couple of weeks ago, the glamour-laden Rajasthan Royals and Kings XI Punjab were terminated without any notice by the BCCI, setting off a storm of protests by owners who have taken legal recourse.
Charging the two teams with breach of franchise agreement, the Governing Council took the decision to de-franchise the two teams and served the first notice to the Kochi team to resolve all their disputes within 10 days.
While Rajasthan, led by Shane Warne, had star players like Greame Smith and Shane Watson, Punjab had players like Yuvraj Singh, Brett Lee, Kumar Sangakkara and Mahela Jayawardene among others.
The two scrapped franchisees had been at the center of corruption allegations involving former IPL chairman Lalit Modi who was already been suspended by BCCI in July and a committee was set up to investigate bribery allegations in the 2008 awarding of the bids.
Modi, who has family links with Rajasthan Royals, though has denied any wrongdoing in the bidding.
Kochi, after being served the first notice, claimed that it had roped in Sunil Gavaskar in an advisory capacity but the former Indian skipper denied accepting the offer and said he would take decision only after the franchise had resolved its disputes.
Gavaskar was ousted from the IPL Governing Council due to a payment dispute some weeks ago.
The IPL was to be a 10-team competition for the 2010-11 season, which is scheduled to take place immediately after the ICC World Cup in April-May next year but with two teams scrapped, it would now be an eight-team affair.