"You've got to understand that when we set up the league, it was in 2008, very early. We were trying it out and we did the system for three years," said Modi.
"At that point in time, there was no black money in the system, but I do understand today, yes, players are being negotiated outside the system and contracts are being done with the players which say one thing and but are being paid another thing.
"And that's quite prevalent all the way through all the teams. It not only applies to the Indian players but applies to a lot of international players too."
Asked if the players became soft targets, while the franchisees get away, Modi said it was for the governing council and the management to ensure a level playing field.
"There's a catch-22 situation at the end of the day. The issue had become very clear that all team owners will want the best players and they will like to negotiate the best deals that they can with the player concerned. It is for the governing council and the management to ensure a level playing field and ensure that nobody does that," Modi told CNN-IBN.
Modi also admitted that there must be a system where franchises don't break rules.
"Yes, there has to be a system that has to be brought into place where the franchises don't break this rule. But it is human psychology that they will want the best players and they will try and negotiate with the best players.
"To avoid that, it's better to put them through a draft system. And if you put them through that system, which we had in first place, this issue would not have arisen today again," said Modi. (MORE)