ED notice to Shah Rukh Khan, Gauri, Juhi Chawla for Rs 73 cr Fema violation

The Enforcement Directorate today issued a show-cause notice to actor Shah Rukh Khan, his wife Gauri, actor-friend Juhi Chawla and others for alleged loss of Rs 73.6 crore foreign exchange in a FEMA case related to the T-20 cricket league IPL.

The agency said it has also issued notice to Knight Riders Sports Private Limited (KRSPL) which owns the Indian Premier League (IPL) team of Kolkata Knight Riders (KKR).

The notice has been issued for the sale of some shares of KRSPL to a Mauritius-based firm at a cost lower than their "actual value", resulting in loss of foreign exchange to the extent of Rs 73.6 crore.

The agency said the notice has been issued for "contravention of provisions of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 made under the Foreign Exchange Management Act".

While Gauri is a Director of KRSPL, Khan and Chawla are the owners of the IPL team KKR.

The case pertains to 2008-09 when the ED first began investigation against the IPL franchise and its owners.

Khan and others have been questioned by the ED multiple times in this case and the actor's statement was also recorded under FEMA provisions.

A show-cause notice under FEMA laws is issued when the investigation gets completed.

Khan's company Red Chillies Enterprises Private Limited (RCEPL), the agency said, is a wholly-owned subsidiary of Red Chillies International Limited based overseas in Burmuda and is co-owned by Gauri.

"In 2008 Red Chillies Enterprises Private Limited formed a special purpose vehicle namely M/s Knight Riders Sports Ltd for the purpose of acquiring IPL franchise rights of the cricket team named Kolkata Knight Riders.

"Initially, the entire share holding of Ms Kolkata Knight Riders Private Limited was with Red Chillies Enterprises and Gauri. After the success of IPL, about two crore additional shares were issued by KRSPL out of which 50 lakh shares were issued to The Sea Island Investment Ltd (TSIIL), Mauritius and 40 lakh shares were issued to Chawla.

"These shares were allotted at a par value of Rs 10 whereas the actual value of these shares was much higher," it said.

The ED said its investigation showed that Chawla subsequently sold her 40 lakh shares to TSIIL, Mauritius at the par value of Rs 10 only.

"Thus, foreign based company TSIIL was issued 90 lakh shares at par value while the actual cost of share at the time of issue/sale was ranging between Rs 86-Rs 99 per share. This has resulted in loss of foreign exchange to the extent of Rs 73.6 crore," the agency said.

The agency has given 15 days' time to all the parties to reply to the notice after which the adjudication proceedings will begin in this case.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel