The Enforcement Directorate (ED) has issued notices to Shah Rukh Khan to appear before a court with respect to a Foreign Exchange Management Act (FEMA) case. Officials told PTI that a sum of Rs 73.6 crore was lost in foreign exchange in the Indian Premier League (IPL) T-20 cricket league case. The actor has to be present before an adjudicator, who is a special director-rank officer of the agency, on August 23. The accused are to participate in the legal hearing and if proven guilty, may have to pay a penalty thrice the amount of loss. Here’s what happened:
1. Khan and Juhi Chawla own the IPL team, Kolkata Knight Riders (KKR), under the company Knight Riders Sports Private Limited (KRSPL). Gauri Khan is the director of KRSPL.
2. Some shares of KRSPL were sold to a Mauritius-based firm at a value lower than their actual rates. This led to a loss of foreign exchange worth Rs 73.6 crore.
3. Show cause notice issued to the company and its owners is due to “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”.
4. The ED had begun its investigation into the IPL franchise and its owners in 2008-09. It has questioned Shah Rukh Khan multiple times and had recorded the actor’s statements under FEMA provisions.
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5. Bermuda-based Red Chillies International Limited is the parent company of Red Chillies Enterprises Private Limited (RCEPL), which Shah Rukh Khan co-owns with Gauri Khan.
6. ED said, “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 TSIIL 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. 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 ED added.
7. According to the ED investigation, Juhi Chawla sold about 40 lakh shares to The Sea Island Investment Ltd (TSIIL), Mauritius at a par value of Rs 10 only.