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ED notices to SRK, Juhi Chawla for Rs 73 crore FEMA violation

MUMBAI: Kolkata Knight Riders (KKR) owner Shah Rukh Khan is in a new round of controversy. The Enforcement Directorate has issued show-cause notices to Bollywood superstar Khan, his wife Gauri, actor-friend Juhi Chawla and others for alleged loss of Rs 73.6 crore foreign exchange in a FEMA case connected with the 2009 Indian Premier League (IPL).

The agency has also issued notice to Knight Riders Sports Pvt Ltd (KRSPL), the company which owns IPL cricket team KKR.

441_stars_juhi_chawla_srkThe notice has been issued for the sale of some KRSPL shares to a Mauritius-based company at a cost that is lower than their “actual value”, This resulted in loss of foreign exchange to the extent of Rs 73.6 crore, the notice said.

The ED has sought a reply from them within 15 days.

Gauri is a director of KRSPL while Khan and Chawla are the owners of KKR.

The case goes back to 2008-09 when the ED started investigation against the IPL franchise and its owners.

According to the ED, Red Chillies Enterprises Private Limited (RCEPL) is a wholly-owned subsidiary of Red Chillies International Limited based overseas in Bermuda and is co-owned by Gauri.

As per the ED’s version, Red Chillies Enterprises Pvt Ltd set up a special purpose vehicle in 2008. Knight Riders Sports Ltd was floated to acquire IPL franchise rights of KKR.

The entire shareholding of Kolkata Knight Riders Pvt Ltd was with Red Chillies Enterprises and Gauri. But 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.

While these shares were allotted at a par value of Rs 10, their actual value would have been much higher,” the agency said.

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

So, the foreign-based TSIIL received 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 resulted in loss of foreign exchange to the tune of Rs 73.6 crore.