The Enforcement Directorate has issued a show cause notice to the owners of Kolkata Knight Riders Shah Rukh Khan, his wife Gauri Khan and Bollywood actress Juhi Chawla for violating the FEMA guidelines.
The show cause notices have been issued by ED under Rule 4(1) of Foreign Exchange Management (Adjudication Proceedings and Appeal Rules), 2000. According to the ED, Shah Rukh Khan bought the IPL team in 2008 after a separate company Kolkata Knight Eiders Pvt Ltd. was formed from his Red Chillies entertainment with Gauri Khan being its director. Initially, all the shares were bought under her name but after team’s success, about 2 crore new shares were bought out of which 40 lakh shares were given to Juhi Chawla.
These shares were allotted at a par value of Rs. 10/- whereas, the actual value of these shares was much higher. Juhi Chawla subsequently sold her 40 lakh shares to M/s. TSIIL, Mauritius at the par value of Rs. 10/- only. Thus, foreign-based company M/s. TSIIL was issued 90 lakhs shares at par value while the actual cost of share at the time of issue sale was ranging between Rs.86 to Rs. 99 per share. So, it led to a loss of Rs. 73.6 Crores in foreign exchange. The notice has given 15 days of time to all the people mentioned for replying. If the claims by ED is true it can mean a tough time for SRK and his team which is currently preparing to participate in the 10th season of the Indian Premier League.
Shah Rukh had bought Kolkata Knight Riders in 2008 before the start of the first season of IPL for about Rs 75 million and it has been one of the richest teams in terms of the brand value since then. Riding on Shah Rukh’s popularity and two title winning seasons, the team has formed a decent fan base in the country. In 2015, he took his investments beyond India as Red Chillies bought shares in West Indian team The Red Steel which was later changed to Trinbago Knight Riders.
This notice has been issued less than a week after Shah Rukh Khan said that he has promised his family to not get into trouble again. “I have promised my family I will not talk like this on stage and get into trouble again! I think in today’s world (one should) be decent, be gracious, bow down a little. I am not giving you freedom to speak your mind, talk your mind, it’s a different world today. Speak your mind in the bathroom,” he said while speaking at the India Today Conclave