The 'Enforcement Directorate' has served a show cause notice to M/s Knight Riders Sports Pvt. Ltd. (KRSPL), Gauri Khan, Shah Rukh Khan and Juhi Chawla under Rule 4(1) of Foreign Exchange Management (Adjudication Proceedings and Appeal Rules), 2000. As per the notice issued by ED, Shah Rukh Khan had brought the 'Kolkata Knight Riders' IPL team in the year 2008, after a different company 'Kolkata Knight Riders Pvt Ltd.' was created under his Red Chillies entertainment banner, with Gauri Khan as its director.
The shares for the team were initially bought under Gauri's name, however, post the success of the venture 2 crore new shares were bought, out of which 40 lakh shares were sold to Juhi Chawla. While Juhi bought the shares at the cost of Rs 10 par value, she eventually sold her 40 lakh shares to M/s TSIL, Mauritius at the same rate.
Thus the Mauritius-based company, M/s TSIL, was issued over 90 lakhs shares at the value of Rs 10 while the actual cost of share at the time of issue sale was ranging between Rs 86 to Rs 99 per share. This deficit costing led to a loss of Rs 73.6 Crores in foreign exchange.
'Kolkata Knight Riders' was one of the most expensive teams bought at approximately Rs 75 million. ED has given the KKR owners Shah Rukh Khan, Gauri Khan and Juhi Chawla 15 days of time to reply to the SCN for violating FEMA guidelines.
