Shah Rukh Khan summoned to explain motive behind sale of shares to a Mauritius company

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The Enforcement Directorate (ED) has asked actor Shah Rukh Khan to appear before it on August 23 in connection with the alleged undervaluation of Indian Premier League (IPL) shares.




Shah Rukh Khan

Shah Rukh Khan may be given an opportunity to explain the "motives" behind the sale of Knight Riders Sports Pvt Ltd (KRSPL) shares at undervalued rates to a shell company in Mauritius.

Top ED sources said that SRK would be asked be explain why the sale of shares were "effected" to the Mauritius based The Sea Island Investment Ltd (TSIIL), an entity which is allegedly owned by actor Juhi Chawla's husband Jay Mehta. The ED holds that money "generated' from the sale of shares made it back to India in the form of black money. The ED holds that SRK in cahoots with Chawla and Mehta has funneled funds out of the country.

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The KRSPL, created by SRK owned Red Chillies Enterprises Pvt Ltd, owns the Kolkata Knight Riders (KKR) cricket team jointly with actor Chawla and Mehta. ED officials said SRK would be "asked be explain his side of the story" as the sale of shares at undervalued rates caused alleged loss Rs 73.6 crore (387 million MUR) in foreign exchange.

The show cause notice had been issued for the sale of five million shares of his KRSPL to a Mauritius-based firm at a cost lower than their "actual value", resulting in loss of foreign exchange to the tune of Rs 73.6 crore.

Approximately, the shares were sold at an undervalued rate of Rs 10 per share when the prices of shares during 2008-09 were assessed to be between Rs 70-80. The ED which wrapped up its probe in March this year had focused on the actual prices KRSRL shares were sold for and the discrepancies between the actual and declared prices.

It is learnt SRK might choose to appear personally or send his "representative" before the agency. ED sources said before the agency authority passes the final "adjudication order" and slaps a penalty quantum on the actor it needed to "ascertain" the beneficiaries of the undeclared funds. The adjudicating authority generally comprises three members-one each from the fields of law, administration and finance- with a chairpersons with adjudicating and oversight powers.