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ED ruins SRK’s Diwali, Grills him for three hours

This is not the first time Shah Rukh was questioned by the ED regarding financial violation.

ShahDiwali turned out to be a dampener for Bollywood actor Shah Rukh Khan as the Enforcement Directorate questioned him in the matter pertaining to the alleged irregularities in the sale of share of Knight Riders Sports Pvt Ltd (KRSPL) to a Mauritius-based company. He was questioned for more than three hours.

“We recorded Khan’s statement in connection with the violation of Foreign Exchange Management Act,” ED sources here said.

The case, dating back to 2008-09, pertains to the share sale of KRSPL, owned by Khan’s Red Chillies along with Juhi Chawla and her husband, to a Mauritius-based company owned by Chawla’s husband Jay Mehta. This is not the first time the actor was questioned by the ED regarding financial violation.

The share transfer which is referred to here had happened in 2008-09, and probing has been taking place since 2010 under Foreign Exchange Management Act (FEMA).

According to sources, however, Shah Rukh Khan has denied any irregularities from his side.

ED is probing allegations that shares sold to the Jay Mehta-owned Sea Island Investments were undervalued by eight to nine times.
Khan had faced ED once in 2011 when he was questioned about alleged foreign exchange violation of around Rs 100 crore.

At the time of incorporation in 2008, Red Chillies had 9,900 shares of KRSPL. The valuation report, made by ED’s external agency last year, said that when the equity shares of KRSPL were issued to Sea Island Investments, the fair value per equity share of KRSPL should have been between Rs 70-86. However, the shares were issued at a value of Rs 10 each.

According to the Foreign Exchange Management Act (FEMA), the price of shares issued to persons residing outside India should not be lower than the price worked out under the guidelines set by stock market regulator SEBI in case of a listed company, or on the basis of fair valuation of shares by a chartered accountant as per guidelines of the erstwhile Controller of Capital Issues (CCI).

Officials said that Khan cooperated with them and has provided them with some documents related to the transfer of shares.

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