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Updated: February 5, 2013 00:45 IST

Rajasthan Royals slapped nearly Rs. 100-cr. penalty

Staff Reporter
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Shilpa Shetty, owner, Rajasthan Royals, at a press conference, in connection with the Pepsi IPL player auction, in Chennai on February 3, 2013. Photo : Bijoy Ghosh
The Hindu Shilpa Shetty, owner, Rajasthan Royals, at a press conference, in connection with the Pepsi IPL player auction, in Chennai on February 3, 2013. Photo : Bijoy Ghosh

Rajasthan Royals and its foreign investors have been slapped a penalty of nearly Rs. 100 crore by the Enforcement Directorate (ED) for contravention of various sections of the Foreign Exchange Management Act (FEMA). Notices were issued to the Indian Premier League (IPL) franchise, Jaipur IPL Cricket Private Limited (JIPL); EM Sporting Holding of Mauritius; and M/S ND Investments of the U.K. They have been asked to pay the penalty within 45 days.

JIPL, which owns Rajasthan Royals, has been asked to pay nearly Rs. 50 crore. Several severe irregularities were found in the foreign investment of the group, sources in the ED said.

Directors of the JIPL include Manoj Badale and Suresh Chellaram. Mr. Badale is also the co-owner of Rajasthan Royals.

“JIPL and its directors have been asked to pay a penalty of around Rs. 50 crore by the adjudicating authority. The EM Sporting Holding of Mauritius and its directors have been slapped with a penalty of around Rs. 34 crore. M/S ND Investments of the U.K. and its directors have been asked to pay around Rs. 14.5 crore,” an official source said.

In April 2011, the ED had issued show-cause notice to JIPL after coming across “flagrant contravention of FEMA.”

“The investment was made much prior to the incorporation of JIPL, funds had been remitted in an irregular manner and shares were sought to be issued in contravention of FEMA,” an official said.

ED investigation revealed that the foreign investments in the group were “in contravention of Section 6 of FEMA read with FEM [Transfer or issue of Security by a person resident outside India] Regulations and FEM [Permissible Capital Account Transactions] Regulations and Section 3(b) of FEMA, 1999.”

The three parties can appeal against this order issued by the adjudicating authority.

So far, in the course of investigating the IPL for nearly two years, the ED had issued 24 show-cause notices to the BCCI (Board of Control for Cricket in India), IPL franchises, banks and their officials for contravention of FEMA to the tune of around Rs. 2000 crore.

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