The initial probe of the corporate affairs ministry into the affairs of the IPL franchises has revealed that some of them had failed to submit their annual reports , including balance sheets, for different years for which they have now been issued show-cause notices with a caution that failing to respond could invite criminal action.
The regional directors of the ministry had been tasked to collect information from these franchises on their shareholding patterns, investments and list of directors . After initial scrutiny, the registrar of companies in Mumbai sent show-cause notices to at least three companies owning these franchises for irregularities in filing of annual reports.
Shah Rukh and Gauri Khan as directors of Red Chillies Entertainments Pvt Ltd, Raghuram Natrajan Iyer and Ranjit Rabindranath Barthakur of Jaipur IPL Cricket Pvt Ltd, and Gauri Khan, Sanjiv Chawla and Jay Mehta of the Knight Riders Sports Pvt Ltd were issued show-cause notices for not filing their annual reports for different years.
The ministry is looking into the allegations that the bid process was rigged and the transactions were not transparent. The income tax department, which has collected a number of documents during their search and survey operations over the last two weeks, has shared some details with the ministry.
The transaction records of the IPL franchises provided by the I-T officials to the ministry will be verified with the balance sheets submitted by these companies before the registrar of companies .
Out of the four franchisees registered in Mumbai , three had allegedly violated the provisions of the Companies Act relating to filing of returns. The notice has cautioned the franchiseeowning companies that “on the expiry of the notice period , criminal proceedings will be filed against the company and the directors” .
While Red Chillies has failed to file its balance sheet for the year ended March 31, 2007, Jaipur IPL did not file the annual report for 2009, and Knight Riders failed to submit reports for both 2008 and 2009 ever since they were awarded the franchisee.
The chief vigilance officer of the ministry is coordinating with all the regional directors on the ongoing scrutiny, sources said.
Last week, the corporate affairs ministry had directed its regional registrar of companies to collect details of IPL franchises — the biidding process, shareholding pattern and their agreement with the IPL.
The details were sought from 10 franchises, including the Kolkata Knight Riders, Mumbai Indians, the new teams in Pune and Kochi and Chennai Super Kings, Royal Challengers Bangalore, Deccan Chargers and Jaipur IPL.
Meanwhile, minister of corporate affairs Salman Khursheed told reporters on Monday that his ministry is “merely collecting information that it should have in the normal course of those companies that are franchisee companies” .He said the ministry was not conducting any “probe… it was only a due diligence ” process.