NEW DELHI: An appellate tribunal has quashed penalties imposed by the Enforcement Directorate (ED) on former Indian Premier League (IPL) chairman Lalit Modi in a decade-old foreign exchange case linked to the 2009 IPL season in South Africa, according to the tribunal's order. Modi, seeing the order getting in his favour, he said that he is “really looking forward” to returning to India.
Modi lived outside India for more than a decade and has faced multiple ED investigations over alleged financial irregularities during his tenure as IPL chairman. The tribunal partly allowed the appeal filed by Modi and other appellants against a May 31, 2018 order passed by the ED's special director, which had imposed penalties for alleged contraventions of the Foreign Exchange Management Act (FEMA).
The case relates to the hosting of the 2009 edition of the IPL in South Africa and payment made by BCCI to Cricket South Africa (CSA), where the tournament was moved that year because of the general elections in India. The 2018 order had imposed penalties for violations of various provisions of the Foreign Exchange Management Act (FEMA), 1999.
A total 12 show-cause notices were issued regarding this. The main issue before the tribunal was whether BCCI's remittances to CSA, made under a Heads of Agreement dated March 30, 2009, amounted to a “Capital Account Transaction” requiring prior approval of the Reserve Bank of India, or a “Current Account Transaction,” which it does not require.
The federal probing agency had stated that the absence of a fixed budget and the staggered nature of the payments made in eight tranches pointed to a contingent liability and therefore it is a capital account transaction. Howeever, the tribunal disagreed. “We are unable to accept the argument advanced by the respondent," it said, holding that the transactions did not alter BCCI's assets or liabilities, including contingent liabilities, outside India.
Setting aside the federal probing agency’s core findings, the tribunal rejected the agency's argument on how the disputed payments ought to be classified. "We have considered the submissions... and find that if, in a given case, the payment towards the service was made from time to time and that too without budgeting, then, according to the respondent (ED), it would fall in the definition of 'Capital Account Transaction'.
We are unable to accept the argument advanced by the respondent (ED)," the tribunal said in its order. Modi, who has lived outside India for more than a decade and has faced multiple ED investigations over alleged financial irregularities during his tenure as IPL chairman, welcomed the order a day before he posted on X. “The Tribunal has rejected the central premise on which the ED's case against me had been built... This marks the conclusion of what has been the single most significant legal matter arising from the 2009 South Africa IPL,” Modi said. In a subsequent post on X, Modi said . “I am really looking forward to returning to India after a long long time. Stay well and stay safe,” he wrote.
