SUPREME COURT REJECTS LALIT MODI’S PLEA TO SHIFT FEMA PENALTY TO BCCI

Iqra Fatima

College:- Aligarh Muslim University centre Murshidabad

Editor:- Malla Greeshma

Introduction 

New Delhi, June 30, 2025 — The Supreme Court of India has rejected a matter brought by former IPL commissioner Lalit Modi, who wanted to transfer a 10.65 crore penalty applicable under the Foreign Exchange Management Act (FEMA) to the Board of Control for Cricket in India (BCCI).

The court was firm on the fact that Modi himself was responsible for the violation, and he could not avoid the responsibility by arguing that he was acting in the name of the cricket board. 

Background of the Case

This case was as a result of a penalty imposed on Lalit Modi in 2011 by the Enforcement Directorate (ED) under the assumption of contravening FEMA when he was the commissioner of the Indian Premier League (IPL). The Enforcement Directorate (ED), during its inquiry, discovered that Lalit Modi had entered into agreements with overseas parties—including those involving international broadcasting—without securing prior approval from the Reserve Bank of India (RBI), a requirement mandated under FEMA. 

FEMA is the main legislative actor in the field of regulating foreign exchange and financial exchange between countries. In that regard, Section 3 of FEMA requires that whoever makes or receives payments that are not in local currency and engages in financial transactions with nonresidents subject themselves to a regulatory approval. Here, the ED found out that Modi had contravened these provisions himself by signing unauthorized contracts.

Though Modi has been living in London for some years, the ED proceeded in his absence, and it has slapped a penalty of 10.65 crore on him. Modi is appealing the sentence on several grounds, though the current appeal is based on the fact that he believes that the BCCI, and not himself individually, should be left to pay the fine. 

Lalit Modi's Legal Argument

The petition by Modi was based on the fact that what he has done in his period serving as the IPL commissioner was all within the line of duty as an official of the BCCI. So he argued any punishment created by such actions must be considered on behalf of the board and not him individually. 

The legal team of his strategies submitted that the contracts and agreements that caused the alleged violations by FEMA were institutional ones. In addition to that, the money and income earned on those arrangements had been channeled to the BCCI rather than to Modi himself. They tried to use the vicarious liability principles and that Modi was just implementing the policy decisions of the governing council.

Based on this, Modi applied to be relieved of personal liability and to have the court instruct the BCCI to recover the penalty on his behalf. 

What the Court Decided and Why

The Supreme Court firmly turned down Modi’s request, emphasizing that individuals cannot avoid personal liability simply because they hold a position within an organization. The court explained that although corporate organizations may be answerable to the law, persons operating in defiance of the provisions of the law must be made to answer for their actions. 

According to the court, FEMA violations under Section 13(1) are on a personal level when there is direct authorization or the actual execution of transactions done. In this instance, the signatures and instructions of Modi played critical roles in the closure of foreign deals without the muchneeded RBI approvals. Such agreements had never been approved by the BCCI, and it had never delegated Modi to have unlimited authority to act inconsistently with Indian law.

In its ruling, the court highlighted one of the fundamental legal aspects: being in office does not protect an individual against the statutory requirements, especially when an individual personally initiates a breach of the law.

Therefore, the 10.65 crore penalty is left to be paid by Modi, and it is not supposed to be paid by the BCCI on his behalf. 

Implications of the Ruling

This judgment portends far-reaching effects on the manner of governance of sports bodies as well as corporate bodies in India. It emphasizes the aspect that people, and particularly those in managerial positions, cannot hide behind their institutional status and cover themselves or their actions that violate the law.

The decision further enhances the implementation power of FEMA, a policy that is frequently condemned as a sophomoric tactic or finger-pointing. Once the personal nature of liability arising out of the unauthorized foreign dealings has been upheld, the message conveyed by the court is very empowering, namely, that compliance with regulations is not negotiable, irrespective of the status or popularity of a concerned person.

Corporate officers, sports administrators, and high-level executives should now be twice as careful whenever they engage in contractual obligations with foreign counterparts or finances. The case is a lesson to be learned that due diligence and regulatory approval are required not only by organizations but also by individuals who act on behalf of the organization. 

Conclusion

The Supreme Court ruling of Lalit Modi v. Union of India & Ors. has served as a significant point of recollection of individual responsibility within the scope of financial control. As Modi is still under legal prosecution by Indian agencies, this verdict restrains his capacity to evade accountability by using institutional protection.

Though legal aspects of Modi filing a review petition or conveying his case to other courts still exist, the judgment by the apex court is a sturdy precedent on limits of individual versus institutional liability under Indian laws. However, in a broader picture of governance, the ruling restates the fact that no officeholder is above the law, particularly where the misuse of either public or organizational trust is concerned.

References 

•  Lalit Modi v. Enforcement Directorate, Supreme Court of India, 2024.

•  Foreign Exchange Management Act, 1999.

•  “Supreme Court dismisses Lalit Modi’s plea to shift FEMA penalty to BCCI,” LiveLaw, June 2024.

•  “Lalit Modi can’t escape FEMA penalty, rules SC,” Bar & Bench, June 2024. 

•  Supreme Court Press Release on Lalit Modi Verdict, dated June 2024.  

•  BCCI Constitution and Broadcasting Agreement 2009.