A media report has claimed that United Spirits (USL) chairman Vijay Mallya made the company pay ₹170 crore to buy shares of his IPL team Royal Challengers Bangalore (RCB) at ₹3,62,240 per share.
The 11 March, 2011 transaction is being linked to his aggressive bidding during the January 2011 auction for IPL players.
The transaction happened when Mallya was in full control of USL, said DNA.
"That was an astronomical self-valuation of an IPL team which was barely three years old as a brand. The allotment of fully paid up shares at such a premium meant that Rs 170 crore were diverted from USL's account into RCB's accounts that year," the daily said.
During IPL autions in 2011, Mallya-owned RCB spent almost $8.6 million (about Rs 55 crore) to pick players like AB de Villiers and Saurabh Tiwary paying more than $1 million for each player.
The team also used a part of diverted funds from USL to buy players like Zaheer Khan, Daniel Vettori, Cheteshwar Pujara and Dirk Nannes, the daily said.
Mallya still has a minority stake in USL, which was sold to Diageo in 2013. Board members of Diageo suspect Mallya of diverting funds to other subsidiaries. They believe that huge diversion of funds from USL has led it to post losses.
The market regulator Securities and Exchange Board of India (SEBI) is also investigating irregularities that happened during his tenure.
Besides, audit firm Price WaterHouse Coopers had revealed that USL funds were parked with other Mallya-owned companies from 2010 to 2014 without the consent of the company's shareholders.