In May 2003 a controversy erupted over alleged links between Shetty’s parents and the Indian underworld. The Surat police issued arrest warrants against her parents on charges of extortion. Police Commissioner of Surat, D.K. Gupta, told the media that the owners of Praful Sarees had lodged complaints with them after claiming to receive threatening telephone calls from Mumbai-based underworld figures asking for money on behalf of the Shettys. The dispute between the two parties related to a 1998 modelling assignment where Shilpa endorsed Praful Sarees and had only been paid Rs. 50 lakhs (over $113,000) out of a contractually-agreed 3 crores ($679,000).   

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