Mint Explainer: Why ED's summons to top lawyers in stock options case sparked a legal firestorm

Mint

4 days ago

The Directorate of Enforcement's recent summons to senior advocate Arvind Datar and advocate Pratap Venugopal in connection with its investigation into stock options granted to former Religare Enterprises chairperson Rashmi Saluja sparked deep concerns within India's legal community.
Though the ED withdrew the notices after mounting criticism and backlash, the episode has reignited the debate on the sanctity of attorney-client privilege, the independence of legal advice, and the limits of investigative overreach.
Mint explains the controversy, the key legal flashpoints, and the broader implications for lawyer-client confidentiality in high-stakes corporate investigations.
What is the case about?
From 2021 to 2023, Care Health Insurance, a subsidiary of Religare Enterprises Ltd, granted 22.71 million stock options valued at over ₹250 crore to Rashmi Saluja, who was the non-executive chairperson of Care and executive chairperson of Religare.
This violated the insurance regulator's 2018 circular capping the remuneration of non-executive directors at ₹10 lakh, unless prior approval was secured. Even after specific instructions from the regulator in May 2022 not to proceed without approval, Care went ahead.
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In November 2023, the regulator found Care to be in breach of compensation norms, ordered the cancellation of unvested/unexercised stock options, and directed the buyback of 7.57 million shares already allotted to Saluja at ₹45.32 per share. A ₹1 crore penalty followed in July 2024.
The Mumbai Police's Economic Offences Wing filed a complaint, prompting the ED to initiate a money laundering probe. In August 2024, the agency conducted search operations and froze the disputed shares, examining whether they were used to facilitate broader financial misconduct.
Why were the senior lawyers summoned?
As part of the probe, the ED examined how Care Health justified the stock options despite regulatory red flags. The company had relied on legal advice from senior counsel Arvind Datar and former Insurance Regulatory and Development Authority of India chairperson J. Hari Narayan. Pratap Venugopal, who filed one of the legal opinions, was also summoned.
The summons was issued to Datar on 12 June and to Venugopal on 19 June, asking for records of their legal advice, communications, and fee/payment details.
Datar is a senior advocate of the Supreme Court known for high-stakes commercial, tax and regulatory litigation, including regular appearances for the Securities and Exchange Board of India. Venugopal has been a designated senior advocate since 31 January 2025 and formerly a founding partner at K.J. John & Co.
Why did the ED withdraw the summons?
Facing widespread criticism, the ED clarified that the lawyers were not accused and were summoned to assist in understanding the legal rationale behind awarding the stock options. However, Datar refused to appear, citing protections under Section 132 of the Bharatiya Sakshya Adhiniyam, 2023, which bars compelled disclosure of privileged legal communication.
With pressure mounting from top bar associations, the ED withdrew the summons—first to Datar on 14 June and then to Venugopal on 20 June. Later that day, the ED issued a circular clarifying that no such summons can be issued without prior approval.
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'No summons shall be issued to any advocate in violation of Section 132 of the BSA, 2023. Further, if any summon needs to be issued under the exceptions carved out in the proviso to Section 132... the same shall be issued with the prior approval of the Director, ED."
The circular acknowledged that some field units had summoned advocates during investigations to produce communications and documents—actions that risk infringing upon legal privilege.
How did the legal fraternity respond?
The ED's summons to senior advocates in the Care Health–Religare case sparked strong condemnation from India's leading bar associations, which viewed it as an attack on the independence of the legal profession and the sanctity of client-lawyer privilege.
'This action by the ED is not only unwarranted but reflects a disturbing trend of investigative overreach that undermines the very foundation of the rule of law," the Supreme Court Advocates-on-Record Association said in a 16 June statement. It stressed that Datar, a senior member of the bar, had consistently upheld the highest standards of legal ethics.
The Bombay Bar Association termed the summons a 'direct attack on the legal community as a whole." It cautioned that such actions—even if withdrawn—could have a chilling effect on advocates engaged in complex corporate cases.
The Delhi High Court Bar Association, in its 18 June resolution, called the move a breach of legal sanctity and said, 'If legal opinions are treated as evidence of complicity, no lawyer will ever be able to advise a client without fear."
The bar warned that summoning lawyers over opinions rendered in good faith sets a dangerous precedent.
Why does this controversy raise deeper concerns?
Legal experts said the episode could alter how legal advice is given in sensitive regulatory and corporate matters.
'Encroaching on the confidentiality of legal opinions in high-profile corporate cases could undermine the trust essential for effective legal defence and advice," said Yatharth Rohila, advocate and partner at Aeddhaas Legal. 'This could discourage companies and their legal counsel from seeking or providing candid opinions, fearing exposure or misuse."
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'This development may influence how lawyers approach such matters. While statutes provide protection, the prospect of being summoned could affect the dynamics of legal consultation," noted Himanshu Vidhani, a partner at Chandhiok & Mahajan.
Alay Razvi, managing partner at Accord Juris, added that even if legal opinions themselves aren't sought, demands for details such as dates, payments or communications can still strike at the heart of legal privilege. The ED has broad powers but using them against legal professionals without clear allegations raises serious concerns, he said.
What are the legal protections for lawyer-client privilege in India?
Indian law strongly protects lawyer-client confidentiality under Sections 126-129 of the Indian Evidence Act, 1872, and the Bharatiya Sakshya Adhiniyam, 2023. Advocates cannot disclose client communications, legal advice or confidential documents.
This protection extends to legal staff and remains intact even if the client testifies. However, privilege does not apply if the communication furthers a crime or fraud, is shared with third parties, is waived by the client, or relates to disputes between lawyer and client.