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Mint
4 days ago
- Business
- Mint
Mint Explainer: Why ED's summons to top lawyers in stock options case sparked a legal firestorm
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. Also Read | What next for the Burmans now that they have won the battle for Religare 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. Also Read | Rahul Navin appointed as new director of Enforcement Directorate for two years '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." Also Read | Mint Explainer: Why did Sebi issue notice to Rashmi Saluja, Religare board? '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.
Hindustan Times
7 days ago
- Politics
- Hindustan Times
ED withdraws summons to senior advocate amid row
The Enforcement Directorate (ED) on Friday withdrew its summons to senior advocate Pratap Venugopal, hours after the Supreme Court Advocates-on-Record Association (SCAORA) urged Chief Justice of India (CJI) Bhushan R Gavai to take suo motu cognisance of the agency's move, calling it a grave infringement on the independence of the legal profession and the sanctity of lawyer-client privilege. The summons pertained to the ongoing investigation into the allotment of Employee Stock Option Plans (ESOPs) by Care Health Insurance. (HT photo) Venugopal, summoned on June 19 to appear before the ED on June 24 under Section 50 of the Prevention of Money Laundering Act (PMLA), 2002, received a text message from the agency on Friday afternoon informing him that the notice 'stands withdrawn with immediate effect.' The summons pertained to the ongoing investigation into the allotment of Employee Stock Option Plans (ESOPs) by Care Health Insurance to former Religare Enterprises Chairperson Rashmi Saluja. Venugopal was the Advocate-on-Record (AoR) for a legal opinion rendered by senior counsel Arvind Datar in the matter. ED had earlier summoned Datar as well, but that notice too was rescinded following backlash from the legal fraternity. In a letter dated June 20, SCAORA President Vipin Nair described the summons to Venugopal as 'a deeply disquieting development,' and warned that coercive measures against lawyers for professional legal opinions strike at the heart of legal privilege and the fundamental tenets of the rule of law. SCAORA asserted that such actions represent an 'impermissible transgression' into the constitutionally protected sphere of legal advice. 'The role of an advocate in offering legal advice is both privileged and protected. Interference by investigative agencies, particularly in respect of opinions rendered in a professional capacity—strikes at the core of the rule of law,' the letter stated. SCAORA urged the Supreme Court to examine the legality and propriety of summoning advocates for professional opinions and called for the framing of clear guidelines to insulate the legal profession from similar overreach in the future. This is the second time in recent days that the Association has stepped in to defend the autonomy of the Bar. On June 16, SCAORA issued a public statement condemning the ED's notice to Datar as 'unwarranted' and a manifestation of growing investigative overreach. Similar concerns have echoed across the legal landscape. On June 17, the Delhi High Court Bar Association passed a resolution criticising the ED's actions, warning of a direct threat to the constitutional right to legal representation and fair trial. The Gujarat High Court Advocates Association also convened an emergency meeting, with its president Brijesh Trivedi calling for urgent government action to protect lawyer-client privilege through amendments to the Indian Evidence Act, 1872, and the Bharatiya Sakshya Adhiniyam, 2023. While ED has not formally disclosed reasons for withdrawing the summons to Venugopal, senior members of the Bar see the move as an implicit recognition of the serious constitutional and professional issues flagged by the legal community.
The Print
21-06-2025
- Business
- The Print
ED takes lesson from Datar & Venugopal episodes, director's nod now must to summon advocates
The move followed strong condemnation by several associations of lawyers of the ED summons issued to two senior advocates in connection with a money-laundering probe. New Delhi: The Enforcement Directorate (ED) Friday issued a circular to its officers instructing them not to summon any advocate as part of the investigation, as it could amount to a violation of the Bharatiya Sakshya Adhiniyam (BSA). The ED circular, a copy of which has been seen by ThePrint, further said that, in exceptional circumstances, when summons have to be issued, it can only be done after the approval of the agency director. From Section 132, 'it is amply clear that a legal practitioner cannot be compelled to disclose any communication made to him in the course and for the purpose of his professional service as such legal practitioner, by or on behalf of his client unless with his client's express consent. However, proviso to Section 132 of the BSA, 2023 has carved out certain exceptions,' said the circular issued by ED's legal wing to field officers. 'In view of the above, it is directed that no summons shall be issued to any advocate in violation of Section 132. Further, if any summon needs to be issued under the exceptions carved out in proviso to Section 132 of the BSA, the same shall be issued with the prior approval of the Director, ED,' it added. The development comes at a time when the ED has drawn criticism from the legal community over summoning senior advocates Arvind Datar and Pratap Venugopal in its probe into dealings of Care Health Insurance (CHIL) and its parent company, Religare Enterprises (REL). Both summonses have been withdrawn. In a letter dated 16 June, the Supreme Court Advocates-on-Record Association expressed 'strong disapproval' of the summons to Datar and said it reflected 'a disturbing trend of investigative overreach'. ThePrint had earlier reported that the ED has been probing money laundering allegations against these firms, including the transfer of shares worth crores to former CHIL non-executive chairperson and REL executive chairperson Rashmi Saluja despite the request being rejected by the Insurance Regulatory and Development Authority of India (IRDAI). The former board of CHIL cited an opinion that it had sought from Datar to grant shares to Saluja. According to the ED, Datar said IRDAI's approval was not needed since the shares were being granted in her capacity as an REL employee, and not CHIL. Separately, Venugopal was summoned in his capacity as the former independent director of CHIL to understand the circumstances behind the share transfer, the ED spokesperson said. In a statement Friday, the ED spokesperson said, 'In view of the fact that Shri Pratap Venugopal is a Senior Advocate in the Hon'ble Supreme Court, the summons issued to him has been withdrawn and same has been communicated to him. 'In the said communication, it has also been stated that if any documents will be required from him in his capacity as an Independent Director of CHIL, the same will be requested from him to be submitted by email.' (Edited by Sanya Mathur) Also Read: ED's now-withdrawn summons to Arvind Datar: The case, controversy & SC advocates body letter
Indian Express
20-06-2025
- Politics
- Indian Express
ED retreats after uproar, withdraws summons to top advocates
Under fire from the legal fraternity over its summons to Senior Advocates Pratap Venugopal and Arvind Datar in connection with a case in which they had rendered legal advice, the Enforcement Directorate said Friday it had instructed field formations not to issue summons to any advocate in violation of Section 132 of the Bhartiya Sakshya Adhiniyam, 2023 — the section deals with the confidentiality of communications between an advocate and client. Any exception necessitating the issue of summons 'shall be issued only with the prior approval of the Director, ED', the probe agency said in a statement to the press. The ED's summons to Datar and Venugopal had drawn not just criticism but also raised questions on whether such summons can dilute attorney-client privilege. The lawyers were summoned under Section 50 of the Prevention of Money Laundering Act (PMLA) in a case of alleged money laundering. It is learnt that Datar wrote to the agency, expressing his inability to respond to the summons, citing attorney-client privilege. Sources in the ED told The Indian Express that the summons to Datar had 'expired' and no fresh summons had been issued. Venugopal received a communication from the ED, clarifying that the summons for June 24 had been 'withdrawn'. Non-compliance of summons by the ED is an offence under the PMLA. However, lawyers are protected under evidentiary laws from being compelled to issue statements or testify against their clients. Advocate Vipin Nair, President of the Supreme Court Advocates-on-Record Association, wrote to Chief Justice of India B R Gavai, urging him to take suo motu action against the ED. 'These actions, by the ED, we believe, amount to an impermissible transgression of the sacrosanct lawyer-client privilege, and pose a serious threat to the autonomy and fearless functioning of advocates. Such unwarranted and coercive measures against senior members of the Bar for discharge of professional duties set a dangerous precedent, potentially resulting in a chilling effect across the legal community,' Nair wrote. The Supreme Court Bar Association (SCBA) too condemned the ED summons to Venugopal and Datar, saying the actions 'reflect a disturbing trend, striking at the very foundations of the legal profession and undermining the independence of the Bar' and also reflect 'an illegal, perverse and intimidatory use of state power'. A statement issued by Advocate Pragya Baghel said 'the Executive Committee of… SCBA unanimously resolved and expresses its deep anguish, concern and unequivocal condemnation of the action taken by the Enforcement Directorate (ED) in summoning and issuance of Notice to Mr. Pratap Venugopal, Senior Advocate and member of SCBA, for the services rendered in discharge of professional duty.' On Friday, in its statement to the press, the ED said, 'The Mumbai Branch of ED is conducting a money-laundering investigation in which it has been alleged that shares of M/s Care Health Insurance Ltd (CHIL) were issued at a much lower price in the form of ESOPs on 1st May, 2022, in spite of the rejection of the same by Insurance Regulatory and Development Authority of India (IRDAI).' 'As part of investigation, a summons was issued to Shri Pratap Venugopal, an Independent Director of CHIL, to understand the circumstances under which the company has issued the ESOPs despite its rejection by IRDAI and subsequent discussions in the Board of CHIL in this regard. It is also pertinent to note that IRDAI on 23.07.2024 had directed the CHIL to revoke or cancel any ESOPs that have yet to be allotted and has also imposed a penalty of Rs 1 crore on CHIL for non-compliance with regulatory directions,' the ED said. 'In view of the fact that Shri Pratap Venugopal is a Senior Advocate in the Hon'ble Supreme Court, the summons issued to him has been withdrawn and same has been communicated to him. In the said communication, it has also been stated that if any documents will be required from him in his capacity as an Independent Director of CHIL, the same will be requested from him to be submitted by email,' it said. 'Further, the ED has also issued a circular for the guidance of the field formations that no summons shall be issued to any Advocate in violation of Section 132 of the Bhartiya Sakshya Adhiniyam, 2023. Further, if any summons needs to be issued under the exceptions carved out in proviso to section 132 of the BSA, 2023, the same shall be issued only with the prior approval of the Director, ED,' the agency said. — With ENS inputs Apurva Vishwanath is the National Legal Editor of The Indian Express in New Delhi. She graduated with a B.A., LL. B (Hons) from Dr Ram Manohar Lohiya National Law University, Lucknow. She joined the newspaper in 2019 and in her current role, oversees the newspapers coverage of legal issues. She also closely tracks judicial appointments. Prior to her role at the Indian Express, she has worked with ThePrint and Mint. ... Read More
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Business Standard
20-06-2025
- Business
- Business Standard
Summonses issued to Saluja's lawyers cause unrest among legal fraternity
Not taking kindly to the Enforcement Directorate's (ED's) summons -- later withdrawn -- to two senior advocates Pratap Venugopal and Arvind Datar, legal experts have said though the agency can send such notices, this should be done only in the rarest of the rare cases. 'Normally and ideally unless the ED has concrete clear and irrefutable evidence as to the complicity of the lawyer in the matter of circumvention of any criminal law, a lawyer is a professional and the rules of confidentiality govern the relations with the clients and therefore the lawyer should not ideally be subject to any kind of investigation,' senior advocate Sanjoy Ghose told Business Standard. 'It is the independence of the judiciary which is at stake because if agencies proceed against lawyers, then the lawyers will not be defending their clients,' Ghose said. The Supreme Court Advocates-on-Record Association (SCAORA) on Friday wrote to the chief justice of India, deploring the ED's action and seeking suo motu cognizance of the issuance of the summons to Venugopal. It said the ED's action had ramifications for 'independence of the legal profession' and the 'foundational principle of lawyer-client privilege'. Earlier this month, the ED had first sent notice to Datar, asking him to appear before the agency in connection with legal advice he had given Care Health Insurance on employee stock options (ESOPs) issued to former Religare Enterprises chairperson Rashmi Saluja. After protests from lawyers and representations before the Supreme Court, the notice was withdrawn. On June 18, the agency issued a second summons, this time to Venugopal in connection with the same issue. In its notice, the ED asked Venugopal to furnish records pertaining to communication between him and Care Health Insurance as well as Religare Enterprises. He was also asked to furnish these details on the legal opinion given for the grant of ESOPs to Saluja after the rejection of the grant by the insurance regulator. The summons also required Venugopal to tender details of payment made by Care Health, Religare Enterprises, and other associate entities against the legal service sought by the companies. He was asked to appear on June 27 before the assistant director of the ED in Mumbai. 'Legal opinion falls under the protection of attorney-client privilege. However, the issue becomes legally complex when legal opinion is allegedly used to facilitate an illegal transaction, such as money laundering or/and when the notice does not directly seek privileged communication, but circumstantial information such as payments received or internal communications,' said Alay Razvi, managing partner of law firm Accord Juris. Though lawyers can be summoned under procedural laws like the Prevention of Money Laundering Act (PMLA), 2002, it is contentious and opposed by the legal fraternity, Razvi said. Himanshu Vidhani, partner at law firm Chandhiok & Mahajan, said the ED issuing summons to Datar and Venugopal appeared to be unprecedented. Section 132 of the Bharatiya Sakshya Adhiniyam, 2023 (previously Section 126 of the Indian Evidence Act), provides protection of the attorney-client privilege. The Madras High Court had in 2002 deprecated the issuance of a summons to an advocate. 'Allowing investigative agencies to question advocates on advice given to clients would destabilise the foundation and independence of the legal profession, particularly in connection with criminal and white collar defence,' said Divyam Agarwal, partner at law firm JSA Advocates & Solicitors. Chinmay Bhosale, advocate at Bombay High Court, said: 'In no way can an advocate be considered responsible for his or her client's actions.' An ED statement said: 'ED has issued a Circular for the guidance of the field formations that no summons shall be issued to any Advocate in violation of Section 132 of the Bhartiya Sakshya Adhiniyam, 2023. Further if any summons needs to be issued under the exceptions carved out in proviso to section 132 of the BSA, 2023, the same shall be issued only with the prior approval of the Director, ED.'
