ED issues summons to Care Health counsel over Rashmi Saluja Esops 'advice'
The Enforcement Directorate has summoned senior counsel Arvind Datar regarding his advice to Care Health Insurance on ESOPs issued to Rashmi Saluja. The investigation revolves around whether the ESOP issuance violated regulations, leading to scrutiny of legal opinions provided. Former Irdai chairman Hari Narayan may also be questioned in connection with the matter.
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Mumbai: India's federal anti-money laundering agency, the Enforcement Directorate, has issued summons to senior counsel Arvind Datar over his legal advice to Care Health Insurance on the controversial Esops (employee stock ownership) issued to former Religare Enterprises chairperson Rashmi Saluja. Religare holds a 62.98% stake in Care.Sources said the agency may also question former Irdai (Insurance Regulatory and Development Authority) chairman Hari Narayan, who also provided a legal opinion on the ESOP issue.Saluja was forced to step down from Religare Enterprises-Care Health's parent-in February, after shareholders blocked her board re-appointment, ending an 18-month tumultuous legal battle against the Burman family-the biggest shareholders of Religare. Thereafter, the Burman family that runs Dabur officially took control of Religare as its new promoter.Datar, who has represented Sebi in high-profile cases like the Sahara fundraising case, is said to have told ED officials that lawyers cannot be summoned for investigations involving their clients. According to sources, he also told them that lawyers are also prohibited from disclosing legal advice given to their clients because of professional privilege.Queries sent to Datar and Care in connection to this remained unanswered until press time.In 2019, Care appointed Saluja as its non-executive chairperson. Two years later, it sought approval from Irdai to grant her Esops. In May 2022, Irdai rejected the plan on the grounds that Saluja's role as non-executive chairperson was similar to that of a non-executive director and that her remuneration should match such a role.Care then sought opinions from Datar and Narayan. Both of them advised the company that it could issue Esops because Saluja was an employee of Religare and held the position of executive chairperson. Giving her Esops as a non-executive chair of Care was not allowed.Based on this, Care allotted her 22,700,000 Esops. A securities lawyer explained that Esops can be given to both executive and non-executive directors if they are employees and not promoters. He added that Sebi rules consider non-executive directors as employees for the purpose of Esops.In 2024, Irdai directed Care to buy back 7,569,000 shares given to Saluja at the same price paid for them (that is ₹45.32 per share) for violating its rules. The regulator also ordered the cancellation of all unused Esops.Saluja made headlines for opposing the Burmans attempting to gain control of the financial services company.
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New Indian Express
2 hours ago
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NEW DELHI: The Enforcement Directorate (ED) on Friday withdrew its summons issued against a senior advocate for reportedly giving legal advice in a case, after the Supreme Court Advocates on Record Association (SCAORA) wrote to the Chief Justice of India (CJI) for taking note of the coercive action. The agency wrote to senior advocate Pratap Venugopal, intimating him that the summons have been withdrawn with 'immediate effect'. SCAORA president Vipin Nair had written to CJI B R Gavai on the 'deeply disquieting development' having 'serious ramifications for the independence of the legal profession and the foundational principle of lawyer-client confidentiality'. 'It has come to our notice that senior advocate Pratap Venugopal, has received on June 19, a summons dated June 18, by ED under Section 50 of the Prevention of Money Laundering Act (PMLA) in its investigation into the Employee Stock Option Plan (ESOP) granted by M/s Care Health Insurance Ltd for a purported legal opinion rendered by senior advocate Arvind Datar, wherein Pratap Venugopal, was the advocate-on-record, supporting the grant of stock options to former Religare enterprises chairperson Rashmi Saluja,' the letter said. Venugopal told TNIE the probe agency's action was completely illegal, unconstitutional, unwarranted. 'It is sad and unfortunate. The action of issuing summons to advocates is an alarming practice besides being wholly contrary to the provisions of Sec 132 of the Bharatiya Sakshya Adhiniyam (BSA) 2023,' he said.
Time of India
4 hours ago
- Time of India
Summons sent to lawyer for his role as co's ind dir: ED
Representative Image NEW DELHI: Faced with criticism, Enforcement Directorate Friday said it issued summons to senior advocate Pratap Venugopal as part of its ongoing investigation against Care Health Insurance Ltd (CHIL) in which Venugopal was an independent director. ED's Mumbai zonal office is conducting a money laundering investigation in which it has been alleged that shares of CHIL were issued at a much lower price in the form of ESOPs on May 1, 2022, in spite of the rejection of the same by Insurance Regulatory and Development Authority of India (IRDAI). "As part of the investigation, summons was issued to Pratap Venugopal, an independent director of CHIL, to understand the circumstances under which the company has issued ESOPs despite its rejection by IRDAI and subsequent discussions in the board of CHIL in this regard," the agency said about the summons which it withdrew after protests by lawyers' bodies. In a statement, the agency emphasised that IRDAI on July 23, 2024, had directed CHIL to revoke or cancel any ESOPs that were yet to be allotted and had also imposed a penalty of Rs 1 crore on CHIL for non-compliance with regulatory directions. "In view of the fact that Pratap Venugopal is a senior advocate in Supreme Court, the summons issued to him has been withdrawn and the same has been communicated to him," the agency said. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like American Investor Warren Buffett Recommends: 5 Books For Turning Your Life Around Blinkist: Warren Buffett's Reading List Undo In the said communication, it was also stated that if any documents were required from him in his capacity as an independent director of CHIL, the same would be requested to be submitted by email, the agency added. Further, ED has asked its units not to issue summons to lawyers, saying summoning them would be violative of Section 132 of Bhartiya Sakshya Adhiniyam, 2023. "If any summons needs to be issued under the exceptions carved out in proviso to Section 132 of Bhartiya Sakshya Adhiniyam, 2023, the same shall be issued only with the prior approval of the director, ED," the agency said.
Indian Express
7 hours ago
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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
