ED retreats after uproar, withdraws summons to top advocates

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Venugopal received a communication from the ED, clarifying that the summons for June 24 had been “withdrawn”.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