Opinion ED summoning lawyers is legally untenable

Bar associations registered their protest. “The ED’s action conflates legal advice with criminal complicity, a proposition that is constitutionally untenable and legally unjustifiable…” the Supreme Court Advocates-on-Record Association wrote.

The ED’s (non-investigative) powers

Of particular concern is the fact that the summons has been issued by the ED, which enforces the Prevention of Money Laundering Act, 2002.

PMLA proceedings require the existence of a “predicate” offence, such as, say, extortion, cheating, etc. Only then can the proceeds of such a crime be brought within its reach. In July 2022, a three-judge bench of the Supreme Court in Vijay Madanlal Choudhary vs Union of India famously recognised this rule. However, they also found the ED’s powers of arrest, search and seizure, and the PMLA’s inversion of the typical due-process principle “innocent until proven guilty” to be constitutional.

Central to the Court’s reasoning was the idea that the PMLA is a regulatory and not a penal law, that the ED’s powers to issue summons are towards an “inquiry” and not an “investigation”. Thus, the ED is not comparable to the police forces entrusted with the responsibility to investigate crimes.

A review petition and other petitions requesting that this judgment be reconsidered by a larger bench are currently pending, as are petitions questioning the validity of provisions of the PMLA itself. Parallelly, the SC continues to rely on Vijay Madanlal to find that ordinary criminal justice protections that are due to those being tried under criminal law (as well as witnesses involved in such trials) do not extend to those summoned by the ED.

The ambit of the PMLA has been widened through notifications issued in May 2023, which now classify professionals — such as chartered accountants and company secretaries carrying out certain types of financial transactions on behalf of their clients — as reporting entities.

A reporting entity is required to maintain records of all transactions and of documents proving their clients’ identities, as well as carry out due diligence on their clients. This heightened obligation imposed on professionals, albeit notably not lawyers, is under challenge before the Delhi High Court.

Lawyers have remained outside such expansive powers for a reason.

The attorney-client privilege

Simply put, it is illegal to compel a lawyer to disclose legal advice given to their client. This proposition finds its foundation in Section 132, on “professional communication”, of the Bharatiya Sakshya Adhiniyam, 2023, but it goes back at least as far as 1872, when the Indian Evidence Act came into force.

The specific elements of legal advice that are privileged are communication, and the contents and the condition of documents exchanged. The only way such privilege can be overridden is if the client expressly permits it.

There are two exceptions to this rule. First, any communication that furthers “any illegal purpose.” Second, observations that “any crime or fraud has been committed since the commencement of his service.” This is to say that the lawyer must either aid or abet an illegal undertaking or be somehow complicit in an undertaking she discovers to be criminal or fraudulent in the course of her engagement with the client. An investigating authority that aims to compel disclosure of privileged information by a lawyer needs to at the very least show demonstrably one of these circumstances. The mere prospect of there being potential illegality that might later emerge, unbeknownst to the lawyer, certainly does not fall within this limited exception.

This is not some kind of special privilege that lawyers enjoy to do as they like. It is far from it.

The privilege is that of the client, or of every individual who may need legal assistance. The idea is to secure an independent and fair judicial process during their day in court. The only way such a judicial process may be guaranteed is if lawyers may put forth the best defence in law, which is only possible if they can elicit the full truth from their clients. Lawyers know all too well that violations of attorney-client privilege can invite unhappy consequences, not least a finding of professional misconduct.

This ties up the question before us. According to the SC precedent, the ED lacks police powers, and thus it cannot do what investigating authorities typically may. Can any law then support the ED’s claim to overriding attorney-client privilege on the mere prospect of there being some potential illegality — yet to be demonstrated by an investigating authority — in the affairs of the client? And if it indeed can, shouldn’t everyone implicated in an ED proceeding be at the very least assured the protection of ordinary due process and criminal justice?

The writer is a lawyer and constitutional law researcher working on federalism. Hariom Tiwari supported her in research