New Delhi: The Supreme Court Advocates-on-Record Association (SCAORA) has expressed “strong disapproval” of the Enforcement Directorate’s (ED) move to issue a notice to senior advocate Arvind Datar over legal opinion that he gave in the course of his professional duties, saying it reflected “a disturbing trend of investigative overreach”.
This was linked to the ED’s investigation into the Employee Stock Ownership Plans (ESOPs) given by Care Health Insurance to former Religare Enterprises (REL) chairperson Rashmi Saluja. According to the ED’s case, to grant the ESOPs to Saluja, the Religare board sought legal opinions from Datar and a retired IAS officer, J. Hari Narayan.
Although on 14 June, the ED withdrew the summons, the SCAORA, while acknowledging this, still chose to lodge its “strong protest” against an “arbitrary exercise of executive power” by the agency. The letter, dated 16 June and issued by SCAORA’s honorary secretary Nikhil Jain, said the action “threatens the independence of the legal profession and undermines the very foundation of the rule of law”.
“This action by the ED is not only unwarranted but reflects a disturbing trend of investigative overreach that threatens the independence of the legal profession and undermines the very foundation of the rule of law,” it read.
Outlining its reasons, the SCAORA, for one, highlighted that senior advocate Arvind Datar is a man of “unimpeachable integrity” and said that summoning a senior member of the Bar for discharging his professional responsibility is a misuse of authority.
“When investigative agencies resort to coercive measures against advocates merely for giving legal opinions, they do not just target individuals—they strike at the institutional structure that ensures justice,” the SCAORA’s statement said, while adding that undermining advocates’ professional independence ultimately threatens the judiciary’s independence itself.
It also highlighted that the Supreme Court has repeatedly held that advocates are not liable for the alleged acts of their clients simply for rendering legal opinions. Therefore, the ED’s action conflates legal advice with criminal complicity, sending a “chilling message” to the legal community and threatening every citizen’s “foundational right” to receive independent legal counsel without fear of intimidation.
This was the first time that any Bar association or body—including SCAORA, the Supreme Court Bar Association (SCBA) and the Bar Council of India (BCI)— has criticised the ED over summons issued by the agency.
Later, the same day, the Madras Bar Association also condemned the ED summons, also highlighting the Supreme Court’s views. It further said the entire legal system could be paralysed if lawyers are subjected to coercive measures for giving legal opinion.
Reacting to the developments, SCBA president Vikas Singh told ThePrint, “This action of ED strikes at the root of the independence of the judiciary. The day is not far when ED will make judges an accused for handling certain matters, if the ED is allowed to make lawyers an accused in such fashion.”
ThePrint also reached BCI chairman and Rajya Sabha MP Manan Kumar Misra through calls for comment. The report will be updated if and when a response is received.
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Religare case & how Datar entered the picture
The case is linked to an Enforcement Complaint Information Report (ECIR) registered last year based on a case filed by a Religare (REL) investor against its former promoters, Malvinder Mohan Singh, Shivinder Mohan Singh, and the promoters of Dabur India Ltd, the Burman family, over alleged misappropriation of funds.
However, an ED investigation, which included recording the complainant’s statement, indicated that the promoters had been framed by the former management of the REL, led by Saluja, to stop the Burman family from an open offer takeover.
In its complaint to the Mumbai Police, the agency said that the current REL management “would have interest” in filing an FIR to also “obfuscate the detection of illegal gains accrued to them through acquisition” of ESOPs of Care Health Insurance Ltd (CHIL).
CHIL is a wholly-owned subsidiary of REL, in which the latter has a 66 percent stake.
Giving details of the “illegal gains”, the ED said that, in 2021, the company’s board and the nomination and remuneration committee (NRC) decided to grant ESOPs to Saluja in her capacity, at the time, as CHIL’s non-executive chairperson and as an executive chairperson of the holding company, REL. In a resolution, the board then decided to grant 2,27,11,327 stocks to Saluja, 37,85,221 stocks to REL’s chief financial officer at the time, Nitin Aggarwal, and 12,61,740 stocks to Nishant Singhal, a REL general counsel at the time.
The price was kept at Rs 45.32 per share.
Since the ESOPs were exceeding 1 percent of CHIL’s issued capital, an approval was sought from the Insurance Regulatory and Development Authority of India (IRDAI). However, the IRDAI declined the request on 10 May, 2022, reasoning that the post of the non-executive chairman was comparable to non-executive director and, according to the established guidelines, the proposed remuneration was not proportional to that post.
This did not deter Religare’s management—the board met again on 2 August, 2022, and decided to grant ESOPs to Saluja with the same number of shares at the same valuation.
It was here that Datar’s role allegedly came in. The agency found that the Religare board sought legal opinion from him and Narayan. According to the ED, the two said IRDAI’s approval was not needed since the ESOPs were being granted in her capacity as a REL employee, and not as the non-executive chairperson of CHIL.
The ED, in its complaint to Mumbai Police said, “Unlawful gains have been made by Dr Rashmi Saluja by acquiring the ESOPs at a price much lower than what was determined for the rights issue with regards to the stocks of the same company i.e. M/s CARE HEALTH INSURANCE LIMITED (“CHIL”) via two Board Resolutions drawn on the same date i.e 02 nd of August 2022.”
It further noted that, at the same meeting, the CHIL’s board proposed raising up to Rs 300 crore by issuing 2,72,72,727 shares but kept their valuation at Rs 110 per share. The ED said this had been proposed by Saluja, and the price of shares was decided by REL shareholders.
(Edited by Sanya Mathur)
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