Mumbai: The Enforcement Directorate (ED) has issued a fresh circular aimed at ensuring compliance with Section 132 of the Bhartiya Sakshya Adhiniyam (BSA), 2023, which protects legal professionals from being compelled to disclose privileged communication made in their capacity as legal advisors.
According to the directive, field formations of the ED have been instructed not to issue summons to any advocate, except under specific circumstances outlined in the law. The circular clarifies that no advocate shall be summoned in violation of Section 132. However, in cases where exceptions carved out in the proviso to Section 132 are applicable, the issuance of summons is not entirely ruled out. In such scenarios, the circular mandates that prior approval must be obtained from the Director of the Enforcement Directorate before any such summons are issued. The move is seen as a step toward upholding the sanctity of the lawyer-client relationship while ensuring that legal procedures are followed in accordance with statutory protections.
The move comes in the wake of a recent controversy involving the summoning of Supreme Court Senior Advocate Pratap Venugopal during a money-laundering probe conducted by the ED’s Mumbai Zonal Office. The investigation pertains to alleged irregularities in the issuance of Employee Stock Ownership Plans (ESOPs) by Care Health Insurance Ltd (CHIL). According to the ED, CHIL issued shares at undervalued rates on May 1, 2022, despite the Insurance Regulatory and Development Authority of India (IRDAI) having rejected the proposal.
As part of the probe, ED summoned Venugopal, who also serves as an Independent Director on CHIL's board to understand the decision-making process behind the issuance. However, the action raised concerns, given his standing as a senior legal professional, prompting the agency to withdraw the summons. In a formal communication to Venugopal, the ED clarified that if any documents are needed from him in his role as a board member, they will be requested via email.
The agency's decision to rescind the summons is being seen as a course correction amid growing legal scrutiny and concerns over the violation of Section 132 of the Bhartiya Sakshya Adhiniyam (BSA), 2023, which protects privileged communication between advocates and their clients. The case has gained further significance after IRDAI, on July 23, 2024, directed CHIL to revoke any ESOPs that were yet to be allotted and imposed a Rs 1 crore penalty on the company for flouting regulatory norms.
The ED’s latest circular is aimed at preventing similar controversies in the future. It reiterates that no advocate is to be summoned unless the narrow exceptions under the BSA are applicable, and even then, only after approval from the Director of Enforcement.
