“Lawyers Can’t Be Summoned for Client Matters”: ED Withdraws Summons to Top Lawyer Arvind Datar in ₹250 Cr ESOP Case
Kiran Raj
NEW DELHI: The Enforcement Directorate (ED) has withdrawn the summons it had previously issued to Senior Advocate Arvind Datar. The notice was connected to the investigation into the Employee Stock Option Plan (ESOP) issued by Care Health Insurance to Rashmi Saluja, former chairperson of Religare Enterprises.
According to news reports, Arvind Datar — a highly experienced and prominent lawyer who has represented SEBI in high-profile matters, including the Sahara fundraising case — informed the ED that: “Lawyers cannot be summoned for investigations involving their clients.”
He also stated that: “Under legal rules, lawyers are prohibited from disclosing legal advice given to their clients.”
The ED had initially called on Datar because he had provided a legal opinion in support of the ESOP granted to Rashmi Saluja. This stock option allocation is currently under examination by regulatory and investigative agencies. The ED has now officially informed Datar that his appearance is no longer required. In effect, the summons has been withdrawn.
The ESOPs under scrutiny involve over 2.27 crore stock options, valued at more than Rs 250 crore. These were issued to Rashmi Saluja by Care Health, a wholly owned subsidiary of Religare Enterprises.
In November 2023, the Insurance Regulatory and Development Authority of India (IRDAI) found that the ESOP grant violated industry norms. Under these norms, companies are not permitted to award more than Rs 10 lakh in compensation to non-executive directors without prior approval.
IRDAI directed Care Health to cancel all unexercised options and repurchase the shares that had already been allocated.
Following IRDAI’s order, the ED launched a money laundering probe based on a complaint from the Economic Offences Wing of the Mumbai Police. As part of this investigation, ED conducted searches at various offices in August 2024 and froze the ESOP shares issued to Rashmi Saluja and other senior executives at Care Health.
The summons issued to Arvind Datar was one aspect of a broader inquiry. The ED was examining the legal and structural framework surrounding the issuance of the ESOPs. Now that the summons has been withdrawn, it remains to be seen whether the ED will continue to examine the role of legal advisors in the matter.
Separately, Rashmi Saluja has approached the Delhi High Court in an attempt to block the Burman family’s takeover of Religare Enterprises. She argues that the takeover violates provisions of SEBI’s takeover code and has requested the court to prevent the Burmans from exercising voting rights on shares acquired through an open offer.
