The Enforcement Directorate has exempted advocates from direct summons under PMLA, unless expressly approved by the director. This move follows backlash over lawyer-client confidentiality violations.
New Delhi: Today, on June 20, the Enforcement Directorate (ED) on Friday issued a new circular that says its officers should not send summons to any advocate in violation of Section 132 of the Bharatiya Sakshya Adhiniyam, 2023.
This legal section clearly mentions that no lawyer can be forced to share any communication made to him by a client unless the client agrees to it.
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In the exact words of the law,
“no advocate, at any point of time, should disclose any communication made to him without the client’s consent.”
The circular issued by the ED further adds that in exceptional situations—where an advocate may be summoned under legal exceptions—
“any summons under the exceptions to this provision require prior approval from the Director of the Enforcement Directorate.”
This means that field offices of the ED cannot independently issue summons to lawyers anymore; they must get special approval from the Director.
This decision comes during an ongoing investigation by the ED into the issuance of Employee Stock Ownership Plans (ESOPs) by CHIL (a company under probe), which allegedly happened against the directions of the Insurance Regulatory and Development Authority of India (IRDAI).
The ESOPs in question were reportedly issued on May 1, 2022, and are believed to have been priced much lower than their actual market value.
What makes the situation more serious is that these ESOPs were allegedly granted
“despite a formal rejection of the ESOP proposal by the Insurance Regulatory and Development Authority of India (IRDAI).”
In connection with this investigation, the ED had earlier summoned senior advocate Pratap Venugopal, who is also an independent director of CHIL.
The purpose was to understand
“the circumstances surrounding the issuance of the ESOPs and the board’s discussions following IRDAI’s rejection.”
However, since Pratap Venugopal is a practicing senior advocate in the Supreme Court, and considering the new ED circular, the summons issued to him has now been withdrawn.
The ED has said that
“any documents required from him in his capacity as an independent director will be requested via email.”
This move shows that the ED is now being more careful about respecting lawyer-client confidentiality and following legal procedure when dealing with advocates.
Earlier, on July 23, 2023, the IRDAI had taken strong action against CHIL. The regulator had directed the company to
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“revoke or cancel any ESOPs that remain unallotted.”
Furthermore, as punishment for not following its instructions, the IRDAI had also
“imposed a penalty of Rs 1 crore on CHIL for non-compliance with its directives.”
Background Of Case
In recent times, the Enforcement Directorate (ED) has faced growing criticism from the legal community over how it exercises its authority, especially when it comes to summoning advocates during investigations.
Several senior lawyers and bar associations have raised serious concerns, arguing that summoning legal professionals without clear justification can harm the basic principle of confidentiality between a lawyer and their client.
This concern grew stronger after the ED sent summons to some senior advocates in sensitive matters. Legal associations, including the Supreme Court Bar Association, strongly opposed such actions, warning that they could undermine the independence of the legal profession.
Many within the legal fraternity described these developments as worrying and felt that such moves could weaken trust between lawyers and their clients.
At the same time, the new Bhartiya Sakshya Adhiniyam, 2023—which replaced the Indian Evidence Act—clearly reinforces protections for advocates. Section 132 of this law states that lawyers cannot be forced to reveal private communications made to them by their clients unless the client allows it.
This legal safeguard has added weight to the objections raised by the legal community.
In light of these growing concerns, the ED has now issued a circular that seeks to address the issue.
The circular clearly states that
“any summons under the exceptions to this provision require prior approval from the Director of the Enforcement Directorate.”
This change means that field officers can no longer independently issue summons to advocates without top-level permission.
The ED’s decision is seen as an important step to ensure that its investigations do not compromise legal ethics or constitutional protections.
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