ED Issues New Circular Protecting Lawyer-Client Privilege After Backlash Over Summons to Senior Advocates

In a significant move, the Enforcement Directorate (ED) has issued a new circular that restricts its officers from issuing summons to advocates in connection with the legal advice they provide to their clients. This step comes after widespread criticism over the ED’s recent decision to summon two senior advocates regarding their legal opinion offered to a private company.

What Sparked the Controversy?

Recently, senior advocates Arvind P Datar and Pratap Venugopal were summoned by the ED. The summons were related to legal advice they had given to M/s Care Health Insurance about Employee Stock Ownership Plans (ESOPs) issued to Dr. Rashmi Saluja, the former chairperson of Religare Enterprises.

This move triggered a strong backlash from the legal community. Bar associations and legal experts across the country expressed concern, arguing that the summons violated the fundamental principle of lawyer-client privilege. Many even called on the Supreme Court to step in, saying such actions posed a threat to the independence of the legal profession.

Following the backlash, the ED withdrew the summons. Now, the agency has taken a step further by formalizing a new policy through an official circular.

What Does the Circular Say?

The circular clearly states that:

“No summons shall be issued to any advocate in violation of Section 132 of the Bhartiya Sakshya Adhiniyam (BSA), 2023.”

Section 132 of the BSA, 2023, protects communications between a lawyer and their client. It prohibits advocates from disclosing any communication made during their professional service unless the client gives express consent.

However, the law includes two exceptions:

1. If the communication was made to further an illegal activity, or

2. If the advocate observes any fact showing a crime or fraud committed during the course of his service.

Even under these exceptions, the ED’s new circular mandates that no summon can be issued without the prior approval of the ED Director.

Lawyer-Client Privilege: A Legal Cornerstone:

Section 132 of the Bhartiya Sakshya Adhiniyam, 2023, reinforces the age-old principle of confidentiality between lawyers and their clients. It reads:

“No advocate shall... disclose any communication made to him... or state the contents... or disclose any advice given... unless with his client’s express consent.”

The section also notes that this duty of confidentiality continues even after the professional relationship ends.

This legal safeguard is essential for ensuring trust between clients and their legal representatives. Without such protection, clients may hesitate to speak openly with their lawyers, which could hinder justice.

Why This Matters

The ED’s recent actions raised questions about the balance between investigative powers and legal ethics. While law enforcement agencies have the authority to investigate financial crimes, their actions must also respect the legal framework protecting individual rights and professional ethics.

With the new circular, the ED has taken a corrective step, showing willingness to respect the boundaries set by law. This move has been welcomed by many in the legal community as a positive development.

Conclusion

The ED’s decision to limit its field officers from summoning advocates over legal opinions—unless absolutely necessary and approved by the Director—is a key moment in upholding the integrity of the legal profession in India. It reaffirms that lawyer-client confidentiality is not just tradition, but a legal right protected by statute.