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Business Standard
13-07-2025
- Business
- Business Standard
InGovern flags governance concerns at REL, questions ESOP clawback
InGovern Research Services has flagged concerns over potential governance lapses at Religare Enterprises (REL) over an undeclared conflict of interest at its health insurance arm, Care Health Insurance (CHIL), and the continued opacity around the clawback of employee stock ownership plans (Esops) granted to former chairperson Rashmi Saluja. InGovern says Pratap Venugopal's 'dual role' — he was simultaneously REL's external legal counsel and an independent director of CHIL — 'raises fundamental governance questions'. The firm argues that the arrangement compromised the independence of REL's nomination and remuneration committee, and that disclosures on the conflict appear to be 'not transparently disclosed'. Responding to a query on the issue, Venugopal said he was never a legal advisor to CHIL but merely an independent director. 'At the request of the board of CHIL, opinions were obtained by KJ John & Co.... wherein I was a partner... neither the firm nor I received any fees for obtaining the opinions,' he said. In July 2024, the insurance regulator, the Insurance Regulatory and Development Authority of India (Irdai), fined CHIL ₹1 crore and ordered it to buy back 7.57 million vested Esops at ₹45.32 apiece and cancel the remaining 15.14 million unvested options. The InGovern report observes that over 80 per cent of CHIL Esops were allotted to Saluja — amounting to 2.5 per cent of CHIL's share capital — whose 'costs [were] ultimately borne by REL shareholders'. The grant price was less than half the ₹110 per share at which REL subsequently raised equity, which had fuelled doubts over fairness. 'Irdai issued an order holding the issuance of Esops to Saluja illegal. CHIL had filed an appeal before the Securities Appellate Tribunal under instructions from Saluja, who was then the non-executive chairperson of the board of directors of the company. Subsequent to Saluja's removal from the board, the company decided to withdraw the appeal. We offer no further comments as these issues are being examined internally,' REL said in an email response. Last month, the Enforcement Directorate summoned Venugopal in connection with the Esop transactions. The summons were later withdrawn after protests from the legal fraternity. Venugopal said he resigned as a partner of KJ John & Co. with effect from January 31, 2024. 'I severed all connection with the law firm and do not have any papers connected with the above-mentioned opinions with me.' Venugopal, who resigned as an independent director of CHIL on January 10, further said the summons 'nowhere stated that I was being summoned in the capacity of [an] independent director'. InGovern has argued that legal privilege cannot protect actions that may have facilitated regulatory breaches. The governance firm has called for immediate disclosures of full Irdai correspondence on the Esop grant issue, legal opinions, and board minutes justifying the Esop issuance and the valuation methodology for the Esop pricing. InGovern has further observed that the CHIL Esop matter finds no mention in REL's annual reports or shareholder communications, which it argues is a breach of market regulator Securities and Exchange Board of India's (Sebi's) disclosure norms. It has called for a Sebi probe into such disclosure lapses.
The Print
21-06-2025
- Business
- The Print
ED takes lesson from Datar & Venugopal episodes, director's nod now must to summon advocates
The move followed strong condemnation by several associations of lawyers of the ED summons issued to two senior advocates in connection with a money-laundering probe. New Delhi: The Enforcement Directorate (ED) Friday issued a circular to its officers instructing them not to summon any advocate as part of the investigation, as it could amount to a violation of the Bharatiya Sakshya Adhiniyam (BSA). The ED circular, a copy of which has been seen by ThePrint, further said that, in exceptional circumstances, when summons have to be issued, it can only be done after the approval of the agency director. From Section 132, 'it is amply clear that a legal practitioner cannot be compelled to disclose any communication made to him in the course and for the purpose of his professional service as such legal practitioner, by or on behalf of his client unless with his client's express consent. However, proviso to Section 132 of the BSA, 2023 has carved out certain exceptions,' said the circular issued by ED's legal wing to field officers. 'In view of the above, it is directed that no summons shall be issued to any advocate in violation of Section 132. Further, if any summon needs to be issued under the exceptions carved out in proviso to Section 132 of the BSA, the same shall be issued with the prior approval of the Director, ED,' it added. The development comes at a time when the ED has drawn criticism from the legal community over summoning senior advocates Arvind Datar and Pratap Venugopal in its probe into dealings of Care Health Insurance (CHIL) and its parent company, Religare Enterprises (REL). Both summonses have been withdrawn. In a letter dated 16 June, the Supreme Court Advocates-on-Record Association expressed 'strong disapproval' of the summons to Datar and said it reflected 'a disturbing trend of investigative overreach'. ThePrint had earlier reported that the ED has been probing money laundering allegations against these firms, including the transfer of shares worth crores to former CHIL non-executive chairperson and REL executive chairperson Rashmi Saluja despite the request being rejected by the Insurance Regulatory and Development Authority of India (IRDAI). The former board of CHIL cited an opinion that it had sought from Datar to grant shares to Saluja. According to the ED, Datar said IRDAI's approval was not needed since the shares were being granted in her capacity as an REL employee, and not CHIL. Separately, Venugopal was summoned in his capacity as the former independent director of CHIL to understand the circumstances behind the share transfer, the ED spokesperson said. In a statement Friday, the ED spokesperson said, 'In view of the fact that Shri Pratap Venugopal is a Senior Advocate in the Hon'ble Supreme Court, the summons issued to him has been withdrawn and same has been communicated to him. 'In the said communication, it has also been stated that if any documents will be required from him in his capacity as an Independent Director of CHIL, the same will be requested from him to be submitted by email.' (Edited by Sanya Mathur) Also Read: ED's now-withdrawn summons to Arvind Datar: The case, controversy & SC advocates body letter
Time of India
21-06-2025
- Business
- Time of India
Summons sent to lawyer for his role as co's ind dir: ED
Representative Image NEW DELHI: Faced with criticism, Enforcement Directorate Friday said it issued summons to senior advocate Pratap Venugopal as part of its ongoing investigation against Care Health Insurance Ltd (CHIL) in which Venugopal was an independent director. ED's Mumbai zonal office is conducting a money laundering investigation in which it has been alleged that shares of CHIL were issued at a much lower price in the form of ESOPs on May 1, 2022, in spite of the rejection of the same by Insurance Regulatory and Development Authority of India (IRDAI). "As part of the investigation, summons was issued to Pratap Venugopal, an independent director of CHIL, to understand the circumstances under which the company has issued ESOPs despite its rejection by IRDAI and subsequent discussions in the board of CHIL in this regard," the agency said about the summons which it withdrew after protests by lawyers' bodies. In a statement, the agency emphasised that IRDAI on July 23, 2024, had directed CHIL to revoke or cancel any ESOPs that were yet to be allotted and had also imposed a penalty of Rs 1 crore on CHIL for non-compliance with regulatory directions. "In view of the fact that Pratap Venugopal is a senior advocate in Supreme Court, the summons issued to him has been withdrawn and the same has been communicated to him," the agency said. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like American Investor Warren Buffett Recommends: 5 Books For Turning Your Life Around Blinkist: Warren Buffett's Reading List Undo In the said communication, it was also stated that if any documents were required from him in his capacity as an independent director of CHIL, the same would be requested to be submitted by email, the agency added. Further, ED has asked its units not to issue summons to lawyers, saying summoning them would be violative of Section 132 of Bhartiya Sakshya Adhiniyam, 2023. "If any summons needs to be issued under the exceptions carved out in proviso to Section 132 of Bhartiya Sakshya Adhiniyam, 2023, the same shall be issued only with the prior approval of the director, ED," the agency said.
India Today
20-06-2025
- Business
- India Today
ED bars summons to advocates, exceptions need director's approval under law
The Enforcement Directorate (ED) on Friday issued a circular instructing its field formations not to issue summons to any advocate in violation of Section 132 of the Bhartiya Sakshya Adhiniyam, 2023. This section states that no advocate, at any point of time, should disclose any communication made to him without the client's circular mandates that any summons under the exceptions to this provision require prior approval from the Director of the Enforcement comes amid the probe agency's investigation into a money laundering case involving Care Health Insurance Ltd (CHIL) concerning the issuance of Employee Stock Options (ESOPs) at significantly undervalued prices. The case centres around the Employee Stock Ownership Plans (ESOPs) issued on May 1, 2022, which were reportedly priced much lower than market value. This issuance allegedly took place despite a formal rejection of the ESOP proposal by the Insurance Regulatory and Development Authority of India (IRDAI).As part of the ongoing probe, the ED summoned Pratap Venugopal, an independent director of CHIL, to ascertain the circumstances surrounding the issuance of the ESOPs and the board's discussions following IRDAI's rejection. However, given that Venugopal is a senior advocate practicing in the Supreme Court, the summons issued to him has now been ED said that any documents required from him in his capacity as an independent director will be requested via July 23 last year, the IRDAI directed CHIL to revoke or cancel any ESOPs that remain unallotted. In addition, the regulator imposed a penalty of Rs 1 crore on CHIL for non-compliance with its Watch
Hindustan Times
20-06-2025
- Politics
- Hindustan Times
Officers told to get director's approval before sending summons to lawyers: ED
NEW DELHI: The Enforcement Directorate (ED) on Friday said it has directed its investigating officers not to issue summons to any advocate in violation of the protection extended to advocate-client privileges under Section 132 of the Bhartiya Sakshya Adhiniyam (BNS) and stipulated that summons could only be issued to lawyers under the exceptions provided in the law after the director's approval. Enforcement Directorate (FILE IMAGE) The circular to the federal agency's field formations came hours after ED withdrew the summons issued to two senior lawyers, Arvind Datar and Pratap Venugopal, after the Supreme Court Advocates on Record Association (SCAORA) asked Chief Justice of India Bhushan R Gavai to take up the case. Section 132 of BNS protects the advocate-client privilege and bars lawyers from disclosing communications between them and their clients. However, the section provides for three exceptions when this protection from disclosure shall not apply. In a statement, ED said Friday's circular was issued for guidance of field formations on Section 132 of BNS. 'Further if any summons needs to be issued under the exceptions carved out in proviso to Section 132 of the BSA, 2023, the same shall be issued only with the prior approval of the Director, ED,' the agency statement said. The agency also clarified that the summons were issued to Venugopal in his capacity as independent director of Care Health Insurance Ltd (CHIL), and not as a lawyer. 'In view of the fact that Pratap Venugopal is a Senior Advocate in the Supreme Court, the summons issued to him has been withdrawn and same has been communicated to him,' ED said. 'In the said communication, it has also been stated that if any documents will be required from him in his capacity as an independent director of CHIL, the same will be requested from him to be submitted by email,' the agency said. The financial crimes probe agency is looking into money laundering allegations in connection with a case in which shares of Care Health Insurance Ltd (CHIL) were issued at a much lower price in the form of ESOPs on May 1, 2022, despite the rejection of the same by Insurance Regulatory and Development Authority of India (IRDAI).
