The Enforcement Directorate has withdrawn its summons issued to Senior Advocate Arvind Datar in connection with the investigation into ESOPs granted by Care Health Insurance to former Religare Enterprises chairperson Rashmi Saluja. The ED had sought Datar’s appearance over a legal opinion he gave supporting the ESOP grant, which is currently under scrutiny. However, the agency has now informed him that his presence is no longer needed.

According to reports, Datar had argued that lawyers cannot be compelled to testify about matters involving legal advice to their clients. Citing professional privilege, he asserted that such disclosures are prohibited.

ESOP case: Care Health

This comes amid the ongoing probe into a controversial Employee Stock Option Plan (ESOP) granted by Care Health Insurance to former Religare Enterprises Limited (REL) chairperson Dr. Rashmi Saluja. As the investigation escalates, the probe deepens further into the regulatory measures and asset freezes done earlier.

Formerly known as Religare Health Insurance, Care Health Insurance was the rebrand launched in 2020. The matter pertains to the issuance of 22.7 million ESOPs to Saluja, worth Rs 250 crore. ED, however, suspects this move to have violated the norms and could be a segment of a broader financial irregularity.

As per Bar and Bench reports, Datar had offered support of the legality of the ESOP allocation to Saluja. Triggering a probe, both ED and the Insurance Regulatory and Development Authority of India (IRDAI) are looking into the matter. Questions rise whether the industry giant violated sector-specific guidelines, especially those limiting the remuneration of non-executive orders.

Furthermore, in Novemeber 2023, IRDAI had already ordered Care Health Insurance to cancel the unexercised ESOPs and repurchased the 7.57 million shared issued to Saluja. Resulting in, the regulatory body finding the breach of norms which prohibit non-executive directors from receiving any compensation exceeding Rs 10 lakh without approval.

Probing money laundering claims

As a result of the IRDAI directive, ED kickstarted a money laundering investigation following a complaint. It was received from the Mumbai Police Economic Offences Wing. Thus, in August 2024, the prob led to the frozen ESOP shared allotted to Saluja and rather, among several other executives of Care Health Insurance