The Enforcement Directorate (ED) in Mumbai is carrying out an investigation related to money laundering. The case is about Care Health Insurance Ltd (CHIL) allegedly issuing Employee Stock Option Plans (ESOPs)—which are shares given to employees—at a very low price on 1st May 2022, even though India’s insurance regulator (IRDAI) had rejected the proposal.
What is the Issue?
According to the ED, CHIL gave these shares at a lower price despite clear instructions from IRDAI not to do so. The matter was also discussed in the company’s board meetings. Because of this, the ED sent a summons to Mr. Pratap Venugopal, an Independent Director of CHIL, asking him to explain the reason why the company still issued the shares after IRDAI’s rejection.
What Did IRDAI Do?
On 23rd July 2024, IRDAI directed CHIL to:
- Cancel any ESOPs that had not been given out yet.
- Pay a fine of ₹1 crore for not following its rules.
Why Was the Summons Withdrawn?
Mr. Pratap Venugopal is a Senior Advocate of the Supreme Court, so the ED withdrew the summons sent to him. They informed him in writing and said that if any documents are needed from him in his role as Independent Director, he can submit them via email.
New Guidelines from ED
To avoid legal issues in the future, the ED has now issued a circular to all its field offices. The circular says:
- No summons should be sent to advocates, as it could go against Section 132 of the Bhartiya Sakshya Adhiniyam (BSA), 2023.
- If a summons is necessary under certain exceptions in the law, it must first be approved by the Director of ED.