The Enforcement Directorate (ED) has issued summons to Senior Advocate Arvind Datar in connection with its 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. The development marks a significant escalation in the investigation, which has already seen regulatory action and asset freezes.
Care Health Insurance, formerly known as Religare Health Insurance and rebranded in 2020, is a wholly-owned subsidiary of REL. The investigation centres on the issuance of over 22.7 million ESOPs, allegedly valued at ₹250 crore, to Saluja — a move the ED suspects may have violated regulatory norms and could form part of a broader financial irregularity.
Legal Opinion Under Scrutiny
According to sources, the summons to Datar pertains to a legal opinion he had rendered supporting the legality of the ESOP allocation to Saluja. Both the ED and the Insurance Regulatory and Development Authority of India (IRDAI) are examining whether the grant violated sector-specific guidelines, particularly those limiting the remuneration of non-executive directors.
In November 2023, IRDAI ordered Care Health Insurance to cancel the unexercised ESOPs and repurchase 7.57 million shares already issued to Saluja. The regulatory body found that the grant had breached norms prohibiting non-executive directors from receiving compensation above ₹10 lakh without prior approval.
ED’s Money Laundering Probe
Following the IRDAI directive, the ED initiated a money laundering investigation based on a complaint by the Mumbai Police Economic Offences Wing. In August 2024, the agency conducted searches and subsequently froze ESOP shares allotted to Saluja and several Care Health executives.
The ED’s summons to Datar is part of efforts to scrutinise the legal foundation of the ESOP issuance, particularly in light of the regulatory violations alleged by IRDAI.
Parallel Corporate Governance Dispute
The matter has unfolded alongside an ongoing corporate battle between the Burman family, major shareholders in REL, and the former Saluja-led management. In a related move, Saluja approached the Delhi High Court in December 2024, seeking to block a resolution at REL’s 40th Annual General Meeting that proposed her replacement as director.
Saluja argued that the resolution violated the Companies Act, 2013 and a Reserve Bank of India (RBI) directive issued on December 9, 2024, which barred changes to REL’s management. She contended that her current term as director runs until February 25, 2028, making the resolution “unlawful and unnecessary.” However, the High Court refused to stay the AGM, and the shareholders subsequently voted to remove her.
