Why the ED's Retreat on Attorney-Client Privilege is Not the Final Word

The recent summoning of senior advocates by the Enforcement Directorate was not a minor dispute. It was the inevitable tremor from a seismic fault line created by draconian law and judicial sanctions. The resulting truce is fragile, and only a fundamental course of correction by the Supreme Court can prevent the collapse of principles vital to a liberal democracy. 

The summons arrived not with a bang, but with the chilling quiet of bureaucratic finality. In the rarefied echelons of India’s legal fraternity, where names like Arvind Datar and R. Venugopal are synonymous with legal erudition and courtroom gravitas, the notices from the Enforcement Directorate (ED) landed like cannonballs in a cathedral. This was not a routine inquiry into tax affairs or a peripheral matter. The ED, an agency that has come to embody the most coercive aspects of state power, was demanding that these senior advocates explain legal advice they had rendered to a client, Religare. The act was audacious, a direct and unprecedented strike at the very heart of the lawyer's function. 

At stake was a principle older than the Indian Republic itself: attorney-client privilege. For the lay reader, this concept can be misconstrued as a self-serving perk for lawyers, a shroud of secrecy to protect the profession. It is anything but. The privilege belongs not to the lawyer but to the citizens. It is the fundamental right of any individual, when faced with the immense power of the state or the complexity of the law, to seek confidential and fearless counsel. It is the seal of confidentiality in the legal world, a necessary precondition for justice. Without the absolute certainty that a client can disclose every fact to their lawyer—be it embarrassing, incriminating, or merely complicated—without fear of that disclosure being turned into a weapon against them, the right to a defense becomes a hollow promise. The ED's summons sought to tear this seal, suggesting that a lawyer’s professional opinion could itself become the basis for a criminal investigation, transforming the counsellor into a potential co-conspirator. 

The response from the legal community was swift, furious, and—most crucially—unanimous. This was not the grumbling of a few disgruntled individuals. The Supreme Court Bar Association (SCBA) and the Supreme Court Advocates-on-Record Association (SCAORA), two of the most powerful bodies representing lawyers at the apex of the profession, rose as one. The language they deployed in their letters to the Chief Justice of India was shorn of diplomatic nicety. They spoke of a “disturbing trend,” of an “impermissible transgression,” and, most damningly, of the “intimidatory use of state power.” 

This was not the language of routine protest; it was the vocabulary of institutional crisis. The Bar was not merely defending two of its own; it was defending its existential purpose. The collective outcry signified a profound breakdown of trust between the court's officers and the state's premier investigative agency. The call for the Chief Justice of India to take suo motu cognizance—to initiate proceedings on his own accord—was the most potent signal of all. This is not a request made lightly. It is an emergency flare, launched from the deck of the judiciary, signaling a constitutional storm in the making. It was a declaration that a fundamental line had been crossed, and that the very architecture of justice was under assault from within. The Bar’s unified roar was a reminder that while the state may possess the sword, the legal profession sees itself as the guardian of the sanctum. 

To understand the gravity of the ED’s move, one must step back from the immediate confrontation and appreciate the deep historical and philosophical roots of attorney-client privilege. It is not a modern legal invention but a cornerstone principle, painstakingly developed over centuries. Its lineage traces back to English common law, born from the recognition that a fair adversarial contest is impossible if one side can force its opponent’s strategist to reveal their playbook. This principle was deemed so vital that it was codified in India early in its modern legal history, finding its place in Section 126 of the Indian Evidence Act, 1872. This provision explicitly bars an attorney from disclosing any communication made to them in the course of or for their employment, without the client’s express consent. Its essence is preserved and carried forward in Section 130 of the new Bhartiya Sakshya Adhiniyam, 2023, demonstrating its enduring relevance. 

The purpose of this sanctity is profoundly practical: to encourage “full and frank” disclosure between a client and their lawyer. In a system where the state, with its vast investigative machinery and prosecutorial resources, is pitted against an individual, this privilege is a great equalizer. It ensures that a defense is not built on a partial or sanitized version of the facts, but on a complete understanding, allowing the lawyer to provide the best possible counsel. Foundational judgments, both in India and across common law jurisdictions, have repeatedly affirmed that this is not merely a rule of evidence but a matter of fundamental public policy, integral to the rule of law. It is the bedrock upon which the right to legal representation, guaranteed by Article 22(1) of our Constitution, stands. To weaken it is to destabilize the entire structure of adversarial justice. 

Of course, privilege is not absolute. The law has long recognized a crucial exception, one that the ED would almost certainly have invoked had this matter escalated: the privilege does not protect communications made in furtherance of an illegal purpose. Section 126 itself contains this proviso. If a client seeks a lawyer’s help not to defend against a past crime but to plan or execute a future one, communication is not privileged. A client cannot use the lawyer’s office as a safe house for conspiracy. 

On its face, this is an eminently reasonable and necessary exception. But its application in the context of the Prevention of Money Laundering Act (PMLA) is fraught with peril. The PMLA is a law of immense breadth and ambiguity. Its definition of "proceeds of crime" is so expansive that it can cover assets that are not directly linked to the original criminal activity. In the labyrinthine world of corporate finance and complex commercial transactions, legal advice on structuring deals, tax planning, or regulatory compliance could, with the benefit of prosecutorial hindsight and a dose of suspicion, be retrospectively painted as a communication “in furtherance of an illegal purpose.” 

This raises a terrifyingly critical question: Who gets to decide when the line has been crossed? When the investigative agency, which already labors under a presumption that the accused is guilty, is also empowered to be the preliminary arbiter of whether a lawyer’s advice was legitimate counsel or criminal facilitation, the exception threatens to swallow the rule. The danger is that the privilege is breached first—the information seized, the lawyer intimidated—and the justification is constructed later. The only meaningful safeguard is for the determination of an "illegal purpose" to be made under stringent and prior judicial oversight. To allow the agency itself to be the judge of its cause in breaching the sanctum is to hand it a master key to every citizen’s last line of defense. 

The ED’s unprecedented action cannot be understood without dissecting the unique and formidable weapon it wields: the Prevention of Money Laundering Act, 2002. The PMLA is not an ordinary criminal law. It is a different breed; a legal leviathan conceived in the global fight against narco-terrorism and transnational organized crime. Its provisions were designed to tackle extraordinary threats, and they achieve this by systematically departing from the cherished principles of standard jurisprudence. 

Its power stems from several key features. First, the definition of "proceeds of crime" is breathtakingly broad, encompassing not just property derived from a predicate offence but also its value. Second, a conviction for the underlying (predicate) offence is not a prerequisite for a PMLA prosecution to continue, creating a strange legal schism. But most significantly, the PMLA performs a radical inversion of foundational legal principles. It reverses the presumption of innocence. Section 45 of the Act imposes “twin conditions” for bail that are nearly impossible to meet: the court must be satisfied that there are reasonable grounds for believing the accused is not guilty and that they are not likely to commit any offence while on bail. This places a Herculean burden on the accused at the very start, making the process itself the punishment. While created to combat the drug lord and the terrorist financier, the PMLA's application has metastasized, expanding into the realm of regular commercial disputes, political rivalries, and civil disagreements, turning a specialized surgical tool into a blunt instrument of routine coercion. 

For years, the constitutionality of these draconian provisions was under challenge. The legal community watched, hoping the Supreme Court would rein in the Act’s excesses and restore a semblance of balance. Instead, in its 2022 judgment in Vijay Madanlal Choudhary v. Union of India, the Court did the opposite. It gave its constitutional imprimatur to the PMLA’s most contentious powers, creating the very climate of institutional impunity that led the ED to believe it could summon a senior advocate for giving legal advice. 

The Vijay Madanlal judgment is the bedrock upon which the current crisis is built. In clear, unambiguous terms, the Court upheld the ED’s sweeping powers of arrest, search, and seizure. Most devastatingly, it ruled that the Enforcement Case Information Report (ECIR)—the ED’s equivalent of an FIR—is a confidential, internal document. The consequence of this is staggering: an individual can have their liberty curtailed, their property attached, and their reputation destroyed without even being given a copy of the specific allegations against them. This creates a grotesque information asymmetry, crippling the ability to mount a meaningful defense. Furthermore, the court upheld the constitutional validity of the twin conditions for bail, effectively sealing the exit door for the accused. 

By sanctifying these provisions, the Supreme Court imbued the ED with supreme confidence, a sense that its powers were virtually limitless and beyond effective challenge. The judgment sent a clear signal that the conventional checks and balances did not apply with the same force to this agency. It is no wonder, then, that some High Courts have themselves taken note of the agency's post-judgment posture. The Madras High Court, in a recent case, made a telling observation that "ED officials are evolving day by day," a polite judicial euphemism for an agency growing bolder and more aggressive in its methods. The summons to Datar and Venugopal was not an aberration; it was the logical, perhaps inevitable, next step for an agency emboldened by the highest court in the land. 

Faced with an insurrection from the Bar and the looming threat of the Supreme Court’s intervention, the ED beat a hasty retreat. It announced the withdrawal of the summons and, more significantly, issued an internal circular stipulating a new guideline. Henceforth, the circular stated, lawyers would not be summoned to disclose privileged communications, and any exception to this would require the personal approval of the Director of the ED at the headquarters in Delhi. On the surface, this appears to be a major concession, a sheathing of the sword. 

But a closer analysis reveals it to be a tactical retreat, not a fundamental change of heart. The circular, while a pragmatic response to immense pressure, is deeply flawed as a safeguard. The decision to breach the sanctum of privilege is still left entirely within the administrative discretion of the agency itself. Placing this power in the hands of the Director does not create an independent check; it merely centralizes the authority to transgress. It offers no pathway for prior judicial review, no recourse for the citizen or their lawyer before the damage is done. It changes the identity of the person who wields the sword, moving it from a regional officer to the Director, but it does not place the sword in a scabbard locked by judicial oversight. The nuance in the ED’s actions—formally withdrawing the summons for Mr. Venugopal (reportedly because he was a non-executive director), while keeping Mr. Datar’s in abeyance—is a subtle but clear signal that the threat remains very much alive. 

This brings us to the final act, the only one that truly matters. The entire confrontation has served to dramatize the stakes of a legal battle already pending: the review of the Vijay Madanlal Choudhary judgment. What was once a somewhat abstract legal exercise has been thrown into sharp, urgent relief. The summoning of senior advocates has provided a real-world, undeniable demonstration of the clear and present danger posed by the unchecked powers that the 2022 judgment upheld. The impending review is now laden with historic significance. 

It presents a vital opportunity for the Supreme Court to perform a profound and necessary course of correction. This is a chance to re-examine the PMLA not merely on dry technicalities, but on the living touchstone of constitutionalism, fairness, and the preservation of the basic structure of our justice system. The Court must look beyond the legislative intent of curbing money laundering and ask what the Act, in its actual operation, is doing to the soul of Indian democracy. Is it possible to fight financial crime without sacrificing the presumption of innocence? Can we have security without surrendering liberty? 

The resolution of this crisis cannot be a flimsy administrative plan. The Bar’s brave and unified stand forced a truce, but it did not win the war for principle. The Supreme Court, as the ultimate guardian of the Constitution, must now step in. It must settle the dust not just on this one incident, but on the seismic fault line that it has so violently revealed. The goal must be to reaffirm, in the strongest possible terms, that in the Indian Republic, no agency is above the Constitution, no process can be the punishment, and no principle is more sacred than a citizen's right to a fair and fearless defense. The Sanctum must be protected from the Sword. The Court must now reinforce the walls.