‘Gross abuse of law process’: Delhi HC quashes police, ED cases against NewsClick.

New Delhi: The Delhi High Court has quashed the Delhi Police Economic Offences Wing (EOW) FIR and the Enforcement Directorate’s (ED) money laundering case against news portal NewsClick, its parent company PPK Newsclick Studio Pvt Ltd, and Editor-in-Chief Prabir Purkayastha over alleged violations of foreign direct investment (FDI) norms.

In a judgment delivered on May 29, Justice Neena Bansal Krishna held that the continuation of the EOW case amounted to a “gross abuse of the process of law.” The court further ruled that since the predicate offence had been set aside, the ED’s Enforcement Case Information Report (ECIR) based on it could not survive.

The EOW had registered an FIR in 2020 alleging that PPK Newsclick Studio received Rs 9.59 crore in FDI from Worldwide Media Holdings LLC, a US-based company, during the 2018-19 financial year in violation of foreign investment regulations, causing losses to the government exchequer.

Investigators alleged that the company had significantly overvalued its shares to bypass an alleged 26% cap on foreign investment in digital news media and that more than 45% of the funds were diverted through salaries, consultancy fees, rent and other expenses.

The ED subsequently launched a money laundering probe against NewsClick, Purkayastha and others based on the EOW case.

Seeking quashing of the FIR, PPK Newsclick Studio argued that the allegations were vague and failed to disclose any criminal offence.

The High Court agreed, observing that the investment was an economic decision and did not constitute a criminal act. It noted that the Ministry of Information and Broadcasting had clarified there was no restriction or cap on FDI in digital media at the relevant time.

The court held that the transaction was in line with accepted business practices and that the allegations did not establish offences such as cheating or criminal breach of trust.

It further observed that a cheating case requires the existence of a victim and noted that Worldwide Media Holdings LLC had never lodged any complaint. Instead, the case was initiated based on information provided by a third party.

Rejecting allegations that funds had been siphoned off, the court said expenses such as salaries, consultancy fees and rent were normal business expenditures for a company operating in digital media.

The court also dismissed the ED’s attempt to sustain the money laundering case on the basis of criminal conspiracy, saying investigators had failed to demonstrate any unlawful objective or illegal means adopted by the accused.

“Extensive investigations have been carried out by ED for about a year and a half and the petitioners as well as employees have been summoned and examined multiple times, but nothing incriminating has been found or placed on record,” the court observed.

Concluding that there was no material to support the allegations, the court ordered that both the EOW FIR and the ED’s ECIR be quashed. It also held that NewsClick’s request for a copy of the ECIR had become infructuous following the closure of the case.