In a significant development for digital news platform NewsClick and its founding editor-in-chief Prabir Purkayastha, the Delhi High Court on Wednesday quashed a First Information Report (FIR) registered by the Economic Offences Wing (EOW) concerning allegations of illegal foreign funding. Justice Neena Bansal Krishna held that the case did not disclose any cognisable offence under the Indian Penal Code (IPC).
Court Ruling on FIR
The court observed that even if all allegations in the FIR were accepted in their entirety, the essential ingredients of offences under Sections 406 (criminal breach of trust) and 420 (cheating) of the IPC were not made out. Holding that continuing the proceedings would amount to a “gross abuse of the process of law,” the court quashed the FIR. It further noted that once the predicate offence itself stood quashed, the Enforcement Directorate’s Enforcement Case Information Report (ECIR), registered on its basis, would also become liable to be quashed.
ED Investigation Findings
The bench remarked, “Pertinently, extensive investigations have been carried out by ED for about a year and a half and petitioners as well as its employees have been summoned and examined many times, but nothing incriminating till date has been found or placed on record. Aside from bald assertions of there being a criminal conspiracy, there is not a whisper of any incriminating allegation, which would even remotely suggest the commission of the offence punishable under Section 4 PMLA.”
Background of the Case
The allegations against PPK Newsclick Studio Pvt Ltd were that it had received foreign direct investment (FDI) by allegedly overvaluing its shares to bypass FDI restrictions. The FIR, registered in August 2020 on a complaint forwarded by the Ministry of Information and Broadcasting (I&B), alleged that NewsClick received Rs 9.59 crore in FDI from US-based Worldwide Media Holdings LLC through an overvalued share transaction. It was further alleged that part of the funds was siphoned off through salaries, consultancy fees, and other expenses. The FIR subsequently formed the basis of an ED money laundering probe.
FDI Policy Clarification
Addressing the allegation of FDI violations, the court noted that NewsClick had sought clarification from the I&B ministry in 2017 regarding the FDI policy applicable to online news publications. Referring to the ministry’s response, the bench observed, “From the response received from the ministry in respect of FDI policy, it was clearly evident that there was no cap on the online publication of news and thus, the agreement between the petitioner and M/s Worldwide Media Holdings LLC and, therefore, the Investment Agreement dated 20.03.2018 cannot be said to be in violation of any law or disclosing any criminal offence.”
The court’s decision provides substantial relief to NewsClick and its editor, who had been facing legal scrutiny over the funding allegations. The ruling underscores the lack of evidence to support the criminal charges, thereby closing the case at the high court level.
