Delhi High Court quashes Newsclick FIR, ED money laundering case

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Founder and Editor-in-Chief of NewsClick Prabir Purkayastha. File | Photo Credit: AP

The Delhi High Court quashed an FIR registered against digital news platform Newsclickand its founder Prabir Purkayastha, holding that the allegations relating to foreign direct investment (FDI), share valuation and expenditure of funds did not disclose offences of cheating or criminal breach of trust.

In a judgment delivered on May 29, Justice Neena Bansal Krishna quashed the FIR registered by the Economic Offences Wing (EOW) on August 26, 2020, observing that even if all allegations in the complaint were accepted at face value, the essential ingredients of the offences were not made out.

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The court also quashed the Enforcement Directorate’s ECIR registered on September 2, 2020, under the Prevention of Money Laundering Act (PMLA), noting that the money laundering case was founded on the same allegations forming the basis of the FIR.

The Delhi Police’s FIR in the case alleged that PPK Newsclick Studio Private Limited received foreign direct investment (FDI) of ₹9.59 crore from Worldwide Media Holdings LLC, U.S, during the financial year 2018-19 in exchange of 7.69% shares of the company. The FIR claimed that the investment was made by greatly overvaluing the shares of the petitioner company to avoid the alleged cap of 26% FDI in a digital news website.

It further alleged that over 45% of this investment was diverted or siphoned off towards the payment of salary/consultancy fees, rent, and other expenses, which are alleged to have been made for ulterior motives. The ED initiated its probe on the basis of the Delhi Police’s FIR.

The court, however, noted that at the time the investment was made there was no cap on FDI in digital news media. It pointed to a clarification issued by the Ministry of Information and Broadcasting in January 2018 stating that online news publications did not fall within the