Delhi HC Quashes NewsClick FIR and ED Case, Calls Proceedings ‘Gross Abuse of Process of Law’

New Delhi, June 10: In a significant judgment concerning media regulation, foreign funding, and anti-money laundering investigations, the Delhi High Court has quashed both the Delhi Police Economic Offences Wing (EOW) FIR and the Enforcement Directorate's (ED) money laundering case against digital news platform NewsClick and its Editor-in-Chief, Prabir Purkayastha.

Justice Neena Bansal Krishna, in a judgment dated May 29, held that the continuation of criminal proceedings amounted to a “gross abuse of the process of law.” The Court further ruled that once the predicate offence itself was unsustainable, the Enforcement Directorate's Enforcement Case Information Report (ECIR) could not survive independently.

Background of the Case

The controversy stemmed from an FIR registered by the Delhi Police's Economic Offences Wing in 2020 against PPK Newsclick Studio Pvt. Ltd., the parent company of NewsClick.

The EOW alleged that the company received Foreign Direct Investment (FDI) worth ₹9.59 crore from a US-based entity, Worldwide Media Holdings LLC, during the financial year 2018-19 in violation of foreign investment regulations applicable to digital news platforms.

According to the FIR, the investment involved an alleged overvaluation of company shares to bypass restrictions on foreign ownership in digital media. The agency further claimed that a substantial portion of the investment was subsequently diverted through salaries, consultancy fees, rent, and other expenditures.

Based on these allegations, the Enforcement Directorate initiated proceedings under the Prevention of Money Laundering Act (PMLA).

No Criminal Offence Made Out: Court

The High Court observed that the transaction in question was essentially an economic and commercial decision and did not disclose any criminal wrongdoing.

The Court relied on a communication from the Ministry of Information and Broadcasting, which clarified that at the relevant time there was no cap or restriction on foreign investment in digital media entities.

Consequently, the Court found that the allegations of cheating and criminal breach of trust were not made out even if the prosecution's claims were accepted at face value.

Importantly, the Court noted that the alleged investor, Worldwide Media Holdings LLC, had never complained of being deceived. Instead, the criminal complaint originated from an informant who was not directly affected by the transaction.

‘Siphoning’ Allegation Rejected

Rejecting the allegation that funds had been siphoned off, the Court observed that a media company necessarily incurs expenses such as salaries, consultancy payments, and rent in the ordinary course of business.

The Court held that such expenditures could not automatically be treated as evidence of diversion of funds or criminal misconduct.

ED Failed to Establish Money Laundering

The High Court also rejected the ED's attempt to sustain the money laundering proceedings on the basis of criminal conspiracy.

The Court emphasized that for a conspiracy charge to survive, investigators must demonstrate an unlawful objective or illegal means adopted by the accused.

Noting the extensive investigation conducted over nearly eighteen months, the Court remarked that despite repeated summons and examinations of the petitioners and employees, no incriminating material had been produced.

The judgment records:

“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.”

FIR and ECIR Quashed

Allowing the petitions, the Court quashed FIR No. 0116/2020 registered by the EOW and ECIR/14/HIU/2020 registered by the Enforcement Directorate.

The Court also held that the request seeking a copy of the ECIR became infructuous once the ECIR itself was set aside.

Why This Judgment Matters

The ruling is likely to have wider implications for investigations involving media organisations, foreign investments, and money laundering prosecutions. The judgment reiterates that commercial decisions and regulatory disputes cannot automatically be converted into criminal cases unless investigating agencies establish clear ingredients of a cognisable offence.

The decision also reinforces the principle that PMLA proceedings cannot survive in the absence of a legally sustainable predicate offence.