The Delhi High Court has quashed the criminal cases filed by the Delhi Police and the Directorate of Enforcement (ED) against the news portal NewsClick and its editor-in-chief, Prabir Purkayastha. In a judgment issued on May 29, Justice Neena Bansal Krishna ruled that the ongoing legal proceedings, which stemmed from allegations of Foreign Direct Investment (FDI) violations, constituted a “gross abuse of the process of law.”
The court noted that the complaint triggering the 2020 Delhi Police FIR was filed by “merely an informant” rather than an aggrieved party, such as the foreign investor, Worldwide Media Holdings LLC.
Why the Court Quashed the FIR
The court’s decision rested on the finding that the original allegations lacked a criminal basis. The Delhi Police’s Economic Offences Wing (EOW) had alleged that NewsClick’s parent company, PPK Newsclick Studio Pvt Ltd, violated FDI norms by overvaluing shares to bypass a 26% investment cap and subsequently siphoning off funds. However, the court cited a response from the Union Ministry of Information and Broadcasting, which confirmed there was no such cap or restriction on FDI in digital media during the 2018-19 financial year.
Justice Krishna further dismissed the claims of financial impropriety, noting that a digital media outlet is expected to incur standard operational costs like rent, salaries, and consultation fees. Because the predicate offence—the underlying FIR—was quashed, the court determined the ED’s Enforcement Case Information Report (ECIR) was also liable to be closed, as it lacked a foundation in criminal law.
This ruling highlights the high evidentiary threshold required to sustain money laundering charges. By emphasizing the absence of an “illegal objective” or any incriminating evidence despite an 18-month investigation, the court has reinforced the principle that investigative agencies must provide more than “bald assertions” of conspiracy to justify prolonged legal action against media organizations.
What Happens Next
With the quashing of both the FIR (No. 0116/2020) and the ECIR (ECIR/14/HIU/2020), the legal cases against NewsClick and Mr. Purkayastha have effectively concluded. The court’s order renders any outstanding requests for documentation, such as the demand for a copy of the ECIR, legally moot. While the state could potentially seek to challenge this judgment in a higher court, the current ruling clears the petitioners of the specific charges related to the 2018-19 FDI transactions.
Frequently Asked Questions
What were the primary allegations against NewsClick?
The Delhi Police alleged that the company violated FDI laws by overvaluing shares to exceed a perceived investment cap and subsequently siphoned off 45% of the funds for ulterior motives.
Why did the court reject the money laundering case?
The court found that the ED failed to provide any incriminating evidence despite 18 months of investigation. It ruled that the agency could not sustain a money laundering case without demonstrating an “illegal objective” or a specific criminal act.
What is the status of the FIR and ECIR?
Both the Delhi Police FIR and the ED’s ECIR have been formally quashed by the Delhi High Court.
How might this judicial decision influence the regulatory environment for digital news outlets in the future?