‘Gross abuse of law’: Delhi HC quashes FIR, ED case against Newsclick, founder

NEW DELHI: In a major relief to digital news platform NewsClick and its founding editor-in-chief Prabir Purkayastha, Delhi high court Wednesday quashed an FIR registered by the eonomic offences wing (EOW) over allegations of illegal foreign funding, holding that the case disclosed no cognisable offence under the IPC.Justice Neena Bansal Krishna held 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) IPC were not made out.Holding that continuation of the proceedings amounted to a “gross abuse of the process of law”, the court quashed the FIR and observed that once the predicate offence itself stood quashed, the Enforcement Directorate’s enforcement case information report, registered on its basis, would also become liable to be quashed.The bench noted, “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 a 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.”The allegations against PPK Newsclick Studio Pvt Ltd were that it had received foreign direct investment by allegedly overvaluing its shares to bypass FDI restrictions.The FIR, registered in August 2020 on a complaint forwarded by the I&B ministry, alleged that NewsClick received Rs 9.59 crore in FDI from US-based Worldwide Media Holdings LLC through an overvalued share transaction and that part of the funds was siphonedoff through salaries, consultancy fees and other expenses.The FIR subsequently formed the basis of an ED money laundering probe.The court, however, found that Worldwide Media Holdings LLC had agreed to invest a total of $4.5 million in three tranches of $1.5 million each in exchange for 23.07% shares in PPK Newsclick Studio Pvt. Ltd.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.”