‘Gross abuse of process of law’: HC quashes Delhi Police, ED cases against NewsClick

The Delhi High Court quashed cases registered by Delhi Police and Enforcement Directorate against news portal NewsClick and its editor-in-chief Prabir Purkayastha over alleged violations of foreign direct investment norms.

In her order dated May 29, Justice Neena Bansal Krishna said the continuation of the FIR registered by the Economic Offenses Wing of the Delhi Police was “nothing short of a gross abuse of the process of law” and once the FIR under the predicate offense is quashed, the ED’s Enforcement Case Information Report (ECIR) in the matter may also be closed.

EOW’s 2020 FIR alleged that PPK Newsclick Studio Pvt Ltd, the parent company of NewsClick, received Foreign Direct Investment (FDI) of ₹ 9.59 crore from Worldwide Media Holdings LLC USA in the financial year 2018-19 in violation of the foreign investment law, resulting in losses to the government exchequer.

The investment was made by grossly overvaluing the company’s shares to avoid the 26% cap on FDI, a digital news site said, and more than 45% of this investment was maliciously spent on salaries, consultancy fees, rent, etc. He claimed that he was directed/shifted as.

The ED subsequently registered a money laundering case against NewsClick, Mr. Purkayastha and others.

PPK Newsclick Studio sought cancellation of the FIR stating that it was full of vague allegations.

In the judgment, the Court stated that the investment was an economic decision that “does not constitute any offence” and as per the Union Ministry of Information and Broadcasting’s response to the news organisation’s letter, there was no cap/restriction on receiving FDI in the digital medium during the relevant period.

The court found that the investment was in accordance with acceptable practices and that even if all the allegations were accepted, the offenses of fraud or breach of trust were not established.

He stated that for the crime of cheating, there must be a “deceived” person, in this case the person should be M/s Worldwide Media Holdings LLC, but there was no such complaint, instead the complaint was made by “just an informant”.

The court also held that a company operating in the digital print media business must pay salaries, consultancy fees, rent, etc. He stated that he would be exposed to expenses related to the payments and therefore the claim of siphoning was not tenable.

The court also rejected ED’s attempt to pursue the money laundering case on the basis of the crime of conspiracy under the IPC, stating that the investigating agency must show the “illegal purpose” or “means” adopted by NewsClick and others for the crime.

“Generally, extensive investigations have been carried out by the ED for about one and a half years and the Petitioners and their employees have been summoned and examined many times, but nothing incriminating has been found or brought on record till date. Apart from clear allegations of a criminal conspiracy, there is not even a whisper of an incriminating allegation that would even remotely suggest that an offense punishable under Section 4 of the PMLA has been committed,” the court said.

“FIR No. 0116/2020 and ECIR bearing ECIR/14/HIU/2020 are hereby cancelled,” the report stated.

The court said that when the ECIR itself is cancelled, the prayer for obtaining a copy of the ECIR is invalid.