NEW DELHI: The Enforcement Directorate (ED) has moved the Supreme Court challenging the Delhi high court’s order quashing a money laundering case against news portal NewsClick and its editor-in-chief, Prabir Purkayastha, over alleged violations of foreign direct investment (FDI) rules.The ED argued that the high court quashed its Enforcement Case Information Report (ECIR) without examining the merits of the case under the Prevention of Money Laundering Act (PMLA). It also flagged a five-month delay in the pronouncement of the judgment.The matter is yet to be listed for hearing.
Why Delhi HC quashed ED’s case against NewsClick
In a judgment dated May 29, Justice Neena Bansal Krishna of the Delhi high court described the continuation of an FIR registered by the Delhi Police’s Economic Offences Wing (EOW) as “nothing but a gross abuse of the process of law”. The judge held that quashing the FIR for the predicate offence also warranted the closure of the ED’s ECIR.Also Read | ‘Gross abuse of law’: Delhi HC quashes FIR, ED case against Newsclick, founderThe court ruled that the investment was an “economic decision that did not spell out any criminal offence”. Citing the Union ministry of information and broadcasting’s reply to NewsClick, Justice Krishna noted there was no cap or restriction on FDI in digital media at the time.The single-judge bench ruled that the investment followed acceptable practices and that the allegations, even if accepted, did not establish cheating or criminal breach of trust. The alleged victim in the cheating case should have been M/s Worldwide Media Holdings LLC, but the company had filed no complaint. Instead, the complaint came from “merely an informant”.Justice Krishna also rejected the fund-siphoning allegation, noting that a digital media company would naturally incur expenses on salaries, consultation fees and rent.The high court further dismissed the ED’s attempt to sustain the money laundering case on the basis of criminal conspiracy under the IPC, holding that the agency must establish the “illegal objective” or “means” allegedly adopted by NewsClick and others.“Pertinently, extensive investigations were carried out by the ED for about a year and a half, and the petitioners as well as their employees have been summoned and examined many a times, but nothing incriminating till date has been found or placed on record,” the order said.
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“Aside from bald assertions of 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 of the PMLA,” it added.The bench further stated that the request for a copy of the ECIR had become “infructuous” after the report was quashed.
The case
The EOW’s 2020 FIR alleged that PPK Newsclick Studio Pvt Ltd, NewsClick’s parent company, received Rs 9.59 crore in FDI from US-based Worldwide Media Holdings LLC in 2018-19 in violation of foreign investment rules, causing a loss to the government exchequer.It alleged that the company’s shares were grossly overvalued to circumvent the 26% FDI cap for digital news websites, and that over 45% of the investment was siphoned off through salaries, consultation fees and rent for ulterior motives.The ED subsequently registered a money laundering case against NewsClick, Purkayastha and others.PPK Newsclick Studio sought quashing of the FIR, arguing that it contained “vague” allegations.(With PTI inputs)
