The Delhi High Court has quashed an FIR registered against news portal NewsClick and its editor-in-chief Prabir Purkayastha, along with related proceedings by the Enforcement Directorate, citing lack of cognizable offences in the allegations of foreign investment irregularities.
The ruling brings to an end investigations stemming from complaints about foreign direct investment received by the digital news platform in 2018.
According to details received by The Chenab Times, Justice Neena Bansal Krishna of the Delhi High Court observed that even if all allegations in the FIR were accepted, they did not disclose the essential ingredients of offences under Sections 406, 420, and 120B of the Indian Penal Code. The court held that the continuation of the FIR amounted to a gross abuse of the process of law.
The FIR No. 116/2020 was registered in August 2020 at the Economic Offences Wing on a complaint forwarded by the Ministry of Information and Broadcasting. It alleged that PPK NewsClick Studio Pvt Ltd received Rs 9.59 crore as FDI from US-based Worldwide Media Holdings LLC through an allegedly overvalued share transaction. Authorities claimed this was intended to circumvent FDI norms and that a significant portion of funds was siphoned off through excessive salaries, consultancy fees, and other expenses.
The Enforcement Directorate had registered an ECIR under the Prevention of Money Laundering Act based on the same allegations. The court quashed the ECIR as well, noting that with the predicate offence FIR set aside, the money laundering case could not stand. It also rendered infructuous a related plea seeking supply of the ECIR copy.
NewsClick, which operates the independent digital platform newsclick.in, had maintained that the investment was legitimate. The company, incorporated in 2018 after converting from an LLP, received the first tranche of USD 1.5 million in April 2018 in exchange for 7.69 per cent shares. It had sought and received clarification from the Ministry of Information and Broadcasting in January 2018 that online publications did not fall under print media restrictions.
The valuation of shares was carried out by independent chartered accountants using the Discounted Cash Flow method, compliant with prevailing FEMA regulations at the time, which required issuance at or above fair value. No FDI cap existed for digital news media when the investment was made in 2018; the 26 per cent sectoral cap was introduced later through a government press note in September 2019.
The court noted that the foreign investor had raised no complaints of cheating or misappropriation. It emphasised that the transaction involved no aggrieved party claiming inducement or entrustment of property, essential elements for the charged IPC offences. Routine business expenses such as salaries to journalists and staff did not constitute siphoning, the judgment stated.
Investigations by the Economic Offences Wing and Enforcement Directorate, including searches in 2021, had seized documents and devices, but the court found no material establishing criminal wrongdoing after years of probe. It highlighted that RBI had confirmed compliance with automatic route reporting for the remittance, with no delays or violations.
The petitions, filed under Article 226 of the Constitution read with Section 482 CrPC, argued the cases were mala fide attempts to target independent journalism. Senior advocates including Kapil Sibal represented the petitioners, while the Delhi government and ED opposed the pleas.
This decision comes amid broader debates on regulation of digital media and foreign funding in news organisations. NewsClick has positioned itself as a platform covering progressive movements, science, technology, and data journalism with a significant online following.
The High Court’s verdict is likely to have implications for similar cases involving FDI in digital media entities. Legal observers note it reinforces safeguards against misuse of criminal processes in commercial and regulatory disputes.
The Chenab Times News Desk