'Not a Whisper of Incriminating Allegation': 5 HC Observations in NewsClick Case

The allegations put by the state were declared "bald" and "not tenable" by the Court, while refusing any foul play.

The Court declared that no incriminating evidence was found to support an offence.

(Source: Delhi High Court Website / Edited by The Quint)

On 29th May, the Delhi High Court, quashed the Money Laundering proceedings against the News Click and its founder and editor-in-chief, Prabir Prukayastha. The Case titled M/s PPK Newsclick Studio Pvt. Ltd. v. State was decided on the Court, rejecting the occurrence of the violation of Sections 420 and 406 of the Indian Penal Code, amounting to accusations of “cheating” and “criminal breach of trust”.

A criminal conspiracy charge of Section 120B was also put up against Prukayastha and the organisation. Additionally, the State accused the organisation of violation of Foreign Exchange Management Act (FEMA) regulations that are directed for foreign investments, and the violation of the Prevention of Money Laundering Act (PMLA).

Recognising the inadequacy of evidence and the "gross abuse of law" in the judgement, the High Court made some crucially important declarations.

High Court Observations

On the allegation of the State, that there was allegedly an “over valuation” of shares to avoid restriction in the FDI regulations, the Court, while highlighting an important reply by the Ministry of Information and Broadcasting, rejected the accusation made by the authorities. 

"There is no illegality or any manipulation pointed out in respect of the working out fair value of the shares of the (NewsClick) Company...It is an economic decision which does not spell out any criminal offence. The valuation was done through the established method... which was the accepted international standard including by the Ministry of Finance. All the relevant factors were duly examined in assessing the fair price value of the shares," the High Court observed.

The next allegation by the state was an alleged “siphoning” of the investment made by the company based in Delaware, USA; in salaries, consultation fee, rent, and other expenses of the journalists and other associated employees. The Court, while observing the “absurdity” of the accusation, stated:

"Even if it is accepted that there were over payments and excessive expenditure incurred by the Petitioner, then too it does not disclose any criminal offence. The allegation of siphoning is, therefore, not tenable."

The Delhi High Court's Order

While rejecting the accusations made by the state through the Section 406 of IPC, which includes “misappropriation of property” entrusted by another party, the Court declared:

"There is neither any person who has claimed to have entrusted a property or that it has been misappropriated by the Petitioner. By no stretch of interpretation can it be said to be an entrustment by M/s Worldwide Media Holdings LLC or misappropriation by the Petitioner.”

Another important allegation made by the State, under the Section 420 of the IPC, was of cheating and fraudulent activities by the organisation. The Court, however, observed how to define “cheating” there has to be a complaint by the party that has been cheated. The court observed that the complaint here though, was not made by any aggrieved party, but by some informant, therefore outrightly rejecting the accusation.

"Even if all the allegations are accepted, no offence under 406 or 420 IPC is disclosed in the FIR. The continuation of such FIR is nothing but a gross abuse of the process of law" the High Court's order read.

The accusation of “criminal conspiracy,” drawn from the Section 120B of IPC, was also deemed hollow by the Court. 

“On what basis the criminal conspiracy is being alleged is not explained, except that Prabir Purkayastha and Jason Pfetcher (Worldwide Media Holdings LLC), had entered into an agreement. Merely because the parties entered into an agreement is not sufficient to constitute criminal conspiracy”

Furthermore, the Court observed in the judgement how the entire allegations against the Petitioner, even if after being admitted, culminate to no actual offence in the FIR.

The Court recognised how the Enforcement Directorate (ED) have been conducted an investigation for more than a year now. The Court observed how, even after this examination into the organisation and Purkayastha, “nothing incriminating till date has been found or placed on record.”

Rejecting the accusation of any violation of the PMLA act, the court observed:

“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. “