In a significant ruling that reinforces the boundaries of criminal law and safeguards journalistic freedom, the Delhi High Court recently quashed a criminal FIR against the digital news portal, NewsClick, and its editor-in-chief, Prabir Purkayastha.
Delivering the judgment, Justice Neena Bansal Krishna held that the allegations of cheating and criminal breach of trust were fundamentally unsustainable in law. The verdict came as a strong rebuke to the investigative agencies—Delhi Police’s Economic Offences Wing (EOW) and the Enforcement Directorate (ED)—observing that the continuation of the FIR amounted to a "gross abuse of the process of law".
Crucially, the Delhi High Court also addressed the legal nexus between a predicate offence and a money-laundering investigation. It ruled that once the FIR for the predicate offence is quashed, the Enforcement Case Information Report (ECIR) registered under the Prevention of Money Laundering Act (PMLA) cannot survive independently, thereby dismantling the ED’s case entirely.
Expressing a sharp disapproval, the court observed that the ED's proceedings were "not only mala fide, but also an arbitrary attack and abuse of powers on the free and impartial journalism of the petitioners."
From FDI Allegations to an ED Probe
The case originated from a complaint forwarded by the Ministry of Information and Broadcasting in 2020, alleging that NewsClick had received over $1.5 million (approximately Rs 9.59 crore) in foreign direct investment (FDI) through an overvalued share transaction designed to circumvent regulatory caps on foreign funding in digital media.
The complaint alleged that NewsClick’s parent company, PPK Newsclick Studio Pvt Ltd, had received the FDI from a US-based entity, Worldwide Media Holdings LLC. Authorities claimed that the shares were issued at a highly inflated premium of Rs 11,510 per share (against a face value of Rs 10) to avoid the then-applicable 26 percent FDI cap for digital news media, and that a substantial portion of the funds was subsequently siphoned off through excessive salaries, consultancy fees, and rent.
Following the registration of the FIR, the ED stepped in and registered an ECIR under the PMLA on 2 September 2020, alleging that the transaction generated "proceeds of crime." The ED conducted extensive search and seizure operations at NewsClick’s offices and the residences of its editors in February 2021.
In response, NewsClick and its editor-in-chief approached the Delhi High Court, seeking to quash both the FIR and the ECIR. They also challenged the ED’s refusal to supply a copy of the ECIR, arguing that the entire probe was a malicious attack on free journalism.
Legal Reasoning Behind the Verdict
Delving into the core allegations, Justice Krishna made several critical observations that dismantled the prosecution's case.
A pivotal finding was regarding the legality of the FDI itself. The court noted in paragraphs 69-70 that NewsClick had proactively sought a clarification from the Ministry of Information and Broadcasting in December 2017, which explicitly stated that "online publications on website/web portal do not fall under the ambit of print media." Consequently, when the investment was received in April 2018, there was "no cap on the online publication of news."
The court further highlighted a crucial status report where the EOW noted that the Reserve Bank of India (RBI) had confirmed the remittance was under the automatic route with no delay in share issuance, a finding the agency later attempted to remove, which the court viewed adversely.
On the core charges of cheating and criminal breach of trust under Sections 420 and 406 of the IPC, the court delivered a decisive blow. Justice Krishna held that the essential ingredients of these offences were entirely absent.
The court observed that there was no complainant who claimed to have been cheated, as the foreign investor—Worldwide Media Holdings LLC—had never alleged any deception. Similarly, there was no entrustment of property to constitute a criminal breach of trust. The court held that even if all allegations were accepted, they merely reflected a commercial transaction and an economic decision regarding share valuation, which does not spell out a criminal offence.
The judgment set a crucial precedent for PMLA proceedings by quashing the ECIR. Relying on the Supreme Court’s judgment in Vijay Madanlal Choudhary and the Delhi High Court’s own ruling in Harish Fabiani, the court held that money-laundering charges cannot stand without a valid predicate offence.
Justice Krishna found that the ED’s invocation of criminal conspiracy under Section 120B IPC was merely a bold assertion, with no evidence of an illegal objective or unlawful means. "If the FIR under predicate offence is quashed, the ECIR automatically is liable to be quashed," the judge ruled.
A Silver Lining in a Black Cloud
By quashing the FIR and the ECIR, the Delhi High Court has powerfully reaffirmed that commercial decisions, such as share valuation and foreign investment conducted through legal banking channels, cannot be arbitrarily criminalised.
The judgment serves as a critical check on the tendency of investigating agencies to treat regulatory or economic disagreements as criminal conspiracies, especially in the absence of an aggrieved party. It underscores the principle that the mere incurring of operational expenses like salaries, even by a loss-making company, does not equate to "siphoning off funds" in a criminal sense.
The verdict is also a landmark pronouncement on the architecture of the PMLA. By holding that an ECIR cannot survive the quashing of the predicate FIR, the court has reinforced the legal principle that the ED’s powers are derivative and not independent of a valid scheduled offence. This prevents the agency from conducting parallel investigations on a "fishing and roving" expedition once the foundation of the criminal case has been demolished.
For media organisations and journalists, this ruling provides much-needed reassurance that their financial operations cannot be targeted through mala fide proceedings aimed at creating a "chilling effect," thereby fortifying the constitutional right to freedom of speech and impartial journalism.
Now, the ED has decided to challenge the judgment before the Supreme Court. Let us hope that the Supreme Court reinforces its already settled principles and upholds the ruling delivered by the Delhi High Court.
(Areeb Uddin Ahmed is an advocate practising at the Allahabad High Court. He writes on various legal developments. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for them.)