The Delhi High Court has quashed a First Information Report (FIR) filed by the Economic Offences Wing (EOW) and an Enforcement Directorate (ED) case against news portal NewsClick and its editor-in-chief, Prabir Purkayastha, in connection with allegations of illegal foreign funding.
In a judgment delivered on May 29, Justice Neena Bansal Krishna ruled that the proceedings against NewsClick were “mala fide” and amounted to an “arbitrary attack and abuse of powers on the free and impartial journalism” of the petitioners.
The court observed that continuing the proceedings would amount to “nothing but a gross abuse of the process of law.”
What Were the Allegations?
The case began in August 2020 when the EOW accused NewsClick’s parent company, PPK Newsclick Studio Pvt Ltd, of receiving ₹9.59 crore in foreign direct investment (FDI) from a US-based company, Worldwide Media Holdings LLC, during the financial year 2018–19.
Investigators alleged that the investment involved overvalued share transactions aimed at bypassing FDI regulations for digital news platforms. Authorities also claimed that a significant portion of the funds had been diverted through salaries, consultancy fees, rent, and other expenses.
Based on the FIR, the ED later initiated a money laundering investigation against NewsClick, Purkayastha, and others.
Court Finds No Violation of FDI Rules
However, the High Court noted that at the time of the investment, there was no restriction on foreign investment in digital news media.
The court referred to a 2018 response from the Union Ministry of Information and Broadcasting, which clarified that online news portals did not fall under print media regulations.
“In respect of FDI policy, it was clearly evident that there was no cap on the online publication of news,” the court said, adding that the investment agreement with Worldwide Media Holdings LLC could not be considered illegal.
Justice Krishna further observed that the valuation of shares was done in accordance with Foreign Exchange Management Act (FEMA) regulations and described it as an “economic decision” that did not indicate any criminal offence.
No Evidence of Cheating or Criminal Breach of Trust
The High Court also rejected allegations of cheating and criminal breach of trust.
The court said there was no complaint from Worldwide Media Holdings LLC, the company that had invested in NewsClick, which weakened the allegations of fraud.
“For the offence of cheating, there has to be a ‘cheated’ person,” the court observed.
It also dismissed claims that funds had been siphoned off through salaries and rent, noting that such expenses are normal for a media organisation operating in the digital news business.
ED Case Also Quashed
Since the FIR was quashed, the court also set aside the ED’s Enforcement Case Information Report (ECIR), effectively ending the money laundering case.
The court noted that despite extensive investigations for nearly one and a half years, the ED had failed to present any incriminating material.
“Nothing incriminating till date has been found or placed on record,” the judgment said.
Background of the Case
The ED had raided NewsClick’s office and the homes of its editors in February 2021. In October 2023, the Delhi Police conducted another series of raids linked to a separate case under the Unlawful Activities (Prevention) Act (UAPA), alleging that the news portal had received funds through Chinese entities to undermine India’s sovereignty.
Purkayastha was arrested in that case but was released in May 2024 after the Supreme Court declared his arrest invalid.
