'Gross Abuse Of Law' : Delhi High Court Quashes FIR & ED Case Against NewsClick, Prabir Purkayastha Over Foreign Funding

The Delhi High Court has quashed EOW's FIR as well as Enforcement Directorate (ED) ECIR against news portal NewsClick and its editor-in-Chief Prabir Purkayastha registered over allegations of foreign funding.Justice Neena Bansal Krishna held that even if the allegations in the FIR were accepted in entirety, the essential ingredients of offences under Sections 406 and 420 of IPC were not made out. The Court further observed that the continuation of such FIR was nothing but a "gross abuse of the process of law", thereby quashing the EOW FIR as well as the ECIR lodged by ED. “It has been held that if the FIR under predicate offence is quashed, the ECIR automatically, is liable to be quashed. Consequently, the complete ECIR is also quashed. Once the ECIR itself is quashed, the prayer for supply of the copy of the ECIR has become infructuous,” the judge ruled.The Court further observed that the ED proceedings were "not only mala fide, but also an arbitrary attack and abuse of powers on the free and impartial journalism of the Petitioners."The FIR, registered in August 2020 on a complaint forwarded by the Ministry of Information and Broadcasting, alleged that NewsClick had received Rs. 9.59 crore in FDI from US-based Worldwide Media Holdings LLC through an allegedly overvalued share transaction designed to circumvent FDI restrictions. It was alleged that a substantial portion of the funds was siphoned off through salaries, consultancy fees and other expenses. After due investigations, the copy of FIR was forwarded to the Enforcement Directorate and the ECIR was registered. Quashing the cases, the Court said that it was an admitted position that M/s Worldwide Media Holdings LLC agreed to invest a total of USD 4.5 Million in three tranches of USD 1.5 M each in exchange of total 23.07% shares of NewsClick's company PPK Newsclick Studio Pvt. Ltd..It further noted that the first tranche of 1.5 Million was received by the platform on 11.04.2018.As NewsClick took the stand that there was no regulatory permission required for FDI in online publication of news, the Court noted that the news platform had written a Letter in 2017 to the Union Ministry of Information and Broadcasting requesting a clarification to the policy in respect of print media and also in respect of FDI in a Company engaged in the business of online publication of news. On this, Justice Krishna observed that when the investment was received in April 2018, there was no cap on FDI in digital news media. Referring to a clarification issued by the Ministry of Information and Broadcasting in January 2018, the Court observed:“From the response received from the Ministry in respect of FDI Policy, it was clearly evident that there was no cap on the online publication of news and thus, the Agreement between the Petitioner and M/s Worldwide Media Holdings LLC and, therefore, the Investment Agreement dated 20.03.2018 cannot be said to be in violation of any law or disclosing any criminal offence. The receiving of 1.5Million USD that were remitted on 11.04.2018 in exchange of 7.69% shares of the Petitioner Company.”The Court also said that the valuation of the shares was carried out in accordance with FEMA regulations and that the price was worked out between M/s Worldwide Media Holdings LLC and NewsClick after due negotiations and their mutual decisions. It is an economic decision which does not spell out any criminal offence, the Court said. “The valuation was done through the established method of Discounted Cash Flow which was the accepted international standard including by the Ministry of Finance. All the relevant factors were duly examined by the in assessing the fair price value of the shares,” the Court said. The judge further ruled that even if it is accepted that there were over payments and excessive expenditure incurred by the news platform, then too it did not disclose any criminal offence. The allegation of siphoning is, therefore, not tenable, the Court observed.The Court also noted that an earlier status report of the EOW had recorded that the Reserve Bank of India had informed investigators that the foreign inward remittance was under the automatic route and that there had been no delay in the issuance of shares or reporting under FEMA regulations.Examining the ingredients of the offences alleged in the FIR, the Court held that there was no complainant who claimed to have been cheated. The foreign investor, Worldwide Media Holdings LLC, had never alleged that it had been deceived or induced into investing in Newsclick."There is nothing which has emerged even during the investigations ... that there was any person who was aggrieved or who was cheated by the Petitioner," the Court observed while concluding that the offence of cheating under Section 420 IPC was not made out.Similarly, the Court held that the offence of criminal breach of trust under Section 406 IPC was absent because there was no entrustment of property and no allegation of...

'Gross Abuse Of Law' : Delhi High Court Quashes FIR & ED Case Against NewsClick, Prabir Purkayastha Over Foreign Funding

Nupur Thapliyal

The Court noted that FDI received by the Newsclick company did not violate any law.

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Nupur Thapliyal

'Gross Abuse Of Law' : Delhi High Court Quashes FIR & ED Case Against NewsClick, Prabir Purkayastha Over Foreign Funding

Nupur Thapliyal

The Court noted that FDI received by the Newsclick company did not violate any law.

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

Tags

Nupur Thapliyal

This is a premium content
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