‘Attack on free press, fishing exercise’: HC quashes PMLA case against NewsClick

The Delhi High Court has ruled that the Enforcement Directorate’s actions against independent digital news outlet NewsClick and its founder Prabir Purkayastha – stemming from a foreign direct investment case – constituted an abuse of power targeting free and impartial journalism. The court has quashed the money laundering case against the portal, Bar and Bench reported.

Justice Neena Bansal Krishna delivered the judgment on May 29, quashing both the First Information Report (FIR) filed by the Delhi Police Economic Offences Wing (EOW) and the subsequent money laundering proceedings that the ED had initiated.

“Not only are the present proceedings only mala fide, but also an arbitrary attack and abuse of powers on the free and impartial journalism of the petitioners,” the court stated, according to Bar and Bench.

Despite a lengthy investigation, during which NewsClick staff were summoned and questioned on multiple occasions, the court noted that no incriminating evidence had surfaced. “Pertinently, extensive investigations have been carried out by ED for about a year and a half and petitioners as well as its employees have been summoned and examined many a times, but nothing incriminating till date has been found or placed on record. 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,” the court said.

The court characterised the ED’s approach as a “fishing and roving exercise”. “The manner in which the investigations have been conducted clearly show that the same is a fishing and roving exercise in the financial affairs of the Petitioners without the existence of any offence.”

In quashing the EOW’s FIR as well, the court said allowing it to continue would amount to a serious misuse of legal process.

The case originated from a 2018 investment NewsClick received from a US-based entity, M/s Worldwide Media Holdings LLC, which authorities alleged was non-existent. The ED raided the homes and offices of Purkayastha and several employees in February 2021, with searches lasting over four days and Purkayastha detained at his residence throughout.

Investigators alleged that NewsClick had overvalued its shares, diverted funds, and breached FDI regulations.

The court rejected these allegations one by one. Citing a Ministry of Information and Broadcasting response, it noted that no 26 percent FDI cap on digital media existed at the time the investment was received in 2018. It found the share overvaluation claim baseless.

The allegation that FDI funds were siphoned off to cover salaries, consultancy fees, rent, and operating expenses was similarly dismissed as untenable. The court also noted that the EOW’s own status report made no mention of whether the US company was genuinely non-existent – an allegation in the case.

NewsClick had earlier approached the Delhi High Court seeking a copy of the Enforcement Case Information Report (ECIR) and protection from coercive action by the ED. 

The court order noted that “pertinently, no copy of ECIR has been supplied to the petitioners till date despite the aforesaid submission of the ED. It is, therefore, submitted that the ECIR and all the proceedings emanating therefrom may be quashed.”

“The ED in the reply has alleged that criminal conspiracy is made out ‘in view of the connivance between Prabir Purkayastha, Jason Pfetcher and Neville Roy Singham’. It is asserted that such allegation of conspiracy is completely baseless and there is absolutely no material on record to substantiate the allegations of ED.”

The ED had raided premises linked to NewsClick and its editors in February 2021.

Separately, the CBI had filed an FIR against the outlet in October 2023 over alleged foreign funding violations, coming roughly a week after Delhi Police arrested individuals linked to NewsClick under the Unlawful Activities (Prevention) Act.

It came after a 2023 report in The New York Times alleged that the portal was part of a global network that received money for pushing Chinese propaganda

Newslaundry has reported on the case against NewsClick from the start. See a timeline of events here and the rest of our reportage here.

The latest verdict has now drawn swift responses from the media fraternity.

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