The Delhi High Court has quashed a first information report filed by the Economic Offences Wing as well as a case filed by the Enforcement Directorate against news website NewsClick and its editor-in-chief Prabir Purkayastha in connection with allegations of foreign funding.
Justice Neena Bansal Krishna, in a judgement on May 29, held that “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 judge said that allowing the case to continue would be “nothing but a gross abuse of the process of the law”.
The first information report filed in August 2020 had accused NewsClick of having received Rs 9.5 crore in foreign direct investment from a United States-based firm named Worldwide Media Holdings LLC by means of an allegedly overvalued share transaction meant to circumvent foreign direct investment regulations, Live Law reported.
The Economic Offences Wing had alleged that a significant part of the funds was siphoned off through salaries, consultancy fees and other expenses, the legal news outlet reported.
However, Krishna noted in her judgement that NewsClick had explained that no regulatory permission was needed at the time for foreign direct investment in digital news.
“In fact, the petitioner had written a letter dated 20.12.2017 to 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,” the judge noted.
The High Court said that the ministry had said in a letter on January 5, 2018, that online publication on a web portal did not fall under the ambit of print media.
“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 High Court said.
The court further said that the valuation of shares was carried out in line with the regulations under the Foreign Exchange Management Act. It noted that the price was mutually agreed to by Worldwide Media Holdings LLC and NewsClick.
“It is an economic decision, which does not spell out any criminal offence,” Krishna said.
The court said that the offence of criminal breach of trust was also not made out, as there was no entrustment of property, and no allegation of misappropriation.
Purkayastha had been granted interim protection from arrest in the matter in June 2021, and the order was extended from time to time.
The Enforcement Directorate had raided the premises of NewsClick and the homes of its editors in February 2021 in connection with the case.
In October 2023, the Delhi Police raided the NewsClick office, along with the residences of nearly 80 journalists and other persons associated with the portal. Purkayastha was arrested on the same day as the raids.
The searches were linked to another case filed against the news outlet under the Unlawful Activities Prevention Act by the Delhi Police in March 2024, which alleged that it had received funds through Chinese entities “with the intention of undermining India’s sovereignty and territorial integrity”.
In May 2024, the Supreme Court declared Purkayastha’s arrest in the case invalid and ordered his release.
Written by Neerad Pandharipande. Edited by Nachiket Deuskar.
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