ED moves SC against NewsClick PMLA case order

New Delhi: The Enforcement Directorate has moved the Supreme Court against a Delhi High Court order quashing a money laundering case against NewsClick, a news portal, and its editor-in-chief Prabir Purkayastha on charges of violating FDI rules.

In its plea before the top court, the agency contended that the high court quashed its enforcement case information report (ECIR) without examining the PMLA case, and there was an inordinate delay of five months in the pronouncement of the judgment.

The matter is yet to be listed for hearing.

In a judgement dated May 29, Justice Neena Bansal Krishna of the high court said the continuation of an FIR registered by the Delhi Police's Economic Offences Wing (EOW) was "nothing but a gross abuse of the process of law", and once the FIR under the predicate offence was quashed, the ED's ECIR in the matter was also liable to be closed.

The EOW's 2020 FIR alleged that PPK Newsclick Studio Pvt Ltd, NewsClick's parent company, received foreign direct investment (FDI) of Rs 9.59 crore from Worldwide Media Holdings LLC USA during the financial year 2018-19, in violation of the foreign investment law, which caused a loss to the government exchequer.

It claimed that the investment was made by greatly overvaluing the shares of the company to avoid the cap of 26 per cent FDI in a digital news website, and that over 45 per cent of this investment was diverted/siphoned off as salary, consultation fees, rent, etc., for ulterior motives.

The ED subsequently registered a money laundering case against NewsClick, Purkayastha and others.

PPK Newsclick Studio sought quashing of the FIR, claiming that it was replete with vague allegations.

The high court, in its judgement, said the investment was an economic decision, which "did not spell out any criminal offence", and as per the reply of the Union Ministry of Information and Broadcasting to a letter by the news outlet, there was no cap/restriction on receipt of the FDI in digital media at the relevant time.

The court held that the investment was as per acceptable practices, and the offences of cheating or criminal breach of trust, even if all the allegations were admitted, were not established.

It said that for the offence of cheating, there has to be a "cheated" person, which should be M/s Worldwide Media Holdings LLC in this case, but there was no such complaint, and instead the complaint was made by "merely an informant".

The court also noted that a company in the business of digital print media was bound to incur expenses on payment of salaries, consultation fees, rent, etc., and the allegation of siphoning was therefore not tenable.

The court also rejected the ED's attempt to sustain its money laundering case based on the offence of conspiracy under IPC, stating that the investigating agency must show the "illegal objective" or "means" adopted by NewsClick and others for the offence.

"Pertinently, extensive investigations were carried out by the ED for about a year and a half, and the petitioners as well as their 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 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 of the PMLA," the court said.

"The FIR No. 0116/2020 and the ECIR bearing ECIR/14/HIU/2020 are, hereby, quashed," it concluded.

The court also said that once the ECIR was quashed, the prayer for the supply of its copy was infructuous.