Delhi High Court quashes NewsClick FIR and ED case over FDI allegations: ‘Gross abuse of law’
The Delhi High Court has quashed an FIR registered by the Economic Offences Wing (EOW) against NewsClick and its founder-editor, Prabir Purkayastha, over allegations relating
The Delhi High Court has quashed an FIR registered by the Economic Offences Wing (EOW) against NewsClick and its founder-editor, Prabir Purkayastha, over allegations relating to foreign direct investment (FDI). The court held that even if the allegations in the FIR were accepted in entirety, the essential ingredient of cheating, criminal breach of trust, or criminal conspiracy were not made out. Also Read | SC orders release of NewsClick founder Prabir Purkayastha in UAPA case 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, legal news website LiveLaw reported from the verdict on 10 June. “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,” Justice Neena Bansal Krishna ruled. An ECIR (Enforcement Case Information Report) is an internal document used by India's Enforcement Directorate (ED) to officially record the start of a money laundering investigation under the Prevention of Money Laundering Act (PMLA). It acts as the ED's equivalent of a police FIR. FIR registerd in August 2020 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. The complaint alleged that NewsClick received approximately Rs. 9.59 crore as FDI in April 2018 and had issued shares at an allegedly inflated premium of Rs.
11,510 per share. Investigators claimed that the valuation was structured to circumvent restrictions on foreign investment in digital news media and that a substantial portion of the funds had been diverted towards salaries, consultancy fees and rent. Also Read | CBSE results row: NSUI moves Delhi HC seeking independent probe into OSM process NewsClick challenged the FIR, asserting that the investment was a legitimate foreign direct investment made through authorised banking channels after obtaining a valuation report from an independent chartered accountant. The company also pointed out that it had sought clarification from the Ministry of Information and Broadcasting in December 2017 regarding FDI in online news platforms and was informed in January 2018 that online news publications did not fall within the ambit of "print media." Prabir Purkayastha was granted interim protection from arrest (no coercive action) in the matter in June 2021. The interim orders were extended from time to time. ED had raided the premises of NewsClick and residences of its editors in February 2021 in connection with money laundering case and had conducted search and seizure. The High Court noted that the investment of USD 1.5 million was received in April 2018, when there was no cap on foreign investment in digital news media. The Court observed that the restriction of 26 per cent foreign investment in digital news media was introduced only through Press Note 4 of 2019 and therefore could not be retrospectively applied to an investment made in 2018. ‘Could not by itself amount to a criminal offence’ Justice Krishna further held that the valuation of shares had been conducted by professional valuers in accordance with FEMA regulations and internationally accepted valuation methodologies.
The BriefWire