The Delhi High Court has quashed the Enforcement Directorate’s (ED) money laundering case against independent digital news platform NewsClick and its founder, Prabir Purkayastha, holding that the agency’s actions amounted to a “gross abuse of the process of law” and an arbitrary attack on free and impartial journalism.

“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 reports by Bar and Bench.

Terming the ED's allegation that a scheduled offence exists "totally misconceived and baseless," Justice Neena Bansal Krishna observed that the federal agency’s proceedings against the news outlet stemmed from allegations linked to foreign direct investment (FDI) received by NewsClick in 2018, when there were no restrictions or caps on foreign investment in digital media. The 26% cap on FDI in digital news media was introduced only in September 2019.

In the judgement, the Court stated that the investment was an economic decision, which “did not spell out any criminal offence.”

The court noted that despite an extensive investigation spanning nearly a year and a half, no incriminating evidence had been uncovered against NewsClick or its founder.

"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 concluded while quashing the FIR.

The EOW's 2020 FIR alleged that PPK Newsclick Studio, NewsClick's parent company, received Foreign Direct Investment (FDI) of INR 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.

The court found no basis for allegations of cheating or diversion of funds. It noted that for an offence of cheating to be established, there must be an aggrieved party, and that Worldwide Media Holdings LLC, the investing entity, had never filed a complaint, and instead the complaint was made by "merely an informant".

Allegations of siphoning funds were also rejected, with the court noting that expenditures such as salaries, rent and consultancy fees constituted normal operating costs for a digital media organisation.

Justice Krishna further held that the Enforcement Case Information Report (ECIR) registered under the Prevention of Money Laundering Act (PMLA) could not survive once the predicate offence on which it was based had already been quashed. Since the underlying FIR had been set aside, the money laundering proceedings automatically ceased to have legal standing.

The Court also rejected the ED's attempt to sustain its money laundering case on the basis of 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.

"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," observed the Court.

In February 2021, the ED had raided the homes and offices of the NewsClick founder and employees. The raids lasted for more than four days whilst Purkayastha was detained at home.
  
The ruling marks a significant legal victory for NewsClick and is likely to be viewed as an important judgment concerning the limits of investigative powers and the protection of press freedom in India.