The Delhi High Court has set aside the Economic Offences Wing FIR and the Enforcement Directorate's money laundering investigation against NewsClick and its founder-editor Prabir Purkayastha, holding that the case lacked the ingredients of fraud or criminal breach of trust.

Court Grants Relief to NewsClick

The Delhi High Court has quashed the FIR filed by the Economic Offences Wing (EOW) and the Enforcement Directorate's (ED) money laundering investigation in the foreign funding case involving NewsClick and its founder-editor Prabir Purkayastha.

Justice Neena Bansal Krishna, in her order, observed that the agencies had carried out extensive investigations without producing concrete evidence of fraud. The court said that even if the allegations in the FIR were accepted at face value, they did not establish offences such as cheating or criminal breach of trust.

Why the court intervened

The High Court said the EOW FIR and the ED's money laundering case did not disclose the essential ingredients of fraud or breach of trust, and that continuing the proceedings would amount to a misuse of the legal process.

The judgment described the continuation of the proceedings as a misuse of the legal process and noted that fraud requires a deceived party, which was absent in the present case.

Origin of the Foreign Funding Case

The case originated from an FIR registered by the Delhi Police in August 2020. Investigators alleged that NewsClick received foreign direct investment (FDI) worth ₹9.59 crore from an American company, Worldwide Media Holdings LLC.

Authorities questioned the valuation of shares, claiming that shares with a face value of ₹10 were issued at a premium of ₹11,510 per share despite the company not being profitable. Investigators alleged that the structure was designed to bypass the 26% FDI cap applicable to Indian media organisations.

Following the FIR, the ED conducted searches at the offices of NewsClick, as well as at premises linked to directors and shareholders under the Prevention of Money Laundering Act (PMLA). Officials seized foreign currency, documents and digital devices during the raids.

The ED later stated that NewsClick had received ₹38.05 crore in foreign funds over three years, including ₹9.59 crore through FDI and ₹28.46 crore classified as export of services revenue.

Parallel Investigations and UAPA Case

The controversy widened in 2023 after BJP MP Nishikant Dubey referred to a New York Times report in Parliament and alleged that some journalists were involved in spreading Chinese propaganda. Union Minister Anurag Thakur also publicly alleged links between businessman Neville Roy Singham and entities associated with NewsClick.

On August 17, 2023, the Delhi Police Special Cell registered a separate case against NewsClick under the Unlawful Activities (Prevention) Act (UAPA) and sections of the Indian Penal Code relating to promoting enmity and criminal conspiracy.

Purkayastha was arrested on October 3, 2023, in connection with that case. The Special Cell questioned 46 individuals and conducted searches at 31 locations linked to NewsClick and journalists associated with the platform. An 8,000-page chargesheet was filed in March 2024.

Multiple Agencies Involved

NewsClick is operated by PPK NewsClick Studio Private Limited and was founded by Purkayastha in 2009.

Over the course of the investigation, multiple agencies became involved, including the Delhi Police Special Cell, the EOW, the Income Tax Department, the ED and the CBI, each examining different aspects of the allegations related to foreign funding and compliance.

Implications of the High Court Order

The Delhi High Court's decision effectively ends the EOW FIR and the ED's related money laundering proceedings against NewsClick and Purkayastha. The court's observations on arbitrary action and the absence of evidence of fraud are likely to be closely examined in future disputes involving financial investigations and media organisations.

The order does not automatically dispose of other proceedings, including the separate UAPA case being pursued by the Delhi Police Special Cell.