New Delhi, Nov 6 — The Supreme Court on Friday issued notice to NewsClick and its editor-in-chief, controversial journalist and production company owner Prabir Purkayastha, on a plea filed by the Enforcement Directorate (ED) challenging a Delhi High Court judgment quashing a money-laundering case against the digital news portal and its founder.
A Bench of Chief Justice of India (CJI) Surya Kant and Justices Joymalya Bagchi and V. Mohana passed the order while hearing the ED's special leave petition (SLP) against the May 29 judgment of the Delhi High Court.
During the hearing, the apex court was informed that the Delhi Police was also in the process of challenging the High Court's decision to quash the predicate offence FIR registered by its Economic Offences Wing (EOW).
The matter has been posted for further hearing on December 14.
The ED's appeal challenges the Delhi High Court's decision to quash the Enforcement Case Information Report (ECIR) registered under the Prevention of Money Laundering Act (PMLA), along with the underlying FIR concerning alleged irregularities in foreign investment received by NewsClick.
In its order, the High Court had quashed FIR No. 116/2020 registered by the EOW under Sections 406 (criminal breach of trust), 420 (cheating) and 120B (criminal conspiracy) of the Indian Penal Code, along with the ED's ECIR registered on September 2, 2020.
A single-judge Bench of Justice Neena Bansal Krishna held that even if the allegations levelled against the petitioners were accepted in their entirety, they did not disclose the commission of the offences alleged in the FIR.
The High Court observed that the ED's allegations of criminal conspiracy were not supported by material establishing an illegal objective or the use of unlawful means.
“Merely because the parties entered into an agreement is not sufficient to constitute criminal conspiracy, unless the ED is able to show what is the illegal objective or the means which have been adopted by the petitioners and the other persons which can be termed as criminal conspiracy,” the judgment said.
It further observed that despite extensive investigations by the ED for about a year and a half, “nothing incriminating till date has been found or placed on record”.
The proceedings stemmed from allegations concerning an investment of USD 1.5 million (approximately Rs 9.59 crore) received by NewsClick in April 2018 from a US-based entity, Worldwide Media Holdings LLC, in exchange for 7.69 per cent shares in the company.
The investigating agencies had alleged that the shares were issued at an inflated valuation to circumvent foreign direct investment (FDI) restrictions applicable to digital news media and that a substantial portion of the funds was diverted towards salaries, consultancy fees, rent and other expenses.
NewsClick and Purkayastha had denied the allegations, maintaining that the investment was made through legitimate banking channels and in accordance with the applicable regulatory framework.
The High Court had also referred to the Reserve Bank of India's (RBI) response, which indicated that the foreign inward remittance was received under the automatic route and there was no delay in the issuance of shares or reporting under the applicable FEMA regulations.
Relying on the legal position laid down by the Supreme Court, the High Court held that once the predicate offence FIR was quashed, the money-laundering proceedings could not independently survive.
“Consequently, the complete ECIR is also quashed,” the High Court ordered.
The proceedings quashed by the High Court are separate from the UAPA case registered by the Delhi Police's Special Cell against NewsClick and Purkayastha over allegations relating to foreign funding and a purported conspiracy. That case is independent of the EOW FIR and the ED proceedings.