“Arbitrary Attack On Free & Impartial Journalism”: Delhi High Court Quashes FIR And ECIR Against NewsClick

The Court further observed that the criminal proceedings were not only legally unsustainable but were also manifestly attended with mala fides, amounting to an abuse of process and an arbitrary attack and abuse of powers directed against the petitioners’ exercise of free and impartial journalism.

The Court was hearing three connected writ petitions seeking quashing of the FIR registered by the Economic Offences Wing, quashing of the ECIR registered by the Enforcement Directorate under the Prevention of Money Laundering Act, and supply of a copy of the ECIR.

A Bench of Justice Neena Bansal Krishna observed: “The ED has claimed that mala fide of the Complainant is immaterial in the investigations after the registration of ECIR, but this contention is also misconceived and untenable in law. The Petitioners have a constitutional right to a free and fair investigation, and mala fide registration of the impugned ECIR and mala fide investigation being conducted by ED hampers the investigations. Moreover, in terms of Bhajan Lal (supra), S.N. Sharma (supra), where criminal proceedings are manifestly attended with mala fide or are maliciously instituted with an ulterior motive, the same is bound to be quashed. 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.”

Senior Advocates Kapil Sibal, Dayan Krishnan and Sidharth Agarwal appeared for the petitioners, while Additional Solicitor General S.V. Raju appeared for the Enforcement Directorate, and Additional Standing Counsel Rahul Tyagi appeared for the State.

Background

The petitions arose from an FIR registered by the Economic Offences Wing based on a complaint forwarded by the Ministry of Information and Broadcasting, alleging irregularities related to foreign direct investment received by the petitioner company. The core allegation was that the company had received USD 1.5 million from a foreign investor in exchange for shares issued at a substantial premium and that the transaction was structured to circumvent foreign investment restrictions.

The FIR further alleged overvaluation of shares, siphoning of funds through payment of salaries, consultancy fees and rent, and violation of laws governing foreign investments. Based on the FIR, the Enforcement Directorate registered an ECIR under the Prevention of Money Laundering Act and initiated proceedings.

The petitioners contended that the investment had been made through lawful banking channels, that the share valuation was based on a professional valuation report prepared in accordance with FEMA regulations, and that at the relevant time there was no cap on foreign investment in digital news media. They further asserted that neither the FIR nor the subsequent investigation disclosed the ingredients of any cognizable offence.

Court’s Observations

The High Court noted that before receiving the investment, clarification had been sought from the Ministry of Information and Broadcasting regarding foreign investment in online news publications. The Ministry had clarified that online publications did not fall within the ambit of print media.

The Court found that the investment agreement and receipt of foreign investment could not be treated as illegal merely on the allegation that it was intended to avoid foreign investment restrictions.

The Bench observed: “From the response received from the Ministry in respect of FDI Policy, it was clearly evident that there was no cap on the online publication of news and thus, the Agreement between the Petitioner and M/s Worldwide Media Holdings LLC and, therefore, the Investment Agreement dated 20.03.2018 cannot be said to be in violation of any law or disclosing any criminal offence.”

The Court further noted that the valuation of shares had been undertaken in accordance with FEMA regulations through an internationally accepted valuation methodology and that the price ultimately agreed between the parties was a result of commercial negotiations.

The Court held: “The said price was worked out between M/s Worldwide Media Holdings LLC and the Petitioner after due negotiations and their mutual decisions. On the assessment of day to day market and the prospects of growth of the Company, that the price was mutually agreed by the Petitioner and M/s Worldwide Media Holdings LLC. It is an economic decision which does not spell out any criminal offence.”

The Court also rejected the allegation that payment of salaries, consultancy fees, rent and other business expenses amounted to siphoning of funds.

The Bench observed that such expenditures are normal incidents of operating a digital media company and that even assuming excessive expenditure had been incurred, it would not by itself constitute a criminal offence.

The Court observed: “However, when a Company is functioning especially in the business of digital print media, such expenses are bound to occur. Even if it is accepted that there were over payments and excessive expenditure incurred by the Petitioner, then too it does not disclose any criminal offence. The allegation of siphoning is, therefore, not tenable.”

The Court additionally noted that material placed before it indicated that the Reserve Bank of India had informed investigators that the foreign inward remittance had been received through the automatic route and that there had been no delay in issuance of shares or reporting under FEMA regulations.

Examining the ingredients of cheating under Sections 415 and 420 IPC, the Court held that the FIR itself failed to disclose any person who had been deceived or induced to part with property.

The Court observed: “There is nothing which has emerged even during the investigations as reflected in the Status Report, that there was any person who was aggrieved or who was cheated by the Petitioner. The offence of cheating even if all the allegations made are admitted, is not established.”

The Court further held that the allegations equally failed to satisfy the ingredients of criminal breach of trust under Section 406 IPC because there was neither entrustment of property nor any allegation of misappropriation.

The Bench observed: “There may have been a business transaction of investment and purchase of shares by M/s Worldwide Media Holdings LLC on payment of 1.5 Million USD, but by no stretch of interpretation can it be said to be an entrustment by M/s Worldwide Media Holdings LLC or misappropriation by the Petitioner.”

“Even if all the allegations are accepted, no offence under 406 or 420 IPC is disclosed in the FIR and in the subsequent investigations that have been undertaken.”

The Enforcement Directorate argued that, irrespective of the offences under Sections 406 and 420 IPC, the offence of criminal conspiracy under Section 120B IPC continued to survive and could sustain the ECIR.

Rejecting the contention, the Court observed that the mere existence of an agreement between parties could not constitute criminal conspiracy unless there was material showing an unlawful object or unlawful means.

The Court held: “Merely because the parties entered into an agreement is not sufficient to constitute criminal conspiracy, unless the ED is able to show what the illegal objective is or the means which have been adopted by the Petitioners and the other persons which can be termed as criminal conspiracy.”

The Court noted that despite extensive investigations spanning approximately one and a half years, nothing incriminating had been discovered.

The Bench observed: “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.”

Having held that no predicate offence survived, the Court further held that the ECIR registered under the PMLA could not continue.

The Bench observed: “It has been held that if the FIR under the predicate offence is quashed, the ECIR automatically is liable to be quashed. Consequently, the complete ECIR is also quashed.”

Conclusion

The High Court held that the allegations relating to foreign investment, valuation of shares and expenditure incurred by the company did not disclose the ingredients of offences under Sections 406, 420 or 120B IPC. The Court found that there was no complaint from the foreign investor alleging deception, no material showing entrustment or misappropriation, and no evidence of any unlawful agreement capable of constituting criminal conspiracy.

The continuation of criminal proceedings was therefore found to be an abuse of the process of law.

Accordingly, the Court quashed the FIR registered by the Economic Offences Wing and also quashed the ECIR registered by the Enforcement Directorate. Consequent upon the quashing of the ECIR, the petition seeking the supply of a copy of the ECIR was rendered infructuous and was disposed of accordingly.

Cause Title: M/s PPK NewsClick Studio Pvt. Ltd. v. State (NCT of Delhi) & Anr (Neutral Citation: 2026:DHC:5098)

Appearances

Petitioners: Senior Advocates Kapil Sibal, Dayan Krishnan and Siddharth Agarwal with Advocates Arshdeep Singh Khurana, Harsh Srivastava, Shreedhar Kale, Sidak Singh Anand, Dikksha Ramnani, Rupali Samuel, Vishwajeet Bhati, Showjhanya Shankar and Manan Khanna.

Respondents: Additional Standing Counsel Rahul Tyagi with Advocates Sangeet Sibou, Aniket Kumar Singh and Priyansh Raj Singh Senger for the State; Additional Solicitor General S.V. Raju with Special Counsel Zoheb Hossain, Panel Counsel Vivek Gurnani and Advocates Kanishk Maurya, Kartik Sabharwal and Paranjal Tripathi for the Enforcement Directorate.

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