The Delhi High Court quashed the EOW FIR and ED’s ECIR against NewsClick and founder Prabir Purkayastha, holding that allegations concerning FDI and financial irregularities disclosed no cognisable offence. The Court termed the proceedings mala fide and an abuse of power targeting independent journalism.
The Delhi High Court has quashed a First Information Report (FIR) registered by the Economic Offences Wing (EOW) against NewsClick and its founder-editor Prabir Purkayastha. The Court held that the allegations relating to foreign direct investment (FDI), share valuation, and alleged financial irregularities failed to disclose any cognisable criminal offence.
In a judgment delivered on May 29, 2026, Justice Neena Bansal Krishna set aside FIR No. 116/2020, which had been registered under Sections 406 (criminal breach of trust), 420 (cheating), and 120B (criminal conspiracy) of the Indian Penal Code. As a consequence, the Court also quashed the Enforcement Directorate’s Enforcement Case Information Report (ECIR) that had been initiated under the Prevention of Money Laundering Act (PMLA) on the basis of the same FIR.
The Court held that the investigation lacked any legal foundation and amounted to an abuse of authority directed against independent journalism. Delivering strong observations on the conduct of the investigation, the Court remarked:
“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.”
Background of the Case:
NewsClick, a digital media platform known for its coverage of political, social, economic, and public policy issues, came under the scanner of multiple investigative agencies over allegations concerning foreign funding and compliance with regulatory norms.
The controversy traces its origins to an investment received by NewsClick in 2018 from a United States-based entity, M/s Worldwide Media Holdings LLC. Investigating agencies alleged that the investment violated foreign direct investment (FDI) regulations and raised concerns regarding the valuation of shares issued by the company.
The Economic Offences Wing subsequently registered a criminal case alleging offences including cheating, criminal conspiracy, and criminal breach of trust. Based on this FIR, the Enforcement Directorate initiated money laundering proceedings under the PMLA, claiming that the funds received by NewsClick were linked to unlawful activities. The allegations formed part of a wider investigation into the company’s financial affairs and foreign funding structure.
The FIR subsequently became the foundation for proceedings initiated by the Enforcement Directorate under the Prevention of Money Laundering Act.
ED Raids and Prolonged Investigation : As part of its probe, the Enforcement Directorate conducted extensive searches in February 2021 at the residences and offices of Prabir Purkayastha and several NewsClick employees. The searches reportedly continued for more than four days. During this period, Purkayastha remained confined to his residence while investigators examined documents, electronic devices, financial records, and company transactions.
Over the following months, multiple employees and officials associated with NewsClick were summoned repeatedly for questioning. The ED sought to establish that foreign funds received by the company had been misused and that the transactions were part of a broader criminal conspiracy.
High Court’s Finding
No Material Against NewsClick: After examining the investigation records, the High Court found that despite prolonged scrutiny and extensive questioning of company officials, the investigating agencies had failed to uncover any evidence supporting the allegations. The Court was particularly critical of the absence of incriminating material despite the lengthy investigation.
Also Read: Delhi Police Files Chargesheet Against NewsClick for Alleged “Pro-China Propaganda”
Observing that the investigation had continued for nearly one and a half years without producing any evidence of criminal wrongdoing, the Court stated:
“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 that the allegations remained unsupported by any substantive evidence capable of justifying prosecution under the anti-money laundering law.
“Fishing and Roving” Investigation: One of the most striking findings in the judgment concerns the manner in which the investigation was conducted. The Court observed that the agencies appeared to be searching for evidence without first establishing the existence of a predicate offence. Justice Krishna remarked that the investigation had effectively become an open-ended inquiry into the company’s finances rather than a legally grounded criminal probe.
The Court observed:
“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.”
No Violation of Any Law: A major component of the case revolved around allegations that NewsClick violated foreign direct investment regulations when it received investment from Worldwide Media Holdings LLC in 2018. However, the Court found that the allegations were legally unsustainable.
Referring to correspondence between NewsClick and the Ministry of Information and Broadcasting, the Court noted that the company had sought clarification regarding the regulatory framework applicable to digital media investments.
At the time the investment was received, there was no restriction limiting foreign ownership in digital news media entities. The Court pointed out that the 26 percent cap on foreign investment in digital news platforms was introduced only later and therefore could not be retrospectively applied to transactions completed in 2018. Consequently, the Court concluded that the investment itself did not violate any law.
Share Valuation Was a Commercial Decision: The investigating agencies had further alleged that NewsClick artificially inflated the value of its shares in order to facilitate foreign investment. The Court, however, rejected this contention.
It held that valuation of shares is primarily a commercial and economic exercise and that differences in valuation do not automatically constitute criminal misconduct. After examining the material on record, the Court concluded that no evidence suggested fraudulent inflation of share prices.
The judgment stated:
“It is an economic decision which does not spell out any criminal offence.”
Alleged Diversion of Funds Not Established: Another allegation raised by the ED concerned the purported diversion of foreign funds through payment of salaries, consultancy fees, rent, and other operational expenses. The Court found this argument unconvincing. It observed that such expenditures are routine and necessary for the functioning of a digital media organisation.
Payments made to journalists, consultants, editors, and support staff constituted ordinary business expenses and did not indicate siphoning of funds. The Court therefore held that the allegations regarding diversion of money were unsupported by evidence and incapable of sustaining criminal proceedings.
No Evidence on Claim That Investor Company Was Non-Existent: Investigators had also alleged that Worldwide Media Holdings LLC, the entity that invested in NewsClick, was either non-existent or lacked genuine business operations. However, the Court noted a glaring deficiency in the investigation. According to the judgment, the status report filed by the Economic Offences Wing failed to substantiate this claim.
The Court observed:
“If the FIR does not disclose any offence or the allegations are patently absurd and born out of mala fide, then merely by claiming that investigation is at a crucial stage, it would not be an impediment for the Court to quash the FIR.”
The Court noted that despite repeated allegations, the investigative records remained silent on establishing the alleged non-existence of the investor company.
FIR and ECIR Quashed: Having found that the allegations failed to disclose any cognisable offence, the High Court proceeded to quash the FIR registered by the Economic Offences Wing. The Court held that continuation of the criminal proceedings would amount to misuse of the legal process.
The judgment observed that maintaining the FIR despite the absence of evidence would constitute:
“a gross abuse of the process of law.”
Since the Enforcement Directorate’s money laundering case was entirely dependent on the FIR, the Court held that the ECIR registered under the PMLA could not survive independently. Accordingly, both the FIR and the money laundering proceedings were quashed.
Case Title: M:s PPK Newsclick Studio Pvt. Ltd. Vs State Of Nct Of Delhi
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