The Enforcement Directorate (ED) has approached the Supreme Court challenging a Delhi High Court judgment that quashed the money laundering case against news portal NewsClick and its editor-in-chief, Prabir Purkayastha. The agency has questioned the High Court’s decision to dismiss its Enforcement Case Information Report (ECIR) arising from allegations of foreign direct investment (FDI) violations.
The ED contended that the High Court had quashed its proceedings without adequately examining the case under the Prevention of Money Laundering Act (PMLA). The agency also raised concerns over a five-month delay in pronouncing the judgment.
Why Has ED Moved the Supreme Court?
The ED argued that its money laundering investigation should not have been terminated without examining the allegations under the PMLA.
The agency’s appeal challenges the High Court’s May 29 judgment, which held that continuing the criminal proceedings would amount to a gross abuse of the legal process. The Supreme Court has yet to list the matter for hearing.
What Triggered the Investigation?
The case originated from a 2020 FIR registered by the Economic Offences Wing (EOW) of Delhi Police against PPK NewsClick Studio Pvt Ltd.
Investigators alleged that the company received ₹9.59 crore in foreign investment from Worldwide Media Holdings LLC, USA, during 2018-19.
The EOW claimed that company shares were substantially overvalued to circumvent the 26% FDI limit applicable to digital news websites. It further alleged that more than 45% of the investment was diverted through salaries, consultancy fees and rent payments.
The ED subsequently registered a money laundering case against NewsClick, Purkayastha and others.
FCRF’s Chief AI Officer Certification Returns on November 14 to Prepare Future AI Leaders
What Did the High Court Decide?
Justice Neena Bansal Krishna held that the investment constituted an economic decision and did not establish a criminal offence.
The court noted that, according to the Union Information and Broadcasting Ministry’s response to the company, no FDI restriction applied to digital media at the relevant time.
It also found that allegations of cheating and criminal breach of trust were not established, even if the prosecution’s claims were accepted.
Why Were the Allegations Rejected?
The High Court observed that cheating required an identifiable victim who had been deceived.
In this case, Worldwide Media Holdings LLC had not complained of being cheated. The court also rejected allegations concerning the diversion of investment, observing that salaries, consultancy fees and rent were legitimate business expenses.
It further held that the ED had failed to establish the illegal objective or means necessary to support the conspiracy allegation.
What Happens to the PMLA Case?
The High Court quashed both the EOW FIR and the ED’s ECIR, finding insufficient grounds to sustain the proceedings.
The court noted that extensive investigations had failed to uncover incriminating material establishing a money laundering offence.
The ED’s appeal now places the legality of that decision before the Supreme Court.
What Does This Mean?
The case raises an important legal question about the continuation of money laundering proceedings when the underlying criminal case has been quashed. The Supreme Court’s examination could clarify the application of PMLA provisions in cases involving disputed financial transactions and alleged regulatory violations.
Follow for daily updates on cybercrime, corporate fraud, DFIR, hacking, investigations, and digital forensics
