Delhi HC Quashes FIR, ED Case Against NewsClick; Says No Cheating, Criminal Breach Of Trust Made Out

Justice Neena Bansal Krishna passed the judgment on May 29 while allowing three connected petitions filed by M/s PPK NewsClick Studio Pvt. Ltd. and Purkayastha challenging FIR No. 116/2020 registered by the Delhi Police's Economic Offences Wing and the subsequent ECIR registered by the Enforcement Directorate under the Prevention of Money Laundering Act (PMLA).

The FIR had been registered under Sections 406, 420 and 120B of the Indian Penal Code on allegations that NewsClick received foreign direct investment (FDI) from a US-based entity, Worldwide Media Holdings LLC, through an allegedly inflated share valuation structure. The ED subsequently registered a money laundering case on the basis of the FIR.

Examining the allegations, the High Court found that the offence of cheating was not made out even if the prosecution's case was accepted at face value.

The Court noted that Worldwide Media Holdings LLC had invested USD 1.5 million in NewsClick, but had never complained of being deceived or cheated.

"For the offence of cheating, it is necessary that there must be an aggrieved person who has been cheated out of his valuable property," the Court observed. It further noted, "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 also rejected the allegation of criminal breach of trust under Section 406 IPC.

Addressing the prosecution's case, Justice Krishna 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."

The Court concluded that the essential ingredients of both offences were absent.

"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," it held.

Holding that continuation of the criminal case would be unjustified, the Court remarked: "The continuation of such FIR is nothing but a gross abuse of the process of law and is hereby, quashed."

The High Court then turned to the ED's argument that a money laundering investigation could continue on the basis of the offence of criminal conspiracy under Section 120B IPC, which is a scheduled offence under the PMLA.

Rejecting this contention, the Court found that the ED had failed to identify any unlawful objective behind the alleged agreement between the parties.

"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 Court observed.

The Court further noted that despite extensive investigation, the agency had not unearthed any incriminating material.

"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 judgment stated.

Referring to the Supreme Court's ruling in Vijay Madanlal Choudhary v. Union of India and other precedents, the High Court reiterated that proceedings under the PMLA cannot survive in the absence of a valid scheduled offence. Relying on settled law, the Court observed that once the predicate FIR is quashed, the ED case automatically falls. "It has been held that if the FIR under predicate offence is quashed, the ECIR automatically, is liable to be quashed. Consequently, the complete ECIR is also quashed," the Court observed.

Accordingly, the Court allowed all three petitions and held: "In the light of aforesaid discussion, the aforesaid three Writ Petitions are allowed. The FIR No. 0116/2020 and the ECIR bearing ECIR/14/HIU/2020 are hereby, quashed."

In July 23, 2025, the Court had granted anticipatory bail to Purkayastha in two separate cases, one filed by the ED for alleged money laundering and the other by the Delhi Police’s Economic Offences Wing over foreign funding.

Previously on July 7, 2021, the High Court had granted Purkayastha interim protection from arrest and directed him to join the investigation. The Enforcement Directorate conducted raids at the office of NewsClick after the Delhi Police’s Economic Offences Wing registered an FIR in August 2020. The agency had alleged that NewsClick received foreign funds disguised as foreign direct investment to promote pro-China propaganda through its stories.

In its plea before the High Court, the agency stated,"In light of further investigation in the matter, additional material has been revealed which discloses the commission of the offence of money laundering as well as the commission of a scheduled offence, which has been intimated to the predicate agency by way of an appropriate communication under Section 66(2) of the PMLA. The relevant facts will be produced in a sealed cover before this Hon’ble Court during the course of the hearing, as it is a subject matter of ongoing investigation.”

As per the FIR filed by the EOW, a case was registered under Sections 406, 420, and 120B of the IPC, and an investigation was launched. During the investigation, the sleuths gathered evidence indicating criminal acts.