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Synopsis

PPK NewsClick Studio Private Limited, which owns the news portal NewsClick, has approached the Delhi High Court to request the quashing of cases filed against it for alleged violations of foreign funding laws.

NewsClick's founder is currently in jail in another case. 

The media portal argued that the prosecution is entirely dishonest and malafide, intended to harass the outlet. Moreover, it highlighted the arrest of its founder and editor-in-chief, Prabir Purkayastha, in another case under the anti-terror law UAPA.

NewsClick has challenged the FIR filed by the Economic Offences Wing (EOW) and the subsequent case initiated by the Enforcement Directorate (ED) for alleged money laundering. The platform stated that it has not violated any foreign direct investment (FDI) guidelines or norms.

During the hearing before Justice Saurabh Banerjee, Senior Advocate Kapil Sibal argued, "There is no violation of any guidelines; no violation of any tax (law). There is no violation of FDI norms. This is a completely dishonest, malafide complaint filed to harass a media channel."

Sibal expressed his disapproval of Prabir Purkayastha's arrest, emphasizing that it was unjust to incarcerate a 72-year-old individual.

The senior advocate contended that no offence was made out in the present case, as the foreign funds received from an investor abroad were in compliance with the applicable law and practices. "RBI itself says I have not violated any law. Yet prosecution is going on. ED is going on. The law is in my favor. I am being prosecuted. Nothing can be more malafide in this country," he stated.

Sibal also pointed out that such actions can lead to innocent people being imprisoned, asserting that the news portal's stance has put it against the establishment. He emphasized that the claim that foreign funds provided to NewsClick caused a loss to the exchequer could not be sustained, as it was a private transaction.

On the contrary, the counsel for the Delhi Police and ED argued that the portal's plea for a copy of the Enforcement Case Information Report (ECIR) had become infructuous as the Supreme Court had already ruled that it was not required to be supplied.

ED's Allegations in FIR

The ED has claimed that during the investigation, additional material has been revealed that discloses the commission of the offence of money laundering. 

"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 commission of scheduled offence which has been intimated to the predicate agency as well, by way of an appropriate communication u/s 66(2) of the PMLA as well. The relevant facts will be produced in a sealed cover before this Hon'ble Court during the course of hearing as it is a subject matter of ongoing investigation", the plea read. 

ED, in its plea, has stated that the plea in which interim orders of stay were passed was premature and not maintainable.

"It has been held repeatedly by the courts, including the Supreme Court, that at the stage of summons, a person cannot even qualify as a person aggrieved, and therefore, the Writ Petitions would not be maintainable as being wholly premature", it stated.

EOW's Allegations in FIR

According to the EOW FIR, 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.

“The accused persons, in conspiracy with their accomplices based abroad, devised a deceitful scheme to obtain and receive funds for undertaking activities as per instructions from their foreign-based benefactors by disguising the funds received as Foreign Direct Investment”, EOW said.

It also stated that the accused persons in furtherance of their scheme, converted their entity into a private limited company and got their valuation inflated through manipulation of the valuation criteria and process, so as to use the inflated valuation to get foreign investment purportedly in lieu of dilution of their shareholding in favour of the foreign investors.

The EOW further stated that after seeking protection from arrest, petitioner Prabir Purkayastha joined the investigation and he merely provided the balance sheet of PPK NewsClick Studio Pvt. Ltd. for the financial year 2017-2018, 2018-2019, 2019-2020 but failed to provide closures of the balance sheets to check their source of revenue, expenditures, end use of funds, FDI and fund/revenue from foreign entities.

“The petitioner or accused also failed to provide information on what kind of export services were provided by their company PPK NewsClick Studio Pvt. Ltd. to the foreign entities against the fee/remittances paid by them”, it said.

Case Title: Prabir Purkayastha v. Directorate of Enforcement (another connected matter)