The truth will out, as it is said. And on May 29, it did. In a 41-page order, a single judge bench of Justice Neena Bansal Krishna of the Delhi High Court quashed the charges brought about by the Economic Offences Wing (EOW) of the Delhi Police and the Enforcement Directorate (ED) in 2020 in a matter relating to alleged violations of foreign direct investment (FDI) and foreign exchange management regulations by Newsclick, an online news portal, and its owner Prabir Purkayastha. The portal and its founder were also accused of cheating and circumventing government regulations.

After a good six years, the unthinkable happened. The court held that no offence of criminal breach of trust was established; no criminal conspiracy was established apart from “bald assertions”, there was no overvaluation of shares, nobody had been cheated, and no regulation had been bypassed to circumvent the cap on FDI. Quashing the Delhi Police’s FIR (IPC Sections 406 and 420), the judge, in a scathing indictment of law enforcement agencies, held that the “continuation of such an FIR is nothing but a gross abuse of the process of law”.

Pitched against a political establishment and its agencies that were out to get both Purkayastha and his online news organisation from 2020 onwards for alleged regulatory violations, share valuation, and criminal conspiracy, justice and relief finally came calling in the form of the High Court order. The truth was that Purkayastha and his team had been bringing out reports and doing critical analyses of government policies like any independent media should. Many writers and journalists were given space for their analytical reportage and views, a space that had become increasingly constricted in legacy media. That Newsclick would be targeted was not anticipated by anyone.

This significant order basically calls out the lawlessness of law-enforcing authorities. It held that “apart from bald assertions of there being a criminal conspiracy, there was not a whisper of any incriminating allegation”. Newsclick issued a short statement the next day hailing the verdict as a strong stand in support of independent journalism in India and that it vindicated its position. It said that the numerous charges and cases against it were attacks on the freedom of the press, with its only “fault” being that it had practised journalism that covered people’s movements. The order reaffirmed its faith in the courts, it said, and expressed confidence that other proceedings would also be resolved. The verdict was hailed by journalist organisations, individuals, and the Left.

The judgment has come a good five years after the witch hunting of Newsclick began in August 2020 following a complaint to the Ministry of Information and Broadcasting (I&B) alleging that the news portal had received Rs.9.59 crore in FDI on April 11, 2018, in exchange of 7.69 per cent shares of the petitioner company. It was alleged that there was misappropriation of funds that had caused a loss to the government exchequer, and that the shares were overvalued in order to escape the cap on FDI. The FDI, it was alleged, was used to make payments for ulterior motives.

The actual harassment began in February 2021 when multiple search and seizure operations were carried out by the ED under Section 17 of the Prevention of Money-Laundering Act, 2002 (PMLA), in the office premises of Newsclick and in the homes of employees, company directors, and journalists. It was the peak of the second wave of COVID-19. Apparently, an FIR had already been registered a few months before this, in August 2020, under IPC Sections 406 (criminal breach of trust), 420 (cheating), and 120B (criminal conspiracy).

It was forwarded to the ED and, in September, the ED registered a case under Sections 3 and 4 of the PMLA as well. Copies of the enforcement case information report (ECIR) and the FIR were not given to the petitioners. Newsclick wrote repeated letters in April and May 2021 seeking a copy of the documents but they were not provided with any. Newsclick and its owners finally filed a writ petition for the quashing of the FIR of the EOW and the ED’s ECIR, as well as for a copy of the ECIR which they had not been given.

The background

In 2009, Newsclick India Trust was set up which became PP Newsclick Studio LLP in 2015. In May 2017, to help the LLP grow and expand, an agreement was entered with one BGSC Associates LLP to value PP Studio Newsclick LLP. In 2017 itself, Newsclick converted itself into a private limited company to receive FDI from a foreign company. It wrote a letter to the I&B Ministry seeking clarification regarding the regulatory framework for FDI in a company engaged with the publication of online news.

In 2018, there were restrictions on FDI in print media but none for online news portals. The restrictions were to come a year later, in 2019. The Ministry replied that online publications or web portals did not fall within the ambit of print media. All these averments were made in the writ petition. The judgment rightly took cognisance and noted that it was clear from the Ministry’s reply that there was no cap on FDI for digital media. Likewise, there was no overvaluation of shares in order to circumvent the cap on FDI. The investment agreement did not violate any law or disclose any criminal offence.

The court also noted that the valuation of shares was as per existing Foreign Exchange Management Act, 1999 (FEMA), guidelines. The share value was worked out after due negotiations, an economic decision which did not spell any economic offence. The judgment also found untenable the allegation that the FDI had been siphoned off for salaries, rent, consultation fee, expenses of promoters, and journalists. It noted that such expenses were bound to occur when a company was in the business of digital media, and even if there was over-expenditure, it did not disclose any criminal offence.

A July 2021 status report of the ED included a correspondence of the RBI with the EOW which showed that there were no violations under extant FEMA rules either in the reporting or the issuing of shares. A subsequent status report omitted the RBI reference which the petitioners pointed out. The charge that the petitioner was dealing with a non-existent company was also dismissed as both the status report and investigation were silent in this regard.

“Gross abuse of the process of law”

The court also dismissed the charges of cheating (IPC Section 420) as the entity with whom the agreement for FDI was made had not lodged any complaint. The only complainant was one Shobhan Singh who was not an aggrieved person but an informant. The status report also did not mention any person who had been cheated by Newsclick or its founder. The offence of cheating, therefore, was not established.

Likewise, there was no evidence of any property being misappropriated. For the purpose of cheating, it was necessary that there must be an aggrieved person, noted the order. Even if such allegations were accepted, the court said, no offence under either Section 406 (misappropriating property) or Section 420 was disclosed in the FIR and in subsequent investigations. “The continuation of such FIR is nothing but a gross abuse of the process law and is thereby quashed,” said the order.

Even for the alleged offence under Section 120B, the Bench said that there was no explanation for the basis for the allegation of criminal conspiracy barring the fact that the two parties had entered into an agreement. “Merely because the parties entered into an agreement is not sufficient to constitute a criminal conspiracy,” it held.

The ED had to show the “illegal objective or the means” which had been “adopted by the petitioners or other persons” which could be termed as a criminal conspiracy, the court said. Coming down heavily on the ED, the order further noted that the ED’s response reflected that even if the entire set of allegations (against the petitioners) were admitted, “no offence was disclosed in the FIR”. Despite “extensive investigations carried out by the ED” for nearly one and a half years, with the petitioners and employees summoned many times, “nothing incriminating till date has been found or placed on record,” it held.

Then came the clincher. The order said that “aside from bald assertions of there being a criminal conspiracy, there is not a whisper of any incriminating allegation, which could even remotely suggest the commission of the offence under Section 4 PMLA”. Relying on judicial precedent, the Bench also quashed the ECIR as the FIR (IPC Sections 406, 420) under the predicate offence itself stood quashed.

The years 2019, 2020, and 2021 were crucial for the government. The swell of protests against the discriminatory Citizenship (Amendment) Act, 2019, had begun in 2019-20 across the country, culminating in the unfortunate Delhi riots. Then COVID-19 followed with a massive number of deaths that was an embarrassment to the government. This was followed later by the unified farmers’ protest against three enacted farm laws which were later revoked due to the sweeping and unrelenting agitation of the farmers.

While a section of the media labelled the farmers as anti-socials and anti-nationalists, reports by independent media including youtubers relayed a different narrative altogether. This was a period of major discontent. In 2019, trade unions were already fuming at the Central government for its decision to scrap 29 Central labour laws and reduce them to four labour codes. These were events that independent media covered diligently and did justice to.

They reported on issues including police and other excesses while “mainstream media”, especially electronic media that had increasingly dissociated from mainstream issues ever since the NDA came to power under Prime Minister Narendra Modi, turned a blind eye to all these developments, preferring to view them, just as the government did, as a law-and-order problem. By October 2023, the government was determined to make an example of Newsclick for the rest of the independent media. It was time to resort to new tactics.

Invoking UAPA

October 2023. A case under the Unlawful Activities (Prevention) Act, 1967 (UAPA), was made out against both Purkayastha and a colleague on the charge that the news portal had received money for pro-China propaganda. Raids were conducted on some 88 locations including those outside Delhi and 300 electronic devices were seized. The interrogation did not spare women. Plain-clothed men landed at wee hours to question the staffers and some contributors for hours altogether. That there were elderly and ailing family members was no deterrent. They were questioned for keeping political literature, which was mostly of a progressive nature.

Purkayastha and one of his senior personnel who had a congenital disability were jailed. The staffer later turned approver and was released sooner. Purkayastha, who is in his late 70s and suffers from age-related health ailments, was jailed for 226 days. He was given bail in the UAPA case by the Supreme Court in May 2024 after his arrest was found invalid. Purkayastha was accused of “terror funding”, “conspiracy to instigate farmers’ protests and Delhi riots” and promoting Chinese propaganda.

Already in 2021, even as the ED and EOW probe on Newsclick was on, IT “surveys” were carried out at the premises of two news websites, one of which was Newsclick. Documents and email dumps were seized. A source told Frontline that the IT cases were filed mainly because the ED could not make much headway in its own investigation.

With the arrest dealing another blow, Newsclick had to reduce its scale of operations drastically and function with a skeletal staff. The harassment was not confined to the owner-editor. The Newsclick office, the homes of Newsclick staff, its contributors, many of whom were senior journalists, and that of the owner-editor were raided again and office equipment, laptops, personal laptops, and phones were seized. No mandatory seizure memos or hashtags were issued to the owners of the equipment.

Three years after the second raid, none of the equipment has been released. Apart from the fact that many employees were sole income earners in their families, the raids damaged the reputation of many journalists, several of whom were women. Many were traumatised by the experience but are also determined to fight it out. Many hope that it will not be a long battle before the other cases get similarly quashed.

The ED, for its part, as per news reports, plans to appeal against the order in the Supreme Court.

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