No offence of cheating, criminal breach of trust or criminal conspiracy made out against Prabir Purkayastha and Newsclick: Justice Neena Bansal Krishna
In M/S PK Newsclick Studio Pvt. Ltd. vs. State of NCT of Delhi & Ors and related matters, Justice Neena Bansal Krishna of Delhi High Court delivered a 41-page long judgment dated May 29, 2026, wherein, she held that the charges made in the FIR registered under Sections 406, 420 and 120B of the Indian Penal Code on allegations that NewsClick, a news entity received foreign direct investment (FDI) from a US-based entity, Worldwide Media Holdings LLC, through an allegedly inflated share valuation structure for which ED had subsequently registered a money laundering case on the basis of the FIR failed to disclose offences of cheating, criminal breach of trust or criminal conspiracy.
Justice Krishna concluded: "130. 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. 131. Once the ECIR itself is quashed, the prayer for supply of the copy of the ECIR has become infructuous. 132. In the light of aforesaid discussion, the aforesaid three Writ Petitions a re allowed. The FIR No. 0116/2020 and the ECIR bearing E CIR/14/HIU/2020 are hereby, quashed and W.P. (Crl.) No. 1129/2021, is hereby disposed of, as infructuous." Enforcement Case Information Report (ECIR) is an internal document used by the ED to start a money-laundering investigation under the PMLA.
The judgement reads: "124. ....even if all the averments maden in the FIR are admitted, no offence under Sections 420/406 IPC is made out. From the response of ED also, it is evident that they are trying to claim that the offence under Section 120B IPC, is still made out. However, on what basis the criminal conspiracy is being alleged is not explained, except that Prabir Purkayastha and Jason Pfetcher, had entered into an agreement. 125. 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. 126. The response of the ED itself reflects that even if the entire allegations against the Petitioners are admitted, no offence is disclosed in the FIR. 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."
Justice Krishna relied on the judgement of Division Bench of the High Court in Harish Fabiani & Ors. vs. Enforcement Directorate &Ors. 2022:DHC:3892-DB, wherein, it held:"The Hon'ble Supreme Court has been clear and categorical in its reasoning as evident from the para extracted above. The undeniable sequitur of the above reasoning is that firstly, authorities under the PMLA cannot resort to action against any person for money laundering on an assumption that the property recovered by them must be proceeds of crime and that a scheduled offence has been committed; secondly, the scheduled offence must be registered with the jurisdictional police or pending inquiry by way of complaint before the competent forum; thirdly, in the event there is already a registered scheduled offence but the person named in the criminal activity relating to a scheduled offence is finally absolved by a Court of competent jurisdiction owing to an order of discharge, acquittal or quashing of the criminal case of the scheduled offence, there can be no action for money laundering against not only such a person but also any person claiming through him in relation to the property linked to the stated scheduled offence. In other words no action under PMLA can be resorted to unless there is a substratum of a scheduled offence for the same, which substratum should legally exist in the form of a subsisting (not quashed) criminal complaint/inquiry or if it did exist the accused has since been discharged or acquitted by a Court of competent jurisdiction."
Justice Krishna also referred to Supreme Court's decision in para 253 of the judgement in Vijay Madanlal Choudhary vs. Union of India (2023) 12 SCC 1 which reads: “253. Tersely put, it is only such property which is derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence can be regarded as proceeds of crime. The authorities under the 2002 Act cannot resort to action against any person for money-laundering on an assumption that the property recovered by them must be proceeds of crime and that a scheduled offence has been committed, unless the same is registered with the jurisdictional police or pending inquiry by way of complaint before the competent forum. For, the expression “derived or obtained” is indicative of criminal activity relating to a scheduled offence already accomplished. Similarly, in the event the person named in the criminal activity relating to a scheduled offence is finally absolved by a Court of competent jurisdiction owing to an order of discharge, acquittal or because of quashing of the criminal case (scheduled offence) against him/her, there can be no action for money-laundering against such a person or person claiming through him in relation to the property linked to the stated scheduled offence. This interpretation alone can be countenanced on the basis of the provisions of the 2002 Act, in particular Section 2(1)(u) read with Section 3. Taking any other view would be rewriting of these provisions and disregarding the express language of definition clause “proceeds of crime”, as it obtains as of now.”
Justice Krishna also recollected that relying on the above principles, Calcutta High Court in M/s Nik Nish Retail Ltd. & Anr vs. Assistant Director, Enforcement Directorate, Govt. of India & Ors, held, “The quashing of FIR of regular case automatically created a situation that the offences, stated and alleged in the FIR has no existence; thus the “Scheduled Offence” has also no existence after quashing of the FIR. When there is no “Scheduled Offence”, the proceeding initiated under the provisions of Prevention of Money Laundering Act, 2002 cannot stand alone.”
The judgement recorded that two years have passed since the registration of impugned ECIR in 2022. The Petitioner No. 2 and various employees of Petitioner number one joined investigations on numerous occasions in 2021, after which they we're not summoned even once between September 2021 to June 2022. The manner in which the investigation was conducted clearly showed that "the same is a fishing and roving exercise in the financial affairs of the Petitioners without the existence of any offence."
Justice Krishna observed that while ED had alleged that it is investigating into alleged violations under FEMA, "but no summons or notice of inquiry under FEMA, has been received by the Petitioners till date. All the summons issued to the Petitioners are only under the PMLA and it is for the first time that ED has claimed that it is also investigating the Petitioners under FEMA as well. No copy of ECIR has been provided and the Petitioners are not even aware of the provisions and the statutes under which they are being investigated."
The judgement recorded that ED had claimed that mala fide of the Complainant is immaterial in the investigations after the registration of ECIR, but this contention is also misconceived and untenable in law. The Petitioners have a constitutional right to a free and fair investigation and mala fide registration of impugned ECIR and mala fide investigation being conducted by ED hampers the investigations. Moreover, in terms of of State of Haryana vs. Bhajan Lal & Ors. 1992 Supp (1) SCC 335, S.N. Sharma v. Bipen Kumar Tiwari (1970), where criminal proceedings are manifestly attended with mala fide or are maliciously instituted with an ulterior motive, the same is bound to be quashed. 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.
The judgement records: "122. While the ED has contended that ECIR is an internal document and the copy of the same cannot be provided to the Petitioners, the ED has failed to appreciate that even in the case of Vijay Madan Lal Chaudhary (Supra), Supreme Court has not held that ED can, as a matter of right, reject the request for supply of ECIR. It has merely stated that it is not mandatory that, in each case, ED shall supply the copy of ECIR and non-supply of ECIR will not constitute violation of the Constitutional right of the Accused."
Significantly, the judgement also records: "123. Further, the ED has filed an Application bearing Criminal M.A. No.9589/2021, dated 22.06.2021 in Criminal W.P. (Crl.) 1129/2021, in which it was submitted that ED has decided to supply the copy of ECIR to the Petitioners herein. Thus, it cannot now turn back and change the legal position. Pertinently, no copy of ECIR has been supplied to the Petitioners till date despite the aforesaid submission of the ED. It is, therefore, submitted that the ECIR and all the proceedings emanating therefrom may be quashed."
The million dollar question is: who is/was afraid of the sunlight.
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