Delhi HC quashes cases against NewsClick editor: ‘gross abuse of the process of law’

In a strong indictment of the investigation, the Delhi High Court has termed the case against NewsClick editor Prabir Purkayastha and the website a “gross abuse of the process of law,” setting aside both the Economic Offense Wing’s FIR and the Enforcement Directorate’s ECIR tied to alleged foreign funding violations.

‘Gross abuse of process of law’

In a detailed judgment delivered on May 29, 2026, Justice Neena Bansal Krishna held that even if the allegations contained in the FIR were accepted in their entirety, they failed to disclose the commission of any cognizable offence under Sections 406 (criminal breach of trust) and 420 (cheating) of the Indian Penal Code. The court concluded unequivocally: “The continuation of such FIR is nothing but a gross abuse of the process of law and is hereby, quashed.”

Also read: ED slaps Rs 184-crore FEMA penalty against NewsClick, editor

The quashed FIR was registered in August 2020 on the basis of a complaint alleging that Newsclick had received foreign direct investment in violation of applicable norms, and that the funds were misused. The FIR subsequently formed the basis for the ED to initiate proceedings under the Prevention of Money Laundering Act (PMLA).

Probe agencies claimed NewsClick shares in Worldwide Media Holdings LLC were overvalued to circumvent foreign investment caps. The court said there was no cap on foreign investment in digital news platforms when the investment was made.

Court counters charges

The allegations were based on an investment of USD 1.5 million (approximately ₹9.59 crore) received in April 2018 from a US-based entity, Worldwide Media Holdings LLC, in exchange for a minority stake in the company. The investigating agencies claimed that the shares were deliberately overvalued to circumvent foreign investment caps and that the funds were siphoned off through operational expenses.

Also read: NewsClick case: Delhi HC grants pre-arrest bail to Prabir Purkayastha

However, the court found these claims to be legally untenable. It noted that at the time when the investment was made, there was no cap on foreign investment in digital news platforms. The restriction of 26 per cent was introduced only later, in 2019. The judgment pointed out that the company had, prior to receiving the investment, sought clarification from the Ministry of Information and Broadcasting, which had confirmed that online news platforms did not fall under the category of print media and were not subject to such restrictions at the time.

No criminal offence: court

On the issue of alleged overvaluation of shares, the court underscored that the pricing was based on a certified valuation and subsequent negotiations between the investor and the company. It observed that such commercial decisions, including pricing based on future growth potential, could not be criminalised. The judgment made it clear that “it is an economic decision which does not spell out any criminal offence.”

Also read: Explained: The raids on news portal NewsClick, and the background

The court was equally dismissive of the allegation that the company had siphoned off funds by paying salaries, consultancy fees and rent. It held that these were legitimate business expenditures, particularly for a media organisation, and did not constitute any criminal wrongdoing even if the company was incurring losses.

The judgment noted that even assuming excessive expenditure, “then too it does not disclose any criminal offence.”

Court examines ‘offences’

Crucially, the court examined whether the essential ingredients of the offences invoked in the FIR were made out. For cheating under Section 420 IPC, it noted that there must be a person who has been deceived and induced to part with property. In this case, the foreign investor itself had invested and had not raised any complaint of being cheated. The court observed that there was “no complaint whatsoever” from the investor and no material to show that any person had been deceived.

Having found that the FIR itself did not disclose any offence, the court held that the ED’s ECIR, which was entirely based on the FIR, could not survive.

Also read: NewsClick founder ‘conspired to peddle narrative that Kashmir, Arunachal disputed’: Police

Similarly, for criminal breach of trust under Section 406 IPC, the court held that there must be entrustment of property and its subsequent misappropriation. It found that the transaction in question was a straightforward investment for equity and could not, “by no stretch of interpretation,” be construed as entrustment or misappropriation.

'Inconsistencies in probe'

The judgment also took note of inconsistencies in the investigation, including an earlier status report indicating that the Reserve Bank of India had found the foreign remittance to be in compliance with FEMA regulations. The court observed that this material had been omitted in subsequent reports, further weakening the prosecution’s case.

Having found that the FIR itself did not disclose any offence, the court held that the ED’s ECIR, which was entirely based on the FIR, could not survive. It noted that the money laundering proceedings were premised on the same set of allegations and therefore had to be quashed along with the FIR.

Also read: SC ruling on NewsClick editor arrest may negate any bid for re-arrest

Setting an example

The ruling is significant not only for the immediate relief it grants to Newsclick and its editor, but also for its broader reaffirmation of the limits of criminal law in regulating business decisions and investments. By emphasising the absence of core ingredients of criminal offences and calling out the proceedings as an abuse of process, the court has underscored the need for investigative agencies to act within the bounds of law and evidence.

Purkayastha was arrested by the Delhi Police Special Cell on October 3, 2023, under the Unlawful Activities (Prevention) Act (UAPA) over allegations of using Chinese funds to disrupt India’s sovereignty, and was remanded to judicial custody. The Supreme Court later quashed his arrest, holding that the failure to provide him or his counsel with the grounds of arrest before remand vitiated both the arrest and subsequent custody. Declaring the process legally invalid, the court ordered his release after 225 days of incarceration, following his challenge to the arrest.

Purkayastha, born in 1952, is a journalist, writer and long-time activist who began his career as an engineer. He was also arrested during the Emergency in 1977 as a student protester, an experience that has shaped much of his political and journalistic work. He founded NewsClick in 2009 as an independent digital platform focused on public interest reporting and progressive movements.