M/S Ppk Newsclick Studio Pvt. Ltd. vs State Of Nct Of Delhi & Anr.
- Court
- Delhi High Court
* IN THE HIGH COURT OF DELHI AT NEW DELHI
rd
% Reserved on: 03 December, 2025
th
Pronounced on: 29 May, 2026
+ W.P. (CRL.) NO.1130/2021 & CRL.M.A. 9407/2021
1. M/S PPK NEWSCLICK STUDIO PVT. LTD.
Registered Office at:
Khasra No.275, West End Marg,
Saidulajab, New Delhi-110030.
Through its Authorised Representative
Mr. Prabir Purkayastha
.....Petitioner
Through: Mr. Kapil Sibal, Sr. Advocate, Mr.
Dayan Krishnan, Sr. Advocate, Mr.
Sidharth Agarwal, Sr. Advocate with
Mr. Arshdeep Singh Khurana, Mr.
Harsh Srivastava, Mr. Shreedhar
Kale, Mr. Sidak Singh Anand, Ms.
Dikksha Ramnani, Ms. Rupali
Samuel, Mr. Vishwajeet Bhati, Ms.
Showjhanya Shankar and Mr. Manan
Khanna, Advocates.
versus
1. STATE OF NCT OF DELHI
(Economic Offences Wing)
Through its Standing Counsel (Criminal)
Chamber No.437, Lawyers Chamber Block-I,
Delhi High Court, New Delhi-110003.
2. SOHAN SINGH
MG 23, Sarai Rohilla,
North Delhi-110007.
.....Respondents
Through: Mr. Rahul Tyagi, ASC for State with
Mr. Sangeet Sibou, Mr. Aniket
Signature Not Verified
Signed By:VIKAS
ARORA
Signing Date:10.06.2026
19:03:45
W.P. (CRL.) NO.1130/2021 Page 1 of 41
Kumar Singh and Mr. Priyansh Raj
Singh Senger, Advocates for State
Mr S. V. Raju, ASG with Mr. Zoheb
Hossain, Spl Counsel, Mr. Vivek
Gurnani, Panel Counsel, Mr. Kanishk
Maurya, Mr. Kartik Sabharwal and
Mr. Paranjal Tripathi, Advocates for
ED
+ W.P. (CRL.) NO.1129/2021, CRL.M.A. 9397/2021,
CRL.M.A. 9589/2021, CRL.M.A. 18231/2022, CRL.M.A.
21591/2023
1. M/S PPK NEWSCLICK STUDIO PVT. LTD.
Registered Office at:
Khasra No.275, West End Marg,
Saidulajab, New Delhi-110030.
Through its Authorised Representative
Mr. Prabir Purkayastha
2. PRABIR PURKAYASTHA
S/o Lt. A.K. De Purkayastha
nd
R/o D-132, 2 Floor, Saket,
New Delhi-110017.
.....Petitioners
Through: Mr. Arshdeep Singh Khurana, Mr.
Harsh Srivastava, Mr. Sidak Singh
Anand, Ms. Dikksha Ramnani and
Mr. Manan Khanna, Advocates.
versus
1. UNION OF INDIA
Ministry of finance
Department of Revenue
North Block, New Delhi- 110001
2. DIRECTORATE OF ENFORCEMENT
10-A, Jamnagar House,
Signature Not Verified
Signed By:VIKAS
ARORA
Signing Date:10.06.2026
19:03:45
W.P. (CRL.) NO.1130/2021 Page 2 of 41
Akbar Road, New Delhi-110011. .....Respondents
Through: Mr S. V. Raju, ASG with Mr. Zoheb
Hossain, Spl Counsel, Mr. Vivek
Gurnani, Panel Counsel, Mr. Kanishk
Maurya, Mr. Kartik Sabharwal and
Mr. Paranjal Tripathi, Advocates for
ED
+ W.P.(CRL) 1146/2021, CRL.M.A. 9600/2021 & CRL.M.A.
33576/2024
1. M/S PPK NEWSCLICK STUDIO PVT. LTD.
Registered Office at:
Khasra No.275, West End Marg,
Saidulajab, New Delhi-110030.
Through its Authorised Representative
Mr. Prabir Purkayastha
2. PRABIR PURKAYASTHA
S/o Lt. A.K. De Purkayastha
nd
R/o D-132, 2 Floor, Saket,
New Delhi-110017. .....Petitioners
Through: Mr. Kapil Sibal, Sr. Advocate, Mr.
Dayan Krishnan, Sr. Advocate, Mr. Sidharth
Agarwal, Sr. Advocate with Mr. Arshdeep Singh
Khurana, Mr. Harsh Srivastava, Mr. Shreedhar
Kale, Mr. Sidak Singh Anand, Ms. Dikksha
Ramnani, Ms. Rupali Samuel, Mr. Vishwajeet
Bhati, Ms. Showjhanya Shankar and Mr. Manan
Khanna, Advocates.
versus
1. UNION OF INDIA
Ministry of finance
Department of Revenue
North Block, New Delhi- 110001
2. DIRECTORATE OF ENFORCEMENT
10-A, Jamnagar House,
Akbar Road, New Delhi-110011.
Signature Not Verified
Signed By:VIKAS
ARORA
Signing Date:10.06.2026
19:03:45
W.P. (CRL.) NO.1130/2021 Page 3 of 41
.....Respondents
Through: Mr S. V. Raju, ASG with Mr. Zoheb
Hossain, Spl Counsel, Mr. Vivek
Gurnani, Panel Counsel, Mr. Kanishk
Maurya, Mr. Kartik Sabharwal and
Mr. Paranjal Tripathi, Advocates for
ED
CORAM:
HON'BLE MS. JUSTICE NEENA BANSAL KRISHNA
J U D G M E N T
NEENA BANSAL KRISHNA, J.
The aforesaid three Petitions are interconnected and are decided together.
W.P. (CRL.) NO.1130/2021: For Quashing of FIR No.116/2020 dated
26.08.2020 under Section 406, 420 and 120B IPC P.s. Economic Offences
Wing.
1. Writ Petition No.1130/2021 under Article 226 Constitution of India
read with Section 482 Cr.P.C. has been filed on behalf of the Petitioner for
quashing of FIR No.116/2020 dated 26.08.2020 under Section 406, 420 and
120B IPC P.s. Economic Offences Wing.
2. It is stated in the Petition that the Petitioner, PPK Newsclick is a law-
abiding corporate entity, incorporated under the Companies Act, 2013. It
owns and operates “ newsclick.in,” a well-known independent digital news
media Company in India dedicated to covering news from India and
elsewhere with a focus on progressive movements. It has become one of
India‟s most consistent chroniclers of diverse people‟s movements and
struggles across the country. It hosts the work of critical and progressive
voices, from across the country. It also focuses extensively on science and
technology and data journalism. It engages extensively with the viewers
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Signed By:VIKAS
ARORA
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W.P. (CRL.) NO.1130/2021 Page 4 of 41
across the world and has several lakhs of followers, views and subscribers
on its various social media platforms and its website.
3. In the year 2009 when it was founded, it was controlled by Newsclick
India Trust and later from the year 2015, a Limited Liability Partnership
namely, M/s PP Newsclick Studio LLP .
4. In or around May, 2017, with an intent to receive investment to allow
the LLP to grow and expand, an Agreement dated 01.05.2017 was entered
between M/s PP Newsclick Studio LLP and an independent valuer Agency
M/s BGJC Associates LLP, to value PP Newsclick Studio LLP. Further, to
enable a smooth inflow of any future investment, M/s PP Newsclick Studio
LLP was converted into a private limited Company, pursuant to the Board
Resolution dated 03.06.2017. The Company thus, came into existence on
11.01.2018.
5. It was further submitted that the valuer M/s BGJC Associates, LLP
submitted a Valuation Report dated 28.02.2018 wherein the shares of the
Petitioner Company were valued at a price of Rs.9188/- per share having
face value of Rs.10/-. A Certificate dated 05.02.2018, certifying the fair
value of the equity share of the Petitioner Company, was also issued.
6. The Petitioner approached for FDI and ultimately an entity by the
name of M/s Worldwide Media Holdings LLC (WWMH) , invested in the
shares of the Petitioner as FDI. WWMH was incorporated on 29.11.2017 as
a Limited Liability Corporation, in accordance with the laws of Delaware,
USA having its registered office at 28, Old Rudnick Lane, Dover, County of
Kent, Delaware 19901.
7. It is further stated that as per the record, there existed a Company with
a same name of Worldwide Media Holdings LLC, incorporated on
Signature Not Verified
Signed By:VIKAS
ARORA
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W.P. (CRL.) NO.1130/2021 Page 5 of 41
29.05.2014 bearing file No.5542317, having its registered office at 8, The
Green, STE A, Dover, Kent, DE-19901 which was voided on 01.06.2017 ,
in the state of Delaware, USA.
8. Under the laws of Delaware, USA, the name of a Company which has
been voided, can be used by another person seeking to incorporate a new
Company. Therefore, the WWMH with whom the Petitioner had the
dealings, was a different Company incorporated on 29.11.2017 and had
since then, continued in business. This Company has no connection with the
previously cancelled Company, with the same name. Even as per the OA,
the investments were made after a gap of more than 1 year, from the date of
earlier Company being voided. WWMH is the different Company
incorporated on 29.11.2017, though it has the same name of an earlier
Company, which got voided.
9. The Petitioner discussed the possibility of investment by WWMH. In
order to confirm the regulatory regime in the digital media business and to
ensure its compliance, the Petitioner wrote a letter dated 20.12.2017 to
Ministry of Information and Broadcasting requesting a clarification to the
FDI Policy, in the following terms:
“1. Does the term “print media” as used in FEMA
regulations cover online publication of news (in form of
videos/written articles) on a website?
2.Is FDI in a company engaged in the business of online
publication of news (in form of videos/written articles) on
a website subject to sectoral caps/conditions for FDI
prescribed under the FEMA Regulation?”
Signature Not Verified
Signed By:VIKAS
ARORA
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10. The Ministry of Information and Broadcasting gave a Reply dated
05.01.2018 with the clarification that “online publications on website/web
portal do not fall under the ambit of print media.”
11. In the light of the above response, Petitioner was advised that there
was no regulatory hindrances/permissions were required for FDI in online
publication of news. As per the Valuation Report of M/s BGJC Associated
LLP, the parties agreed to the value of Rs.11510/- per share. They entered
into an Investment Agreement dated 20.03.2018, wherein WWMH agreed to
invest a total of USD 4.5 Million in three tranches of USD 1.5 Million each,
in exchange for a total of 23.07% shares of the Petitioner. The first tranche
of investment of 1.5 million USD was remitted on 11.04.2018, in exchange
of 7.69% shares of the Petitioner Company. Though the Agreement dated
20.03.2018 provided for further investments of USD 3 Million, but it was
never remitted by WWMH. Consequently, WWMH holds 7.69% shares of
the Petitioner Company.
12. The Petitioner clarifies that upon receipt of this Inward Remittance,
all necessary disclosures that are statutorily required to be made under any
law including reporting the remittance to RBI, were made and rules were
duly complied. No objection was raised by RBI, in regard to the remittance
in question.
13. The Petitioner continued to expand its business and practice
independent impartial journalism. Notably, no other foreign direct
investment was received by the Petitioner Company, since the one received
on 11.04.2018.
14. Suddenly, in February 2021 , multiple search and seizure operations
carried out by the ED under Section 17, PMLA, at the offices of the
Signature Not Verified
Signed By:VIKAS
ARORA
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W.P. (CRL.) NO.1130/2021 Page 7 of 41
Petitioner as well as the premises of various employees, directors,
shareholders and contractors of the Petitioner Company, between
09.02.2021 and 13.02.2021. Consequent to search and seizure operations,
ED filed an Application A.A. No.456/2021 under Section 17(4) PMLA
s eeking retention of records and devices seized by it, before the
Adjudicating Authority, PMLA which is pending consideration.
15. After being served with the O.A., the Petitioner became aware that an
FIR bearing No.0116/2020 dated 26.08.2020 under Section 406, 420, 120B
IPC , has been registered against the Petitioner. It also became aware that
the ED herein registered an ECIR bearing ECIR/14/HIU/2020 on
02.09.2020 under Section 3 & 4 PMLA . While both the FIR and ECIR have
been extensively relied upon by the ED in O.A., but neither of these
documents had been supplied to the Petitioner, as part of the relied upon
documents.
16. The Petitioner thus, addressed a Letter dated 20.04.2021 seeking the
copy of FIR and ECIR, and also filed an Application dated 23.04.2021
before the learned Adjudicating Authority. However, ED neither responded
to the Letter dated 20.04.2021 nor to the Application dated 23.04.2021. The
Petitioner states that he believes that similar requests were made by the other
persons arraigned as Respondents, before the learned Authority, but their
request have not been consented to, by the ED.
17. Similarly, the Petitioner aggrieved by the non-supply of the requisite
documents, wrote Letters dated 26.04.2021 and 15.05.2021 to the
Respondent for these documents, as the same have not been uploaded on the
website of the Delhi Police, as per the mandate of law. However, no
response has been received by the Petitioner.
Signature Not Verified
Signed By:VIKAS
ARORA
Signing Date:10.06.2026
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W.P. (CRL.) NO.1130/2021 Page 8 of 41
18. An Application dated 05.06.2021 before learned CMM, New Delhi
with a similar request, had also been preferred. On 06.06.2021, the
Respondent supplied the copy of the FIR to the Petitioner. Consequently,
the Petitioner withdrew his Application on 07.06.2021. However, learned
CMM, South-East District took suo moto cognizance of the violation of law
by the Respondent, in not uploading and supplying the FIR to the Petitioner.
19. The Petitioner also apprehends that the Respondent had failed to
comply with the rigours of Section 157 Cr.P.C in respect of the FIR,
inasmuch the same was not forwarded to the CMM. The facts revealed a
pattern of evasiveness and opacity being adopted by the Investigating
Agency, in their approach during the investigations against the Petitioner.
20. The Petitioner further asserted that the FIR has been registered
malafide, merely to harass the Petitioner. The contents of the FIR are totally
vague, baseless and contains frivolous allegations, even if they are accepted
on their face value, they do not disclose any cognizable offence against the
Petitioner.
21. The Petitioner thus, filed the present Petition seeking quashing of the
FIR. It is asserted that the FIR is replete with vague allegations, without any
justification. It is alleged that the matter relates to money laundering and
“ the FDI was intended to make payments for ulterior motives clandestinely ”
and that “ the news portal has violated the FDI law and other laws of the
country and caused loss to the exchequer ”. However, no details of any of
these allegations, have been provided. The statements have been made
merely to sensationalize the issue and cause prejudice against the Petitioner.
22. A bare perusal of the FIR would show that no person has been
induced to do any of the acts stipulated under Section 420 IPC and no
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Signed By:VIKAS
ARORA
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W.P. (CRL.) NO.1130/2021 Page 9 of 41
material has been placed on record to satisfy the essential ingredients
thereof.
23. For invoking S. 406 IPC , there must be entrustment of certain
properties to a person which is misappropriated by him in a manner as
stipulated under Section 406 IPC. This crucial ingredient is also missing
from the FIR.
24. It is claimed that the allegations concerning the FDI are completely
untenable for the reasons; firstly , that these allegations do not disclose any
cognizable offence and no FIR could have been registered; secondly , the
investment of FDI by WWMH in the Petitioner Company, was duly
disclosed at arm‟s length commercial and lawful investment, in terms of law
regarding FDI in Digital News Media in 2018. The entire FDI was received
through legal banking channels (Authorized Dealers) under intimation to
RBI.
25. Thirdly , the allegations regarding over valuation of shares apart from
being patently absurd, cannot be sustained as the valuation of shares was in
terms of Foreign Exchange Management (Transfer or Issue of Security by a
Person Resident Outside India) Regulations, 2017 which requires that shares
and securities to be transferred to entities abroad, must be at a price above
the fair value. In the instant case, the fair value of the equity shares have
been determined by an independent valuer, as Rs.9188/- per share.
Therefore, transfer of shares at Rs.11510/- per share was lawful, which
cannot be assailed on any ground.
26. Fourthly , as regard to the allegation that overvaluation was necessary
to avoid the FDI cap of 26% on digital news media, it is submitted that it is
completely untenable. The Petitioner had sought clarification from Ministry
Signature Not Verified
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ARORA
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W.P. (CRL.) NO.1130/2021 Page 10 of 41
of Information and Broadcasting which had confirmed that there was no
restrictions on FDI in Digital News Media, in 2018. The restrictions of 26%
got introduced by the Government Press Note No.04/2019 dated 18.09.2019
as “new clauses”. Therefore, the allegation that the Petitioner was
attempting to circumvent FDI laws is absurd, as there was no law then in
existence restricting the FDI.
27. Fifthly , the allegations of “siphoning” are also baseless, as they
pertained to expenses incurred by the Company such as payment of salary,
consultancy fee and rent which are permissible in law. The Petitioner being
a media and news organization, cannot be faulted for paying salary to the
journalist, as it is a basic part of its operation. Further, the FIR does not
indicate an ulterior motive for which the expenses have been incurred.
Indeed, the primary transaction (the infusion of FDI by WWMH) which has
been questioned in the FIR, was a legitimate foreign direct investment made
in accordance with rules and regulations, under the applicable laws and
through normal banking channels.
28. The allegations of the Respondent that the shares of face value of
Rs.10/- were sold for Rs.11,510/- which was overvalued, is ex facie absurd
and deserved to be rejected. It ignores the fact that it is the value of the
Company as considered by the investor and not the face value of the share
that determines its value. Therefore, the fact that WWMH invested @
Rs.11510/- per share, is indicative of the value they ascribed to the business
of the Petitioner and is not evidence of wrongdoing or ulterior motive. The
purchase of shares at a higher value than the nominal share value, is not an
offence.
Signature Not Verified
Signed By:VIKAS
ARORA
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W.P. (CRL.) NO.1130/2021 Page 11 of 41
29. The transfer of shares or securities to an entity outside India by an
Indian entity, are governed by the Foreign Exchange Management (Transfer
or Issue of Security by a Person Resident Outside India) Regulations, 2017
under Notification No. FEMA 20(R)/2017-RB. Regulation 11(1) gives the
Pricing Guidelines according to which the price at which a foreign entity
subscribes to these shares cannot be less than the fair value worked out at
the time of issuance of shares as per internationally accepted pricing
methodology for valuation on an arm‟s length basis, duly certified by a
Chartered Accountant.
30. In the instant case, the investment by WWMH was at a value higher
than that certified by M/s BGJC Associates LLP, Chartered Accountants,
vide Certificate dated 05.03.2018. Following the preparation of the
Valuation Report, Certificate of Chartered Accountant and consideration of
the relevant FEMA Regulations, the parties had entered into negotiations,
after which price of Rs.11,510/- per share, was agreed. There is no question
of there being any inducement/cheating or dishonesty in the transaction
between the Petitioner and WWMH.
31. The allegations that the investment of WWMH was structured to
avoid the alleged 26% cap on FDI, ignores that when the said investment
was made, there was no restriction on the amount of FDI that could be
invested in digital media Organization. Therefore, there was no question of
avoiding or attempting to avoid the laws.
32. It is further submitted that the allegations in the FIR that the payments
to various persons were being made, despite the revenue of the Company not
matching the payments. However, it is only a bald allegation, a practice that
is widely prevalent across sectors and industries, both private and public; in
Signature Not Verified
Signed By:VIKAS
ARORA
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W.P. (CRL.) NO.1130/2021 Page 12 of 41
the absence of any material to show any wrongdoing, it cannot hold up to
any serious scrutiny.
33. If the case of the Complainant was to be accepted, then any loss-
making Company which pays its employees, would be charged with
“siphoning”. Such an absurd interpretation of the law cannot be
countenanced.
34. Moreover, the FIR does not show that any enquiry was conducted by
the Respondent to ascertain the antecedents of the alleged Complainant, one
Sobhan Singh and what was his relation to the allegations made in the
Complaint and his source of information. No preliminary enquiry has been
conducted and the FIR has been registered directly. No enquiry has been
conducted from Ministry of Information and Broadcasting. Furthermore, the
Investigating Agency for violation of FDI laws under the FEMA, would be
ED and not the Respondent. Moreover, FEMA primarily allows only for
civil penalties, while the powers of ED, are much more extensive under the
PMLA than FEMA.
35. Reference is made to Shreya Singhal vs. Union of India (2013) 12
SCC 73 and Vinod Dua vs. Union of India and Ors . 2021 SCC OnLine SC
414. It is, therefore, submitted that FIR bearing NO.116/2020 dated
26.08.2020 P.S. EOW South, be quashed along with all the pending
proceedings.
Status Report of EoW:
36. The Respondent EoW, in its Status Report has stated that the FIR
was registered on the Complaint of Sobhan Singh, which was duly
forwarded by Shri Vijay Kaushik, Under Secretary, Govt. of India, Ministry
of Information and Broadcasting, New Delhi, vide its Letter dated
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ARORA
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W.P. (CRL.) NO.1130/2021 Page 13 of 41
26.08.2020. In the Complaint, there were specific allegations made in
regard to illegal misappropriation of funds by the Petitioner M/s PPK
Newsclick Studio Pvt. Ltd., resulting in loss to government exchequer. The
revenue of this Company has increased from Rs.27.15 lakhs in FY 2017-18
to Rs.1.22 Crores in FY 2018-19. The expenditure of the Company has
increased from Rs.64.95 lakhs in FY 2017-18 to Rs.7.83 crores in FY 2018-
19.
37. The Company has, therefore, has been incurring huge losses varying
from Rs.17.8 lakhs in FY 2017-18 to Rs.6.61 crore in FY 2018-19.
38. This Company received FDI of Rs.9.59 crore from M/s Worldwide
Media Holdings LLC, USA during FY 2018-19 which was used for
allotment of 8,333 equity shares of Rs.10 each at a premium of Rs.11,510/-
per share as against allotment of shares of Rs.10/- at face value, only to the
promoters. Apparently, it is much higher than valued by RBI. The reason
for charging such huge premium on allotment of shares, seem to be to
deliberately avoid the restriction/ cap of FDI in the digital news website at
26% of the capital of the Company, as well as to avoid government approval
for such FDI. If the shares were allotted to the foreign investor at the face
value, 98% of total capital of the Company was to be allotted to the foreign
investor, which was against the FDI policy of the government, for
investment in the digital news website.
39. The investor Company M/s Worldwide Media Holdings LLC, USA
was incorporated in the State of Delaware, USA giving the address of the
Chartered Accountant. This Company was reported as cancelled due to non-
payment of tax as on 01.06.2017. It shows that this Company had received
FDI of Rs.9.59 crore from M/s Worldwide Media Holdings LLC, USA, after
Signature Not Verified
Signed By:VIKAS
ARORA
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W.P. (CRL.) NO.1130/2021 Page 14 of 41
a gap of more than one year from the date when the Company was
cancelled.
40. The reason for incurring such huge losses was excessive payment of
consultancy, salary and rent. For example, salary/ consultancy fee of
Rs.3.82 crore and Rs.1.12 crore respectively was paid during FY 2018-19,
even when the total revenue of the Company was Rs.1.10 crore. More than
45% of FDI, was actually diverted/siphoned off for the payment of salary/
consultation fees, rent and other such expenses of the promoters/journalists/
employees associated with the Company . Prima facie these facts suggest
that the FDI was actually intended to make the payments for ulterior
motives, clandestinely . The above news portal has violated the FDI law and
other laws of the country and caused loss of exchequer resulting in the
registration of the present FIR.
41. During the investigations, on perusal of the records of the alleged
Company, it had come to light that M/s PPK Newsclick Studio Private
Limited was incorporated on 11.01.2018 and Mr. Prabir Purkayastha was
its Promoter Director . Initially, Mr. Prabir Purkayastha along with other
associates, was running an NGO in the name of „Newsclick India Trust‟
which used to run online news portal namely www.newsclick.in.
Subsequently, this NGO was converted into PPK Newsclick Studio LLP.
This LLP of the alleged persons, as per the allegations in the Complaint, was
incurring huge losses varying from Rs.17.8 lakhs to Rs.6.61 crore in the FY
2017-18 and 2018-19, respectively.
42. After the conversion of the LLP into a Private Limited Company on
11.01.2018 and after opening of the account of the Company on 05.02.2018
in ICICI Bank, this Company received FDI of Rs.9.59 crore from M/s
Signature Not Verified
Signed By:VIKAS
ARORA
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W.P. (CRL.) NO.1130/2021 Page 15 of 41
Worldwide Media Holdings LLC, USA in April, 2018, as the said USA
Company purchased 8333 equity shares of the alleged Company of Rs.10/-
each at a premium of Rs.11,510/- per share.
43. After due investigations, the copy of FIR was forwarded to
Enforcement Directorate, where ECIR14/HIU/2020 was registered and the
investigations had been taken up under PML Act. It is further stated that
during investigation and scrutiny of accounts of M/s PPK News Click Studio
Pvt. Ltd., it was revealed that FDI of Rs.9.59 crores was transferred to this
account on 11.04.2018. Further, fund from various foreign entities were
received i.e. an amount of Rs.27.51 crores from Justice & Education Fund
Inc. of America, Rs.62.43 Lacs from The Tri-Continental Ltd. 912, Rs.2.89
lakh from GSPAN, Rs.2.0 Lakh from Centro Popular and Rs.2.27 lakh from
Viva Salud. All these Companies transferred foreign fund into the account
of the Petitioner till October, 2020.
44. During further investigations, Mr. Darshan Chajjer, partner BGJC,
the Chartered Accountants who had issued Certificate of Valuation of shares
for RBI, was examined and he confirmed that in Jan-Feb 2017, he was
approached by Mr. Prabir Purkaystha for conversion of PP Newsclick LLP
Company to Private Limited Company, as he was expecting FDI. Mr. Prabir
also asked him to get the Valuation Report conducted of the Company,
which was arranged by him through Mr. Rachit, Partner RCPL. He got the
Company M/s PPK Newsclick Studio Pvt. Ltd. registered in ROC and
issued Certificate dated 05.03.2018 regarding valuation of Equity shares of
the Company PPK Newsclick Studio Pvt. Ltd.
45. Mr. Rachit Choudhary, Partner RCPL who had conducted the
Valuation Report of the Company was summoned, but he did not join the
Signature Not Verified
Signed By:VIKAS
ARORA
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W.P. (CRL.) NO.1130/2021 Page 16 of 41
investigations on account of ill health and requested for some time to join
the investigations.
46. Mr. Amit Chakraborty, shareholder of the Petitioner Company who
remained associated with Mr. Prabir Purkaystha, was also examined who
stated that the Company was formed to receive the FDI and foreign fund and
he remained associated in the process, as per instructions of Mr. Prabir
Purkaystha.
47. Mr. Prabir Purkaystha and Mr. Pranjal Pandey, both the Directors of
the Petitioner Company have applied for Anticipatory Bail , wherein
protection had been granted by this Court.
48. The details of the shareholder/Directors of the Petitioner Company
are as follows:
Name and Address of
Alleged
Shareholders/Directors
Detail of Shareholding Date of joining as
Director
Sh. Prabir Parkayastha
nd
R/o D-132, 2 Floor,
Saket, New Delhi-110017.
99000 Shareholder Director 11-01-2018
Sh. Pranjal Pandey R/o D-
nd
26, 2 Floor, Block-D,
Saket, New Delhi-17.
- Director 12-03-2020
Ms. Githa Hariharan R/o
nd
D-132, 2 Floor, Saket,
New Delhi-110017.
100 Shareholder
Sh. Gautam Navlakha R/o
A-5, Block A, Greater
Kailash, New Delhi-
110048.
100 Shareholder
Sh. Amit Sen Gupta R/o
8-206, CR Park, New
Delhi-110019.
500 Shareholder
Sh. Durai Swami
Raghunandan R/o B-4130,
Safderjung Enclave, New
Delhi-29.
100 Shareholder
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Sh. Bapaditya Sinha R/o
G-1281, CR Park, New
Delhi-110019.
100 Shareholder
Sh. Amit Chakraborty R/o
D-626, CR Park, New
Delhi-110019.
49. Mr. Prabir Purkayastha was given a Notice to join the investigations,
but he sent an intimation letter to be granted one week‟s time, as he was
engaged and wanted some more time to collect the information and the
documents.
50. Further verification of foreign fund received by Petitioner Company
and their end use, is being verified from various agencies and entities.
Letter Rogatory (LR) proceedings have been initiated the verify facts from
foreign entities.
51. Further, investigations to unearth deep rooted conspiracy of the
Petitioner to receive foreign fund for dubious activity is in progress.
Moreover, detailed investigation is being carried out and various persons
associated with the affairs of the alleged Company, are yet to be examined.
Mr. Rachit Chaudhary and Mr. Prabir Purkaystha, both have sought time to
produce documents.
52. It is, therefore, submitted that the investigations are at initial
stage and crucial evidence is likely to be collected in further
investigations.
Rejoinder by the Petitioner:
53. The Petitioner filed a Rejoinder , wherein it was stated that though the
Status Report has been filed on record on 04.10.2021, the State had emailed
the copy of the Status Report on 26.07.2021 to the counsel for the
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Petitioners which was signed by ACP Anil Kumar, EOW, Delhi Police. The
relevant extract of the FIR is as under:
“During the course of investigation reply from RBI has
been received where in it is mentioned that as per the
Form FCGPR submitted, the foreign inward remittance
was under automatic route and there was no delay in
issue of shares as well as reporting, as per the extant
FEMA regulations in case of M/s PPK New Click Studio
Pvt. Limited is concerned.”
54. The bare perusal of the above makes it evident that the entire basis for
the impugned FIR which is alleged wrongful foreign direct investment (FDI)
received by the Petitioner No.1, has been refuted by RBI itself, which it
appears to have written to EOW that the investment was under the automatic
remittance, and there was no violation of FEMA regulations. From the
perusal of the FIR, it is evident that no cognizable offence has been made
out against the Petitioners and the FIR is liable to be quashed. The copy of
the emailed Status Report dated 26.07.2021 has been placed on record.
55. It is further submitted that the State during the hearing on 29.07.2021,
disassociated itself from the first Status Report and in fact, sought time to
file a Status Report, though the First Status Report had already been
supplied to the Petitioners. While liberty was granted by this court to the
Respondent to file a fresh Report, liberty was also granted to the Petitioners
to point out discrepancies, if any, between the two Report.
56. The second Status Report was served on the Petitioners on
03.10.2025 and was filed before this Court on 04.10.2021. On perusal of
this Report, the Petitioners were shocked to find that the reference to the
Reply of RBI had been completely removed and replaced with baseless and
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vague allegations, against the Petitioners. This Status Report is a blatant
attempt by the EOW to backtrack and obfuscate the First Report, which
shows that no cognizable offence has been committed by the Petitioner
herein and the FIR is liable to be quashed.
57. No explanation has been given in the second Report as to why the
reference to the Reply of RBI has been completely excluded, especially
when both the Reports are signed by Mr. Anil Kumar, ACP, EOW and both
have been officially served upon the Petitioners. In the absence of any
explanation, the Court ought to reject the second Report as being an
afterthought and mala fide .
58. On merits , it is submitted that the second Report does not in any
manner, show the ingredients of the offence alleged against the Petitioner
and had merely makes vague and baseless insinuations.
59. The first allegation is of Petitioner being a loss-making entity . It is
submitted that even if this allegation is assumed to be correct, the financial
performance of a Company, has absolutely no relevance or relation to the
offences allegedly committed by the Petitioners. The thrust of the
allegations against the Petitioner, was wrongful receipt of FDI at inflated
valuations. It, therefore, appears to be an insinuation of the State that the
investment was made a high premium, despite the alleged poor financial
performance of the Petitioner No.1.
60. It is claimed that such an insinuation deserves to be rejected,
outrightly. It is not uncommon for early-stage ventures, to make losses in
the first few years of performance and for investors to invest keeping in
mind the future prospects of the investee Company. This insinuation is
completely at odds, with the prevailing commercial realities in the country.
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61. The World Wide Media Holdings LLC , the foreign investor had at no
point of time, raised any objections in regard to their FDI in the Petitioner
Company. None of the money invested in the Petitioner, is public money.
Therefore, the financial position of the Petitioner prior to the FDI receipt, is
completely irrelevant and ought to be ignored.
62. The second allegation is in regard to overvaluation of shares to
avoid restriction/cap in FDI. It is asserted that there is no further
investigation conducted by the State and it is ex-facie baseless. The details
have been given about the receipt of FDI, on 11.04.2018. Notably, it was
affirmed by RBI in their Reply, as extracted in the First Report. There was
no cap of 26% in Digital Media, which got introduced vide Press Note
4/2019 dated 18.09.2019. The relevant FEMA guidelines also mandated
that where a transfer of shares and securities is made by an Indian entity to a
foreign investor, the same must be issued at a price not less than the fair
value worked out as per internationally accepted pricing methodology.
63. The Chartered Accountants, had duly issued the Certificate dated
05.03.2018 giving the fair value of the shares of Petitioner at Rs.9,188 per
share. The Petitioner could not have issued the shares to World Wide Media
Holdings LLC, at Rs/10/-, as the same would be in violation of the extant
FEMA guidelines. The issuance of shares at a premium, was a commercial
decision and it is the prerogative of the Board Directors to decide the
premium amount and the wisdom of the shareholders on whether they want
to subscribe to those shares, at the said price. In a day-to-day market, unless
and until a rate is fixed by any govt. Authority or unless there is any
restriction on the amount of share premium under any law, the price of the
shares is decided on the basis of mutual understanding of the parties
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concerned. The Discounted Cash flow method is used to conduct the
valuation in an established method accepted by all international standards,
including Ministry of Finance. The Petitioner No.1 further stated that it has
tremendous viewership, on its online platforms. The allegation of State in
relation to overvaluation is therefore, baseless.
64. The third allegation made is of siphoning of FDI received from
WWMH LLC by alleging that more than 45% of the FDI was siphoned off
for the payment of salary/consultation fee, rent and other expenses.
However, this allegation does not make out any cognizable offence. It also
fails to appreciate that any FDI or even domestic investment received in a
Company, is utilized for operating expenses of that Company. The
allegation is absurd and merits dismissal outright.
65. The fourth allegation is Non-cooperation by Petitioner No.2 with the
investigation. However, in compliance of the Notice dated 30.06.2021 the
Petitioner No.2 and 3 had appeared before the State on 07.07.2021 and
09.07.2021. Further Notice was issued, but a request was made by
Petitioner No.2 for deference of his appearance by a week, as the documents
requested were voluminous. Thereafter, the Petitioners have appeared before
the Investigating Agency and fully co-operated in the investigations.
66. In the end, it is submitted that despite a period of nearly 1.5 years
since the registration of FIR, no material showing cognizable offence has
been placed on record by the State, and the FIR and ECIR are liable to be
quashed .
Submissions heard and record perused .
67. An FIR No. 116/2020 under Section 406/420/120-B IPC P.S. EOW
has been registered against the Petitioner Company on the Complaint of one
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Shri Sobhan Singh, received in the Government of India which was
forwarded to the Respondent EOW which resulted in the registration of the
FIR. The basic allegation against the Petitioner Company was of having
received FDI in the sum of Rs.1.5 Million USD (Rs.9.59 Crore) on
11.04.2018 in exchange of 7.69% shares of the Petitioner Company.
68. The Petitioner has explained that initially at the time of its foundation
in the year 2009, the Petitioner was controlled by Newsclick India Trust and
later in the year 2015 it became M/s PP Newsclick Studio LLP. However, in
and around May, 2017 with an intent to receive investment to allow the LLP
to grow and expand, an Agreement dated 01.05.2017 was entered between
M/s PP Newsclick Studio LLP with M/s BGJC Associates LLP to value PP
Newsclick Studio LLP. Thereafter, the Petitioner converted itself into a
private limited Company pursuant to Board Resolution dated 03.06.2017
and it came into existence on 11.01.2018. The Petitioner became a Private
Limited Company in order to be able to receive FDI from foreign entity.
69. It is further the admitted that M/s Worldwide Media Holdings LLC
agreed to invest a total of USD 4.5 Million in three tranches of USD 1.5 M
each in exchange of total 23.07% shares of the Petitioner. The first tranche
of 1.5 Million was received by the Petitioner on 11.04.2018. The first
allegation against the Petitioner was that there was overvaluation of shares
to avoid restriction/cap in FDI. The Petitioner has explained that there was
no regulatory permission required for FDI in online publication of news. In
fact, the Petitioner had written a Letter dated 20.12.2017 to Ministry of
Information and Broadcasting requesting a clarification to the policy in
respect of print media and also in respect of FDI in a Company engaged in
the business of online publication of news.
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70. Ministry of Information and Broadcasting gave a reply dated
05.01.2018 with a clarification that “online publication on website/web
portal do not fall under the ambit of print media.” From the response
received from the Ministry in respect of FDI Policy, it was clearly evident
that there was no cap on the online publication of news and thus, the
Agreement between the Petitioner and M/s Worldwide Media Holdings LLC
and, therefore, the Investment Agreement dated 20.03.2018 cannot be said
to be in violation of any law or disclosing any criminal offence. The
receiving of 1.5Million USD that were remitted on 11.04.2018 in exchange
of 7.69% shares of the Petitioner Company.
71. The allegation of the State was that there was alleged over valuation
of shares to avoid restriction/cap in FDI . Firstly , as per reply of the
Ministry of Information and Broadcasting dated 05.01.2018, received on
11.04.2018, there was no cap/restriction on receipt of the FDI in digital
media.
72. Secondly, the FEMA guidelines mandate that where a transfer of
shares and securities is made by an Indian entity to a foreign investor, the
same may be issued at a price not less than the fair value worked out as per
internationally accepted pricing methodology. The Petitioners accordingly
appointed M/s BGJC Associates LLP Chartered Accountants, who gave the
fair value of the shares vide Certificate dated 05.03.2018 for Rs.9,188 per
share. There is no illegality or any manipulation pointed out in respect of
the working out fair value of the shares of Petitioner No.1 Company. The
fair valuation assessment of the shares had been done of the Petitioner
Company in accordance with the FEMA regulations. Therefore, to say that
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the Petitioner could not have issued the shares to M/s Worldwide Media
Holdings LLC at Rs.10/-, would in violation of extant FEMA guidelines.
73. Further, after due negotiations with the M/s Worldwide Media
Holdings LLC that the share value was worked out as Rs.11,510/- and 1.5
Million USD was remitted in exchange of 7.69% shares of the Petitioner
Company. The said price was worked out between M/s Worldwide Media
Holdings LLC and the Petitioner after due negotiations and their mutual
decisions. On the assessment of day to day market and the prospects of
growth of the Company, that the price was mutually agreed by the Petitioner
and M/s Worldwide Media Holdings LLC. It is an economic decision
which does not spell out any criminal offence.
74. The valuation was done through the established method of Discounted
Cash Flow which was the accepted international standard including by the
Ministry of Finance . All the relevant factors were duly examined by the
in assessing the fair price value of the shares.
75. The next allegation against the Petitioner was of siphoning of the
FDI received from M/s Worldwide Media Holdings LLC, in payment of
salary, consultation fee, rent and other expenses of the promoters,
journalists, employees associated with the Company.
76. However, when a Company is functioning especially in the business
of digital print media, such expenses are bound to occur. Even if it is
accepted that there were over payments and excessive expenditure incurred
by the Petitioner, then too it does not disclose any criminal offence. The
allegation of siphoning is, therefore, not tenable.
77. Significantly, one Status Report dated 26.07.2021, copy of which was
forwarded to the Petitioner as an advance copy, though not placed on
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record , clearly stated that during the course of investigation a Reply from
RBI had been received wherein it was mentioned that as per the Form
FCGPR, the foreign inward remittance was under automatic route and
there was no delay in issue of shares as well as reporting, as per the extant
FEMA regulations in case of the Petitioner.
78. This correspondence, though mentioned in unserved Status Report,
was subsequently withdrawn, but is sufficient to explain that there were no
violations by Petitioner, established.
79. The State had also claimed that this alleged FDI was received from
M/s Worldwide Media Holdings LLC which was incorporated on
29.11.2017 in accordance with laws of Delaware, USA having its registered
office at County of Kent, Delaware 19901. However, according to the State
it was voided in 01.06.2017 in the State of Delaware, while the Petitioner
had subsequently dealt with the M/s Worldwide Media Holdings LLC
while entering into an Agreement on 20.03.2018. it is evident that this
Company M/s Worldwide Media Holdings LLC which had been voided was
not in existence and it was a fraudulent transaction undertaken by the
Petitioner.
80. However, it has been explained by the Petitioner that as per the State
laws of Delaware, if a Company is voided, then another person can seek to
incorporate a new Company in the same name. The M/s Worldwide Media
Holdings LLC with whom the Petitioner had the dealings was incorporated
on 29.11.2017 though in the same name as M/s Worldwide Media Holdings
LLC which had been earlier voided on 01.06.2017. There is nothing which
has come out in the investigation of the State that the M/s Worldwide Media
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Holdings LLC with which the Petitioner had the dealings was a non-existing
Company. In fact, the Status Report is completely silent on this aspect.
81. The Petitioners have been charged with the offence under Section
420 IPC which deals with cheating and dishonestly inducing delivery of
property.
82. The term „ cheating’ is defined under Section 415 IPC , which states
that whoever by deceiving any person fraudulently or dishonestly induces
the person so deceived to deliver any property is said to have committed the
offence of cheating.
83. For the offence of cheating, it is necessary that there must be an
aggrieved person who has been cheated out of his valuable property. In this
case, M/s Worldwide Media Holdings LLC is the entity which had
forwarded 1.5 Million USD to the Petitioner. However, there is no
Complaint whatsoever, by the Company about having been cheated by the
Petitioner. Pertinently, the Complaint had been made by one Shoban Singh,
who was merely an informant and was not the aggrieved person. 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.
84. The second offence with which the Petitioner has been charged
under Section 406 IPC for having misappropriated the property that was
entrusted to him by some person. By the same logic there is neither any
person who has claimed to have entrusted a property or that it has been
misappropriated by the Petitioner. There may have been a business
transaction of investment and purchase of shares by M/s Worldwide Media
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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.
85. 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.
86. The continuation of such FIR is nothing but a gross abuse of the
process of law and is hereby, quashed .
W.P. (CRL.) NO. 1146/2021:
Quashing of the investigation in ECIR bearing ECIR/14/HIU/2020 dated
02.09.2020 registered under Sections 3 and 4 PMLA.
87. Writ Petition under Article 226 of Constitution of India read with
Section 482 Cr.P.C. has been filed on behalf of the Petitioners, for quashing
of the investigation in ECIR bearing ECIR/14/HIU/2020 dated 02.09.2020
registered under Sections 3 and 4 PMLA.
88. The factual background in the ECIR, is the same on which FIR, was
registered. It is additionally submitted that violation of FEMA, is not a
scheduled offence under PMLA. The Respondent as well ED has attempted
to create jurisdiction in a manner described above to browbeat and harass
the Petitioners and its employees. Within seven days of registration of FIR,
ED took cognizance of the offences mentioned in the FIR and used the same
as the scheduled offences, to assume the jurisdiction for investigation under
PMLA, disclosing the preplanned and concerted effort to register the FIR in
haste.
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89. The Petitioner and its Directors have been summoned multiple times
by ED, without even furnishing the copy of the ECIR. It is submitted that
the FIR and the ECIR and the investigations conducted therein, is merely an
attempt to silence the independent and impartial reporting of various issues
of national importance and are intended to create a chilling effect on various
persons, including journalists, discouraging them from exercising their
constitutional right of freedom of speech. W.P. (Crl.) No. 1146/2021:
W.P. (CRL.) NO.1129/2021:
90. W.P. (Crl.) No. 1129/2021: Writ Petition has been filed by the
Petitioners for directing the Respondent to supply a copy of an Enforcement
Case Information Report (ECIR) bearing ECIR/14/HIU/2020 dated
02.09.2020 for the offence under Sections 3 & 4 of the Money Laundering
Act.
91. It is submitted that despite moving an Application to the learned
CMM to supply the copy of the ECIR, no such copy has been supplied. On
the other hand, the Petitioners are continuing with their investigations and
have been summoning various persons associated with the Petitioners to
record their statements under Section 50 PMLA. The Petitioner No. 2 has
joined the investigations and has provided all the information sought,
furnished several documents and reports of the company.
92. Allowing the Respondent to follow such an approach is arbitrary,
unfair and prejudicial to the Petitioners‟ right to a fair and impartial
investigation under Article 21 of the Constitution of India, which provides
that every person has a right to be informed about the allegations against
him for which reliance is placed on In Re: Madhu Limaye, (1969) 1 SCC
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292 ; Court on its Own Motion v. State 2010 SCC OnLine Del 4309; Youth
Bar Association v. Union of India (2016) 9 SCC 473; Dhanpat Singh v.
Emperor , AIR 1917 Pat 625; Panchanan Mondal v. State (1971) Crl.L.J 875
and Jayantibhai Lalubhai Patel v. State of Gujarat 1992 Crl.L.J. 2373; J.
Sekar v. Union of India 2018 SCC OnLine Del 6523; Shri Chamundi
Mopeds Ltd. v. Church of South India Trust Association (1992) 3 SCC 1;
Allegeny Finlease Pvt. Ltd. and Ors. v. Deputy Director , Directorate of
Enforcement 2017 SCC OnLine ATPMLA 1.
93. It is further contended that the duty to disclose ECIR, also draws
strength from the structure of the PMLA and the rules framed thereunder.
The Scheme provides that it is only upon the existence, crystallization of
allegations, and recording of reasons to believe that action under PMLA can
be taken. The “ reasons to believe ” is the only safeguard against
unchanalized exercise of police powers by the State. The Noticee impugning
the action of the agency can do so, only by demonstrating that the “reasons
to believe” do not exist. None of this can happens, unless the parties are
provided with the reasons so recorded.
94. ECIR is merely the commencement of any investigation under
PMLA. There is no statutory backing, nor are the actions taken by ED
pursuant to the registration of ECIR granted any protection similar to
Section 172 Cr.P.C. Thus, if the scheme of the Act is to disclose the
“reasons to believe”, its fortiori assumes disclosure of ECIR. It cannot be
termed as an internal document and must be considered as a public
document, which ought to be disclosed to the public.
95. Section 65 PMLA stipulates that the provisions of Cr.P.C. shall be
applicable to the investigation and other proceedings. Section 2(na) PMLA
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defines investigation to include “all the proceedings under this Act
conducted by the Director or by an authority authorised by the Central
Government under this Act for the collection of evidence.” There is no
provision under PMLA governing or dealing with investigation. Thus,
Cr.P.C. must govern all the investigations under PMLA, which has been
recognised by the Supreme Court in the case of Ashok Munilal Jain v.
Assistant Director, Directorate of Enforcement Criminal Appeal No.
566/2017, decided on 22.03.2017.
96. Both Section 154 and 155 Cr.P.C. of Chapter XII Cr.P.C. provide
that every information relating to the commission of an offence, shall be
reduced into writing and be entered into a book by such officer in such form
as may be prescribed. The Chapter XII Cr.P.C. leaves the form, manner, and
nomenclature regarding recording of such information, to subordinate
legislation. The term “FIR” is not defined. Therefore, the investigating
agency under the PMLA is bound to reduce any information received by it
for an offence under PMLA into writing. The character of the information
itself, cannot be changed so as to term it as “confidential” information
recorded in an “internal document”.
97. It is claimed that ED in multiple cases has voluntarily disclosed ECIR,
while filing applications and complaints under Section 8 PMLA. It is ex
facie evident that the action of Respondent No. 2 in supplying ECIR as and
when it pleases, in the absence of any guidelines or policy determining the
same, is an action that is fully capricious and falls foul of the requirements
of equal treatment under Article 14 of Constitution of India.
98. The meaning and import of arbitrariness in State action has been
elucidated by the Supreme Court in countless judgments, including Kumari
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Shrilekha Vidyarthi and Ors. v. State of UP and Ors. (1991) 1 SCC 212. A
prayer is, therefore, made that the direction be given to ED to supply the
copy of the complaint/ECIR dated 02.09.2020 to the Petitioner.
99. The Respondent No. 1 in its Reply stated that on registration of FIR
No. 0116/2020 under Section 406/420/120B IPC, the EOW found a prima
facie case of money laundering punishable under Sections 3 & 4 PMLA
against the Petitioners.
100. The investigations were conducted to identity the proceeds of crime
and also other persons involved in money laundering. The
ECIR/14/HIU/2020 dated 02.09.2020 was recorded against the Petitioners.
During the investigations, search was conducted at the premises of the
Petitioners under Section 17 PMLA on the basis preliminary investigation
and scrutiny of documents recovered from the premises of the Petitioner. It
had reasons to believe that the Petitioners are in possession of proceeds of
crime generated out of criminal activities relating to scheduled offence and
has thus indulged in an offence punishable under Section 4 PMLA.
101. The Respondents had relied upon State of State of Haryana v. Bhajan
Lal and Ors. 1992 Supp (1) SCC 335, State of Orissa v. Ujjal Kumar
Burdhan (2012) 4 SCC 547, Neeharika Infrastructure Pvt. Ltd. v. State of
Maharashtra and Others 2021 SCC OnLine SC 315 wherein it was held that
only in case where no cognizable offence or offence of any kind is disclosed
in the FIR, then the Court will not permit the investigations to go on. The
power for quashing should be exercised sparingly with circumspection in
rarest of rare cases. While examining an FIR in complaint, quashing of
which is sought, the Court cannot embark upon an enquiry of the reliability
of genuineness or otherwise of the allegations made in the FIR/complaint
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and the criminal investigations should ought not to be scuttled at the initial
stage.
102. When a prayer for quashing of FIR, is made by the Accused and the
Court exercises its power under 482 Cr.P.C., it only has to consider whether
the allegations in the FIR disclose commission of cognizable offence or not.
103. It is submitted that without admitting to the claims made by the
Petitioners with respect to non-existence of offences under Sections 406 and
420 IPC, the Petitioners have very conveniently refrained from making any
reference to the existence of the offence of criminal conspiracy in terms of
Section 120B IPC. The offence of criminal conspiracy is clearly made out in
the facts of the case as the amount of Rs.9.59 crores has been brought into
India in the garb of investment in digital media under automatic route. This
investment transaction was carried out by Prabir Purkayastha in connivance
with Jason Pfetcher and Neville Roy Singham.
104. It is well settled that for an offence of criminal conspiracy under
Section 120B IPC, it is not essential that the Accused person must commit
an overt act and mere agreement between two or more persons to commit an
illegal activity is sufficient to constitute the offence of criminal conspiracy.
The very act of entering into an agreement by the co-conspirators is in itself
an offence and punishable under law. The offence under Section 120B IPC
is a separate and independent offence and the PMLA investigation flowing
from the commission of the offence of criminal conspiracy is well within the
framework of law.
105. For this, reliance is placed on Yogesh @ Sachin Jagdish Joshi v. State
of Maharashtra (2008) 10 SCC 394, wherein it was held that the offence of
conspiracy is a substantive offence and renders the mere agreement to
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commit an offence punishable even if the offence does not take place
pursuant to the illegal agreement. Reliance is also placed on Ahsan Ahmad
Mirza and Others v. Enforcement Directorate , W.P.(Crl.) 2780/2019, C.M.
No.5528 of 2019, wherein it was held that Section 120B IPC is distinct,
independent and stand-alone offence and is one of the scheduled offence
under PMLA. Where a property is derived or obtained by any person
directly or indirectly as a result of criminal activity relating to the offence of
conspiracy, it would come within the definition of proceeds of crime,
including its concealment, possession, acquisition, etc. as untainted property
which comes within the purview of money laundering as defined under
Section 3 PMLA.
106. It is further contended that FIR is not an encyclopedia and does not
contain all the facts pertaining to the offence as observed by the Apex Court
in Superintendent of Police through CBI v. Tapan Kumar Singh (2003).
107. It is further stated that the investigation is at a crucial stage where the
department has identified the proceeds of crime and is further following the
money trail to unearth further proceeds of crime and the modus operandi by
which the processes and the activities relating to laundering of money had
been executed.
108. Reference is further made to State of Maharashtra v. Arun Gulab
Gawali (2010) 9 SCC 701, wherein it has been held that the High Court
shall not use its inherent powers at the crucial stage of investigation.
109. The Respondent has further asserted that if two offences are made out
from the same set of facts, then the person is liable to be tried under the two
different enactments. In addition to the investigations in this ECIR, the
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Respondent/Directorate of Enforcement is also investigating the FEMA
violations that have taken place in the course of transactions.
110. It is further stated that the allegation of mala fide intention of the
Complainant is of no importance, once the ECIR has been recorded. The
Supreme Court in CBI v. Ravi Shankar Srivastava , (2006) 7 SCC 188 had
observed that the Court must be careful that the powers under Section 482
Cr.P.C. is exercised on the basis of sound principles. The inherent power
should not be exercised to stifle a legitimate prosecution.
111. Reliance is also placed on Abhishek Banerjee and Another v.
Directorate of Enforcement in W.P.(Crl.) 1808/2021 and Criminal M.A.
14972-73 of 2021, decided on 11.03.2022 wherein it was held that the
allegations of mala fide do not have any place in criminal investigations.
112. Insofar as supplying the copy of ECIR is concerned, it is stated that
it is an internal document for commencement of investigation. It has no
statutory or legal recognition and therefore, the Accused cannot have a right
to claim a copy of ECIR. Reliance is placed on Vijay Madanlal Chaudhary
v. Union of India and Others , SLP (Crl.) No. 4634/2014, wherein it has been
held that ECIR is an internal document and the Accused has no right to
claim a copy of the same. On merits, all the averments made in the Petition
are denied.
113. The Petitioner, however, has stated that cognizant of the position that
no offence under Sections 406/420 IPC is made out against the Petitioners,
the ED has relied upon invocation of Section 120B IPC in the said FIR. It is
submitted that in terms of FIR, no offence under Section 120B IPC is made
out. Criminal conspiracy is an agreement between two or more persons to do
an illegal act or an act, which is not illegal by illegal means.
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114. The ED in the Reply has alleged that criminal conspiracy is made out
“in view of the connivance between Prabir Purkayastha, Jason Pfetcher and
Neville Roy Singham”. It is asserted that such allegation of conspiracy, is
completely baseless and there is absolutely no material on record to
substantiate the allegations of ED. These are only bald and baseless
assertions, which are not supported by any material.
115. There is no agreement to commit either an illegal act or a legal act by
illegal means. The allegations in the FIR at the highest is that FDI was
infused in the Petitioners Company at inflated value in violation of FDI
guidelines. Firstly, there was no cap on FDI in 2018 and secondly , even if
there is any violation alleged, it would constitute an offence under Foreign
Exchange Management Act (FEMA), which is not a scheduled offence.
116. Furthermore, thirdly, according to Status Report dated 05.08.2021,
submitted by ED in Bail Application No. 2317/2021, it had been stated that
RBI had not found any violation of any FDI guidelines by the Petitioners.
The FDI infusion in the Petitioners Company was in full compliance with
the FDI guidelines.
117. From the reply of ED, it is evident that the allegation that there is a
clear-cut existence of a scheduled offence, is totally misconceived and
baseless.
118. The contention of the ED that the investigation is at a crucial stage,
cannot be considered in isolation and it must be appreciated that for the
aforesaid legal position, the FIR must disclose a commission of cognizable
offence. If the FIR does not disclose any offence or the allegations are
patently absurd and born out of mala fide , then merely by claiming that
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investigation is at a crucial stage, it would not be an impediment for the
Court to quash the FIR.
119. Two years have passed since the registration of impugned ECIR in
2022. The Petitioner No. 2 and various employees of Petitioner number one
have joined investigations on numerous occasions in 2021, after which they
have not been summoned even once between September 2021 to June 2022.
The manner in which the investigations have been conducted clearly show
that the same is a fishing and roving exercise in the financial affairs of the
Petitioners without the existence of any offence.
120. Furthermore, while ED has 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.
121. The ED has 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 Bhajan Lal (supra), S.N. Sharma
(supra), 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
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arbitrary attack and abuse of powers on the free and impartial journalism of
the Petitioners.
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.
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.
Submissions heard and the record perused.
124. As has already been discussed above, even if all the averments made
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
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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.
127. In the case of Harish Fabiani & Ors. vs. Enforcement Directorate &
Ors . 2022:DHC:3892-DB, the Division Bench of this Court held as under:
"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
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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."
128. In this regard reference may also be placed on para 253 of Vijay
Madanlal Choudhary vs. Union of India (2023) 12 SCC 1 which reads as
under:
“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.”
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129. 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.”
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.
Conclusion:
132. 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 and W.P. (Crl.) No. 1129/2021,
is hereby disposed of, as infructuous.
(NEENA BANSAL KRISHNA)
JUDGE
MAY 29, 2026
VA
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