Seeking quashing of an FIR by the Delhi Police’s Economic Offences Wing for alleged violation of foreign funding laws, online news portal NewsClick told the Delhi High Court Tuesday that the entire case was malafide.
The EOW’s FIR was registered on August 26, 2020, under IPC sections 406 (punishment for criminal breach of trust), 420 (cheating and dishonestly inducing delivery of property), 120B (punishment of criminal conspiracy). It alleges that M/s. PPK NewsClick Studio Pvt. Ltd, the petitioner here, had received foreign direct investment of Rs 9.59 crore from M/s.Worldwide Media Holdings LLC, USA, during the financial year 2018-19 which was made by “greatly overvaluing the shares of the company to avoid the alleged cap of 26% FDI in a digital news website”.
Among various things, the FIR alleges that the petitioner company, which owns the digital portal, had violated “FDI and other laws of the country and caused a loss to the exchequer”.
On this, senior advocate Kapil Sibal, appearing for the company, argued before a single-judge bench of Justice Saurabh Banerjee, “What is the loss to the government exchequer here? I have brought in the money. I have paid salaries; these are all banking transactions and not non-banking. How is an offence under Sections 420 and 406 (IPC) made out? Who have I cheated and what is the breach of trust? The investor has given the money, but he has not filed any complaint. Nobody has said there is a breach of trust… it is a commercial transaction. Has the GOI given me any money which I have siphoned off? This is nothing but pure malafide.”
The HC was hearing the company’s 2021 plea seeking quashing of the EOW FIR, as part of a batch of pleas pertaining to probes by EOW and the Enforcement Directorate against the company.
Sibal said that for FDI, there are various caps on different sectors in the economy; and for print media, there was a cap of 26%, but this did not apply to digital news media.
He submitted that on January 5, 2018, the Ministry of Information and Broadcasting informed that digital news media is not included in print media and, therefore, there is no cap on the FDI in digital news media.
Sibal argued that the Reserve Bank of India had also said the company had not violated any law. He said that subsequently there was a “change in law”, wherein on September 18, 2019, the FDI policy of 26% cap was also made applicable to digital media. However, the FDI to NewsClick had already come prior to the change in law.
The FIR also alleges that over 45% of investment was diverted/siphoned off for payment of salary/consultancy, rent and other expenses. These payments are alleged to have been made for ulterior motives, as per the EOW. Sibal submitted that there had been no violation of any FDI norms.
“This is a completely dishonest malafide complaint filed to harass a media channel and now the poor man is sitting in jail because of these allegations. In the new (UAPA) FIR, it has been said that this money has come from China… you can’t send people to jail like this, he (Prabir Purkayastha) is a 72-year-old man. His bail is listed in SC now,” Sibal said, referring to a separate Unlawful Activities (Prevention) Act case where Purkayastha, the portal’s editor-in-chief, and HR head Amit Chakravarty were arrested following allegations that the news portal received money for pro-China propaganda.
The EOW’s counsel said the UAPA case was different from the batch of matters being heard by the HC, where Purkayastha has interim protection from any coercive action granted by the HC in an interim order dated July 7, 2021. The EOW this year filed a plea seeking vacation of this interim order.
On October 13, the HC dismissed Purkayastha and Chakravarty’s pleas challenging their arrest and remand order in the UAPA case.