New Delhi: The Delhi High Court has quashed the FIR registered by the Economic Offenses Wing (EOW) and the Enforcement Directorate’s subsequent ECIR against the news portal NewsClick and its editor-in-chief Prabir Purkayastha on alleged foreign funding violations.
A single bench of Justice Neena Bansal Krishna held that even if the allegations in the FIR were to be taken on face value, they did not disclose the essential ingredients of the offenses under sections 406 (criminal breach of trust) and 420 (cheating) of the Indian Penal Code.
“Continuing such an FIR was nothing but a gross abuse of the process of law,” the court said in its judgment on May 29, 2026, while quashing both the EOW FIR and the ECIR of the ED.
The judge further observed that once the main offense FIR is quashed, the ECIR can be quashed automatically.
The FIR was registered in August 2020 based on a complaint sent by the Ministry of Information and Broadcasting.
He alleged that NewsClick had received Rs 9.59 crore as foreign direct investment (FDI) from US-based Worldwide Media Holdings LLC through an alleged overvalued share transaction to circumvent FDI restrictions.
A significant portion of the funds were alleged to have been used through salaries, consultancy fees and other expenses.
The Enforcement Directorate had registered an ECIR and raided the premises of NewsClick and the residences of its editors in February 2021.
Dismissing the cases, Justice Krishna noted that Worldwide Media Holdings LLC had agreed to invest USD 4.5 million in three tranches in exchange for 23.07 per cent stake in PPK NewsClick Studio Pvt Ltd. The first installment of USD 1.5 million was received on April 11, 2018.
The court observed that at the time of the investment, there was no limit on FDI in digital news media.
He was referring to a 2017 letter written by NewsClick to the Ministry of Information and Broadcasting seeking clarification on the FDI policy for online news portals and the Ministry’s response in January 2018 confirming no such restrictions.
“From the response received from the Ministry… it was clearly understood that there was no limit on the publication of news on the Internet and therefore, the Agreement… cannot be said to be in violation of any law or detection of any criminal offence,” the court said.
The Tribunal further held that the valuation of the shares was carried out as per FEMA regulations using the internationally accepted discounted cash flow method after due negotiation between the parties.
“It is an economic decision that does not foresee any criminal offense,” the judge noted.
The court also rejected the allegation of siphoning of funds, stating that even if there were overpayments or excessive expenses, it does not constitute a criminal offense. He noted that the Reserve Bank of India had informed the investigators that the foreign remittance was under the automatic route and there was no violation of FEMA regulations.
Regarding the components of the criminal offences, the court emphasized that the foreign investor had never complained that he had been defrauded.
“There is nothing that has come out even during investigations… that there was any person who was harmed or cheated by the petitioner,” he said, ruling that no offense was committed under Section 420 of the CPC.
Similarly, the court ruled that there was no trust of property or misappropriation that constituted a criminal breach of trust under Article 406 of the CPC.
He also dismissed the charge of conspiracy under Section 120B IPC, noting that mere entering into an investment agreement did not amount to criminal conspiracy.
Purkayastha had been granted interim protection from arrest in the case since June 2021, which was extended from time to time.
With the cancellation of the ECIR, the court also found that the claim to supply a copy of the ECIR had become void.
