Delhi HC Quashes PMLA Case Against NewsClick: Court Finds ED Abused Powers Against Free Journalism

In a landmark ruling delivered on May 29, 2026 and made publicly available on June 10, 2026, the Delhi High Court quashed both an FIR registered by the Delhi Police Economic Offences Wing and the Enforcement Directorate's money laundering proceedings against NewsClick and its founder Prabir Purkayastha. Justice Neena Bansal Krishna held that the continuation of proceedings amounted to a "gross abuse of the process of law" and constituted an "arbitrary attack and abuse of powers on the free and impartial journalism" of the petitioners.

Background and Facts of the Case

The case originated from a 2018 investment that NewsClick received from a US-based entity, Worldwide Media Holdings LLC. The investment amounted to approximately Rs 9.59 crore in Foreign Direct Investment, structured through a share transaction valued at Rs 11,510 per share. At the time this investment was received, there was no cap of 26 percent on foreign direct investment in digital media, making the transaction entirely lawful under the regulatory framework then in force.

On August 26, 2020, the Delhi Police EOW registered an FIR invoking Sections 406 (criminal breach of trust), 420 (cheating) and 120B (criminal conspiracy) of the Indian Penal Code. The complaint had been forwarded by the Union Ministry of Information and Broadcasting. Understanding how FIR filing and police complaints work in India is relevant here, as the registration of the FIR set off a chain of enforcement actions that would span several years.

Following the FIR, the Enforcement Directorate launched its own probe under the Prevention of Money Laundering Act (PMLA). In February 2021, the ED conducted searches at NewsClick's office and at journalists' residences. The situation escalated when Purkayastha and NewsClick's HR head, Amit Chakravarty, were arrested in October 2023, raising serious questions about the use of financial crime statutes against media organisations.

Key Findings of the Court

Justice Neena Bansal Krishna's judgment dismantled the prosecution's case on multiple fronts. The Court found that the essential ingredients of the offences under Sections 406 and 420 of the IPC were not made out on the facts. The investment by Worldwide Media Holdings LLC was characterised by the Court as "an economic decision which does not spell out any criminal offence." The allegation that the share transaction was overvalued was rejected as baseless, with the Court noting that no credible evidence had been placed on record to support such a claim.

The Court observed that "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." It further noted that "aside from bald assertions of there being a criminal conspiracy, there is not a whisper of any incriminating allegation." The Court described the ED's approach as a "fishing and roving exercise," signalling disapproval of open-ended probes lacking evidentiary foundation. This is consistent with concerns seen in recent Delhi High Court rulings on criminal intent and proportionality as well.

PMLA Principle: ECIR Dependent on Predicate Offence

A significant legal principle affirmed in this case concerns the relationship between an Enforcement Case Information Report (ECIR) and its underlying predicate offence. Under the PMLA, the offence of money laundering is parasitic; it cannot exist independently of a scheduled offence. The Court held: "If the FIR under predicate offence is quashed, the ECIR automatically is liable to be quashed."

This principle is critical for practitioners and accused persons alike. The ED's jurisdiction under the PMLA is entirely derivative; once the foundational criminal case collapses, PMLA proceedings must fall with it. Since the Court quashed the EOW FIR on the ground that no offence was made out, the ECIR could no longer survive. The ruling reinforces the position that the Supreme Court's evolving jurisprudence on anticipatory bail and criminal proceedings provides important safeguards against the continuation of baseless prosecutions.

The Court also underscored that the regulatory framework at the time of the alleged offence must govern. In 2018, there was no restriction capping foreign investment in digital media at 26 percent. Applying subsequent regulatory changes retrospectively to criminalise lawful conduct would violate fundamental principles of legality. The judgment has broader relevance for entities navigating FEMA regulations governing foreign investment in India, as it reaffirms that legitimate foreign investment should not be recharacterised as criminal conduct without concrete evidence.

Implications for Press Freedom

The Court did not limit its analysis to the technical legal merits. Justice Krishna addressed the broader implications of using financial crime statutes against media organisations, describing the proceedings as "not only mala fide, but also an arbitrary attack and abuse of powers on the free and impartial journalism of the Petitioners." This language represents a direct acknowledgment that investigative agencies must not weaponise laws like the PMLA to target the press.

The NewsClick case is not an isolated incident. Media organisations across India have faced investigations under various statutes in recent years. This judgment signals that courts will scrutinise such actions carefully and will not hesitate to quash proceedings where evidence does not support the charges. For individuals facing similar prosecution, understanding the process of claiming victim compensation under the BNSS 2023 may also be relevant where wrongful prosecution has caused measurable harm.

What This Judgment Means Going Forward

The ruling carries several important takeaways. First, it reinforces that PMLA proceedings are entirely dependent on the survival of the predicate offence. Defence counsel in money laundering cases should challenge the underlying FIR as a threshold matter, since a successful quashing renders the ECIR unsustainable. This structural safeguard is particularly relevant in cases involving insolvency and financial dispute resolution mechanisms where overlapping enforcement actions can create compounding burdens on parties.

Second, the judgment sends a clear message about the limits of investigative authority. Agencies cannot pursue protracted investigations, summon individuals repeatedly, and conduct raids without accumulating evidence to support their case. When investigations yield nothing incriminating over extended periods, courts are prepared to intervene and halt proceedings. This is consistent with the growing judicial concern about delays in tribunal proceedings and their impact on due process, where prolonged proceedings themselves become a form of injustice.

Third, legitimate foreign investment transactions should not be criminalised absent concrete evidence of wrongdoing. The regulatory environment at the time of the transaction must govern, and subsequent changes to FDI caps cannot be applied retrospectively. For businesses engaged in cross-border transactions, this provides reassurance against retroactive criminalisation of commercial decisions. Developments such as MSME invoice financing under the RBI's updated TReDS framework further illustrate how regulatory clarity benefits participants in the financial ecosystem.

This judgment will likely be cited in future challenges to PMLA proceedings where the underlying FIR is weak or unsustainable. It establishes a clear precedent: courts will not allow investigative agencies to pursue indefinite, evidence-free probes under the guise of financial crime enforcement, especially when doing so threatens constitutionally protected freedoms. For the media industry and the broader legal community, this ruling affirms that the rule of law requires evidence, not assertion, and that the judiciary remains a bulwark against the abuse of state power.