ED Appeals Supreme Court: NewsClick PMLA Quashing Challenged

• The Enforcement Directorate has appealed to the Supreme Court against a Delhi High Court order that quashed an FIR and PMLA case against NewsClick and its founder, Prabir Purkayastha.
• The Delhi High Court ruled that the allegations failed to establish predicate offenses of cheating (Section 420 IPC), criminal breach of trust (Section 406 IPC), or criminal conspiracy (Section 120B IPC).
• The High Court noted that the investor, Worldwide Media Holdings LLC, never claimed to be defrauded, and no aggrieved party was identified for the cheating charge.
• The original case involved allegations that NewsClick received ₹9.59 crore in foreign investment through an inflated share valuation to bypass funding restrictions for digital news media.
• The ED argues the High Court overlooked critical evidence and that cheating can involve public authorities, not just private victims.

This case could set a significant precedent for how financial irregularities, especially involving foreign investment in media, are prosecuted under PMLA in India.

The Enforcement Directorate (ED) has lodged an appeal with the Supreme Court of India, challenging a significant decision by the Delhi High Court. This appeal seeks to overturn the High Court's order that quashed both an Economic Offences Wing (EOW) First Information Report (FIR) and the subsequent money laundering case initiated by the ED against the digital news platform NewsClick and its founder-editor, Prabir Purkayastha.

The Delhi High Court, in its ruling on May 29, 2026, concluded that the allegations presented by the prosecution failed to establish the necessary predicate offenses of cheating, criminal breach of trust, or criminal conspiracy. The original FIR, numbered 116/2020, was registered by the Delhi Police's EOW in 2020. It alleged that NewsClick received foreign direct investment (FDI) amounting to ₹9.59 crore from a US-based entity, Worldwide Media Holdings LLC, through a structure that purportedly involved an inflated share valuation designed to circumvent restrictions on foreign funding for digital news media in India. The ED's money laundering case under the Prevention of Money Laundering Act (PMLA) was subsequently registered based on this FIR.

Justice Neena Bansal Krishna delivered the judgment on May 29, 2026, granting three connected petitions filed by M/s PPK NewsClick Studio Pvt. Ltd. and Purkayastha. In its detailed examination, the High Court determined that the offense of cheating under Section 420 of the Indian Penal Code (IPC) was not made out, even when considering the prosecution's case at face value. The court specifically highlighted that Worldwide Media Holdings LLC, which invested USD 1.5 million in NewsClick, had never lodged a complaint of being deceived or cheated. The High Court underscored that for a cheating offense to exist, there must be an identifiable aggrieved person who has been deprived of valuable property, a condition it found unmet in this instance.

Furthermore, the High Court rejected the allegation of criminal breach of trust under Section 406 IPC. Justice Krishna observed that while there was a business transaction involving investment and the purchase of shares by Worldwide Media Holdings LLC, this could not be interpreted as an entrustment of property or its misappropriation by the petitioners. Regarding the charge of criminal conspiracy under Section 120B IPC, which is a scheduled offense under the PMLA, the court found that the ED had failed to identify any unlawful objective behind the alleged agreement between the parties. The High Court clarified that merely entering into an agreement is insufficient to constitute criminal conspiracy unless an illegal objective or means can be demonstrated.

In its appeal to the Supreme Court, the Enforcement Directorate contends that the Delhi High Court's decision overlooked crucial evidence and submissions presented by the prosecution. The agency maintains its argument that false representations were made to statutory authorities and banks in connection with the foreign investment. The ED's challenge also includes a broader interpretation of the offense of cheating, asserting that it can encompass public authorities as victims, not solely private individuals. This perspective is central to their argument that the alleged financial irregularities and circumvention of foreign funding regulations constitute a valid basis for the PMLA case.

The Supreme Court's review of the Delhi High Court's decision in the ED appeal concerning the NewsClick PMLA quashing holds significant implications for the interpretation and application of the Prevention of Money Laundering Act in India. The outcome will provide critical clarity on the threshold for initiating and sustaining PMLA investigations, particularly when predicate offenses like cheating or criminal breach of trust are not clearly established or are subsequently quashed by a High Court. This case could set a significant precedent for how financial irregularities, especially those involving foreign investment in digital news India, are prosecuted under PMLA.

Legal professionals and compliance officers will closely monitor this case, as its resolution will offer vital guidance on the evidentiary requirements for establishing predicate offenses necessary to trigger PMLA proceedings. The Supreme Court's ruling will shape the future landscape for PMLA scheduled offense interpretation, influencing how agencies like the Enforcement Directorate pursue cases where the underlying criminal activity is disputed or deemed unproven by higher courts. The Supreme Court has not yet expressed any view on the merits of the appeal, and the presumption of innocence continues to apply to Purkayastha and NewsClick.

Lawyers and compliance officers should monitor this Supreme Court appeal closely, as its outcome will provide critical clarity on the threshold for initiating and sustaining PMLA investigations, particularly when predicate offenses like cheating or criminal breach of trust are not clearly established or are quashed by a High Court. This case could set a significant precedent for how financial irregularities, especially involving foreign investment in media, are prosecuted under PMLA in India.

Source: Original reporting based on legal filings and court decisions.