Subjected to prosecution to create chilling effect, NewsClick tells Delhi HC

NewsClick on Wednesday alleged in the Delhi high court that investigating agencies were abusing the process of law to subject it to criminal prosecution to create a "chilling effect".

The court was hearing petitions by the news portal for quashing the cases the Delhi police and Enforcement Directorate have registered against it over alleged violation of foreign funding laws.

"I am being targeted because I happen to be an entity engaged in news circulation on digital platform," said senior advocate Siddharth Agarwal, representing the petitioner, before Justice Saurabh Banerjee.

"We have reached a place where criminal law is used as a weapon of choice for chilling effect. There is nothing here that needs to be investigated," argued the senior lawyer.

The criminal cases, he added, were intended to "silence" independent and impartial reporting, discourage journalists and "create a chilling effect".

PPK Newsclick Studio Pvt Ltd, which owns NewsClick, had moved the high court in 2021 seeking quashing of the criminal cases against the portal over allegations of violation of Foreign Direct Investmet (FDI) law.

Agarwal submitted that foreign funds came into the company legitimately and in due compliance with the applicable law and the offences of criminal breach of trust and cheating under the Indian Penal Code, as alleged, were not made out.

"The court will have to consider...if there is an abuse of process by the investigating or prosecuting agencies. There is a context to the matter," he stated.

On Tuesday, senior advocate Kapil Sibal had argued on behalf of the petitioner and said that the case against it was "completely dishonest".

The allegation in the FIR, registered by the economic offences wing of Delhi police, is that the company, PPK Newsclick Studio Pvt Ltd, received FDI to the tune of Rs 9.59 crore from M/s Worldwide Media Holdings LLC USA during financial year 2018-19 in violation of the law.

The FIR has alleged the investment was made after greatly overvaluing the shares of the company to avoid the alleged cap of 26 per cent FDI in a digital news website.

It has further alleged that over 45 per cent of this investment was diverted/siphoned off for the payment of salary/consultancy, rent and other expenses, which payments are alleged to have been made for ulterior motives.

Therefore, the company has violated the FDI and other laws of the country and has caused a loss to the government exchequer, it has claimed.

The ED initiated its probe on the basis of the Delhi Police FIR and conducted searches on the premises of the digital news platform and several other places in connection with the money received from overseas.

On July 7, 2021, the high court had granted interim protection from arrest to NewsClick founder Prabir Purkayastha in the Delhi police case and directed him to join the investigation.

On June 21, 2021, the high court had directed the ED to not  take coercive action against NewsClick and Purkayastha, its editor-in-chief, in connection with the money laundering case.

Purkayastha was arrested by the Special Cell of the Delhi Police on October 3 in a separate case lodged under anti-terror law Unlawful Activities (Prevention) Act for allegedly receiving money to spread pro-China propaganda. He is in judicial custody.

The hearing in the matter will continue on November 9.