Court finds absence of cognizable offences under IPC and invalid predicate offence under PMLA
In a significant ruling, the Delhi High Court has quashed the FIR and Enforcement Case Information Report (ECIR) against M/s PPK Newsclick Studio Pvt. Ltd., a prominent digital media company. The court found no evidence of cognizable offences under Sections 406, 420, and 120B of the Indian Penal Code (IPC), and determined that there was no valid predicate offence under the Prevention of Money Laundering Act (PMLA) to justify the ECIR.
The case stemmed from allegations that Newsclick had overvalued its shares and siphoned funds received through foreign direct investment (FDI). The FIR was registered based on a complaint forwarded by the Ministry of Information and Broadcasting, citing illegal misappropriation of funds and loss to the government exchequer.
Justice Neena Bansal Krishna, presiding over the case, noted that the allegations did not disclose any cognizable offence. The valuation of shares at a price higher than the nominal value was deemed lawful, as it complied with regulations under the Foreign Exchange Management Act (FEMA) regarding FDI. Furthermore, the Ministry of Information and Broadcasting had clarified that online news publications did not fall under the ambit of print media, and thus were not subject to FDI restrictions.
The court emphasized that the continuation of the FIR constituted a gross abuse of the legal process, lacking any substantive evidence. Additionally, the ECIR registered by the Enforcement Directorate was quashed due to the absence of a scheduled offence under the PMLA, underscoring that a predicate offence must exist to initiate actions under the Act.
The ruling is seen as a reaffirmation of the importance of adhering to legal procedures and standards in criminal investigations. It also highlights the necessity for clear and substantial evidence when pursuing cases under the PMLA, which is intended to combat money laundering and related offences.
The decision is expected to have implications for future cases involving allegations of economic offences, particularly those concerning digital media companies and foreign investments.
Bottom Line:
FIR and ECIR quashed against M/s PPK Newsclick Studio Pvt. Ltd. due to absence of cognizable offences under Sections 406, 420, and 120B IPC and lack of a valid predicate offence under PMLA.
Statutory provision(s): Criminal Procedure Code, 1973 Section 482, Prevention of Money Laundering Act, 2002 Sections 3 and 4, Foreign Exchange Management Act (FEMA), Indian Penal Code Sections 406, 420, 120B.
M/s PPK Newsclick Studio Pvt. Ltd. v. State of NCT of Delhi, (Delhi) : Law Finder Doc id # 2920565
