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The has approached the challenging the ’s order that quashed the and connected proceedings against digital news portal and its founder-editor, Prabir Purkayastha. The , filed on , is yet to be listed for hearing before the apex court.
The development marks the latest twist in a legal saga involving allegations of irregularities in foreign funding received by ’s parent company, Studios Private Limited. The High Court had terminated both the criminal complaint registered by the ’s Economic Offences Wing (EOW) and the ED’s under the , holding that their continuation amounted to a .
High Court Finds No Criminality in Share Valuation
The case originated from an FIR that invoked Sections 406 (), 420 (), and 120B () of the . The allegations centered on a foreign direct investment of approximately ₹9.59 crore received by from Delaware-based in through issuance of shares at ₹11,510 per share. Authorities claimed the shares were overvalued to circumvent restrictions on foreign investment in digital news media and that over 45% of the funds were spent on salaries, consultancy fees, rent, and other expenses.
In her reasoned judgment, Justice Neena Bansal Krishna of the rejected these allegations outright. She observed that the mutually agreed share price was an economic decision that did not, by itself, establish criminal wrongdoing. “Even if all the allegations are accepted, no offence under 406 or 420 IPC is disclosed in the FIR and in the subsequent investigations that have been undertaken,” the court held. It further noted that routine business expenditure could not be treated as siphoning of funds, and that the offence of was not made out in the absence of an identifiable victim.
Crucially, the High Court also took into account that no cap on foreign investment in digital news media existed at the time the investment was received. had produced an independent chartered accountant’s valuation and a communication indicating the remittance was under the , with no delay in share issuance or regulatory reporting. These factors led the court to conclude that the material on record did not establish the commission of the alleged .
ED Asserts Were Disclosed
The ED had registered its ECIR treating the FIR offences as for its probe. Once the High Court quashed the FIR, it held that the connected PMLA proceedings could not survive. The ED’s challenge before the Supreme Court now seeks to overturn this finding, arguing that the High Court erred in concluding that no predicate offence was disclosed.
The agency is expected to contend that the share valuation and fund utilization pattern raised sufficient grounds for investigation, and that the quashing at the threshold prevented a thorough inquiry into suspected . The Supreme Court will have to determine whether the High Court’s exercise of its to quash proceedings was justified in the absence of full appreciation of the evidence.
Legal observers note that the outcome could have implications for the interplay between the PMLA and quashing petitions, particularly where the are alleged to be economic offenses involving complex financial transactions. The case highlights the threshold question of when investigative proceedings can be terminated at the initial stage.
Distinct from
Notably, the proceedings quashed by the High Court are separate from the case registered by the ’s Special Cell against and Purkayastha under the . That case, which also involves allegations related to foreign funding and an alleged conspiracy, is independent of the EOW FIR and the ED’s investigation and remains pending.
The ED’s petition is likely to be listed for preliminary hearing soon, where the Supreme Court may decide whether to admit the SLP and potentially stay the High Court’s order. Until then, the quashing of the FIR and ECIR stands, providing relief to and Purkayastha from the proceedings.
The case underscores the evolving legal landscape around foreign investment in Indian digital media and the limits of criminal law in regulating corporate financial decisions. For legal professionals, the eventual Supreme Court ruling will clarify the scope of the PMLA when the are alleged to be economic offences rooted in valuation and expenditure decisions—areas that traditionally fall under regulatory rather than criminal scrutiny.
