PMLA proceedings against Director of Newsclick studio: Delhi HC Grants Anticipatory bail considering prolonged investigation [Read Order]

Prabir Purkayastha , a bail Application has been filed on behalf of the Applicant, Prabir Purkayastha seeking Anticipatory Bail in ECIR bearing ECIR/14/HIU/2020 dated 02.09.2020 under Section 3 and 4 of the Prevention of Money Laundering Act, 2002 (ECIR).

The Applicant is a respectable and law-abiding citizen of India having deep roots in the Society and is residing with his Partner. He is a reputed journalist and is also a Director of M/s PPK Newsclick Studio Pvt. Ltd., a law-abiding corporate entity incorporated under the Companies Act, 2013, which owns and operates “newsclick.in” set up in 2009, one of the most popular and reputed digital media platforms in the country as well as abroad.

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The expertise of the Applicant in various issues relating to industry and technology, has also been recognised by the Government of India. He has been a member of the National Steering Committee, ASTeC Programme as well as a Member of the Expert Group on Industrial Application, both of which are convened under the aegis of the Ministry of Electronics and Information Technology, Government of India. He has published several scholarly Articles in various National and International Publications in the field of Engineering, Software Technology, Energy Policy and other social issues.

The Newsclick was controlled by a Trust, namely, the Newsclick India Trust and later from the year 2015, a Limited Liability Partnership i.e. M/s PP Newsclick Studio LLP. With an intent to receive investment to allow the LLP to grow and expand, an Agreement dated 01.05.2017 was entered between M/s PP Newsclick Studio LLP and M/s BGJC Associates LLP. Further, to enable a smooth inflow of future investment, a decision was taken by M/s PP Newsclick Studio LLP, to convert the LLP into a private Limited Company, which was done on 03.06.2017.

The Company was approached for FDI and ultimately, an entity by the name of M/s Worldwide Media Holdings LLC (WWMH) invested the shares of the said Company as FDI. WWMH was incorporated on 29.11.2017 as a Limited Liability Corporation in USA. During this time, when the possibility of investment by WWMH in the Company was being discussed, the Applicant wanted to confirm the regulatory regime around the receipt of FDI by a Company engaged in the Digital Media business, to ensure any regulatory regime is fully complied with.

The Respondent on 23.06.2021, on an Application filed by the Applicant for being supplied with the copy of ECIR, decided to give the same to the Applicant. It is claimed that this concession had been given by the ED only after interim Orders of protection were passed in favour of the Applicant. However, despite stating so, the copy of the ECIR has still not been supplied to the Applicant, which clearly reflects the mala fide on the part of ED. It also indicates that ED intends to take coercive action against the Applicant.

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The Anticipatory Bail is sought on the ground that there is no Scheduled Offence against the Applicant in the present Case and therefore, there cannot be any offence of money laundering under Section 3 PMLA, which is a sine qua non for the offence of money laundering.

The Applicant is a Senior Journalist with deep roots in the society. He has co-operated with ED and there is no likelihood of him being a flight risk.There is no allegation that he has ever influenced or intimidated the witnesses. Moreover, the entire evidence is documentary in nature, which has already been seized by ED and there are no chances of him fleeing from justice. It is submitted that the Applicant is a Senior Citizen aged about 71 years and suffers from various co-morbidities and any custody of the Applicant could be deleterious upon his health, especially in the light of the COVID-19 pandemic.

The Respondent in its Reply, has alleged that M/s PPK Newsclick Studio Pvt. Ltd. received a FDI of Rs.9.59 Crores from WWMH during the Financial Year 2018-2019, which was used for allotment of 8333 Equity shares of Rs.10 each at a premium of Rs.11,510/- per share as against the allotment of share of Rs.10/- at face value only to the promoters, apparently, much higher than valued by RBI. The reason for charging huge premium on allotment of Share seems to deliberately avoid the restrictions/cap of FDI in the Digital News website at 26% of the capital, as well as to avoid Government approval for such FDI.

The Investor Company WWMH was incorporated in USA giving the address of the Chartered Accountant and the Company was reported as cancelled due to non-payment of Tax as on 01.06.2017. It shows that this Company had received FDI of Rs.9.59 Crores from WWMH, after a gap of more than one year from the date when this Company was cancelled. The reason for incurring such huge losses was excessive payment for consultancy, salary and rent. For example, salary/consultancy fee of Rs.3.82

Crores and Rs.1.12 respectively was paid during the Financial Year 20182019 even when the total revenue of the Company was Rs.1.10 Crore.

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To make any arrest under Section 19, the Respondent Department necessarily has to comply with the stringent conditions of Section 19 PMLA. The power of arrest is statutory in nature and is circumscribed by considerations and cannot be exercised at the whim or fancy of an officer.

A single bench of Justice Neena Bansal Krishna viewed that even though, the investigations are pending since 02.09.2020, no prosecution Complaint has been filed by the ED in the Court. Considering the prolonged investigations, and in view of the aforesaid circumstances, it is directed that in the event of arrest, the Applicant/Accused shall be admitted to Anticipatory Bail by the Investigating Officer/Arresting Officer.

It was stated that the Applicant/Accused shall furnish a personal bond in the sum of Rs.25,000/- with one surety in the like amount to the satisfaction of the Investigating Officer/Arresting Officer. The conditions includes, cooperation in investigation,not to contact, nor visit, nor offer any inducement, threat or promise to any of the prosecution witnesses or other persons acquainted with the facts of case and not to tamper with evidence nor otherwise indulge in any act or omission that is unlawful or that would prejudice the proceedings in the pending trial.

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