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The Prevention of Money Laundering Act (PMLA) punishes the laundering of wealth that a crime has produced. That earlier crime is the starting point. The law calls it a scheduled offence, or predicate offence. The statute carries a schedule, a list of offences under other laws.

Cheating, corruption and drug crimes sit on it. Only money traceable to a listed crime counts as “proceeds of crime.” The laundering is a second act. It is the effort to disguise that money and pass it off as clean. So the base crime comes first. The disguising follows. 

The enforcement directorate (ED) enters only after the base crime exists. It then traces the money the crime is said to have produced. The link is strict. No predicate offence means no proceeds of crime. No proceeds of crime means no laundering to prosecute.

A plain parallel makes the point. There can be no charge of handling stolen goods if nothing was stolen. Remove the base crime, and the case above it has no floor to stand on. This is the logic on which the prosecution of the news portal NewsClick came undone.

The dispute turned on a single foreign investment. NewsClick is an independent digital news portal. It has chronicled people’s movements and struggles across the country.

In April 2018, its parent company received about Rs 9.59 crore from a United States investor named Worldwide Media Holdings LLC. In return, the company issued the investor a minority block of shares. The money came through banking channels. It was reported to the Reserve Bank of India.

Also read: ‘Delhi High Court Judgement Vindicates Our Position’: Newsclick on Police, ED Cases

More than two years later, in August 2020, the Delhi Police’s Economic Offences Wing registered a first information report. The complaint had been forwarded by an official in the Ministry of Information and Broadcasting. It alleged three offences: cheating, criminal breach of trust and criminal conspiracy.

Within days, the ED opened its own money-laundering case on the same facts. In February 2021, its officers searched the portal’s offices and the homes of its staff. The searches ran for four days.

On May 29, the Delhi high court quashed both the police FIR and the ED’s case. The judgment was delivered by Justice Neena Bansal Krishna. She did not weigh the evidence as a trial court would. Her task was narrower. She had to ask whether the allegations, even if accepted in full, disclosed any crime. She took them one at a time. The clearest way to follow the judgment is to do the same.

The cap that did not exist

The central charge was about evasion. The prosecution said NewsClick priced its shares far above their face value to dodge a ceiling on foreign money in digital news. That ceiling is real today. It limits foreign investment in digital news to 26%, and it requires government approval. But it did not exist in April 2018, when the money came in.

It arrived later,........

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