Karnataka High Court Asks WinZo's Subsidiary To Submit Employee Details To ED On Plea Seeking Account De-Freeze For Paying Salaries

The Karnataka High Court on Tuesday (January 27) directed Gaming company WinZo's subsidiary Zo Private Limited to submit details of its employees to the Enforcement Directorate while considering the company's interim plea to de-freeze its account to enable payment of salaries to its employees.

The court was hearing Zo Private Limited petition against Rs 193 Crore account freeze by ED in connection with an earlier Enforcement Complaint Information Report lodged against WinZo.

After hearing the matter for some time, Justice BM Shyam Prasad in his order dictated:

"...Shri Madhu N Rao, learned counsel for respondent can only place on record certain circumstances based on tentative instructions, but the learned is to complete pleadings or take definite instructions on petitioner's specific request for interim order permitting the petitioner to operate the account frozen for the purpose of discharging the liabilities in terms of the two board resolutions, that have been placed on record on 19-1-2023. These board resolutions are for the petitioner to assist its holding company M/s WinZo in managing and carrying forward its day to day business and to facilitate disbursement of salaries, wages and other employment related dues and also to support the discharge of the employee related liabilities and obligations..."

"The jurisdictional question apart which will have to be considered, respondent (ED) must have an opportunity to have their say whether they could dispute at all the strength of the employees to whom the petitioner has to pay salaries.Therefore the petitioners representative is called upon to furnish names of the employees, the designation and the account details to which the salaries are to be paid, to the respondent at the earliest calling upon the respondent to take a stand based on such details to facilitate an order".

During the hearing senior advocate Sajjan Poovaya appearing for petitioner Zo Private Limited, submitted that there is no justification for assuming jurisdiction under Section 17(1A) PMLA.

He said that the petitioner in terms inter-corporate investment and loans given by M/s WinZo to the petitioner, and because of certain proceedings against it, board resolutions have been passed under which the petitioner is obliged to disperse salaries to employees as well as statutory duties

He said that if the court were to permit, the petitioner to utilitze the account (which has been frozen) for the limited purpose (of paying salaries), there cannot be a request on behalf of WinZo to meet similar expenses.

It had been argued earlier that the petitioner's parent company had in 2023 had invested into the petitioner. It was argued earlier that there were no ECIRs against the subsidiary and there was no allegation that activities of the petitioner are amenable to PMLA proceedings, adding that Zo Private Limited is not a gaming company.

It was earlier submitted that based on the fact that a search was conducted at the office of the accountants and information was received that WinZo had given a loan to the petitioner, a freezing order was passed under Section 17(1A) PMLA, which had brought the petitioner's operations to a stand still.

The ED has alleged that during the search operation it was revealed that Winzo Games diverted proceeds of crime by cheating the users and the same was diverted to Zo' account.

The ED had alleged that the evidence unearthed during the search and subsequent investigation revealed that WinZo was engaged in criminal activities and unscrupulous practices i.e. customers were made to play with BOTs/AI/Algorithms/software without being made aware of the fact that they are playing with such modes and not with humans in real money games. ED has alleged that through this manner WinZo made winnings of around Rs.177 Crore.

The court today directed the petitioner to furnish these details "over email at the earliest" and listed the matter on January 29 for consideration of interim relief.

Case title: ZO PVT. LTD. v/s ED

WP 962/2026