Karnataka High Court Issues Notice On Plea By WinZo's Subsidiary Against ₹193 Crore Account Freeze By ED

The Karnataka High Court on Monday (January 19) issued notice on a petition moved by Gaming company WinZo's subsidiary Zo Private Limited against Rs 193 Crore account freeze by Enforcement Directorate in connection with an earlier ECIR lodged against WinZo. After hearing the matter for some time, Justice BM Shyam Prasad in his order dictated:"learned senior counsel is heard on the ground of ad interim order and it would suffice for present proceedings to record that the petitioner request for interim order on the next date would be confined to permission to operate the accounts frozen...under Section 17(1A) PMLA to disperse salaries and contractual/statutory dues. Shri Madhu N Rao learned standing counsel for respondent is permitted to take notice and secure instructions on the petitioner's request as aforesaid with liberty to petitioner to furnish by way of affidavit details of salaries, contractual/statutory dues that have to be paid..."Appearing for the petitioner senior advocate Sajjan Poovaya submitted that the petitioner's parent company had in 2023 had invested into the petitioner. He said 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.He said 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. He submitted that under the PMLA if there is attachment of property under Section 5, an order has to be passed which demonstrates application of mind and reasons to believe that this money is proceeds of crime.He said that there was no Section 5 order with respect to the petitioner. Poovaya said that the money came to the petitioner through inter-corporate deposits. "My accountants had well before freezing etc., had disclosed in complete candour the monies that my parent company had, the loan which has come to the subsidiary and the activity the subsidiary is conducting," Poovaya said. He referred to judgments to argue that there cannot be a freezing order based on suspicion. He said that while there were ECIR proceedings against WinZo games He said that the order freezing the petitioner's account did not show the reason to believe that the petitioner has committed money laundering. A search and seizure brings to discovery certain monies that a concealed, then there can be freezing. During the search operation it was revealed that WinZo Games diverted proceeds of crime by cheating the users. It was diverted to Zo's account. Zo appears to not have regular business activity 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.On this Poovaya said that there was no nexus shown on whether WinZo made Rs 177 crore by using bots and whether that money has come to the petitioner. Poovaya thereafter submitted that petitioner has to pay salaries of Rs. 20 crores and the matter be kept on Friday asking the show on what basis the account of the petitioner has been frozen. The matter is listed on January 23. Case title: ZO PVT. LTD. v/s ED WP 962/2026

Karnataka High Court Issues Notice On Plea By WinZo's Subsidiary Against ₹193 Crore Account Freeze By ED

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Karnataka High Court Issues Notice On Plea By WinZo's Subsidiary Against ₹193 Crore Account Freeze By ED

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