Karnataka HC issues notice to ED on WinZO plea, told to produce CCTV footage

The Karnataka High Court on Monday initiated crucial judicial scrutiny into the Enforcement Directorate’s (ED) search-and-seizure operations against Delhi-based online gaming company WinZO Pvt Ltd, issuing notice to the agency and directing it to file its response before December 15.

The court’s intervention marks a significant moment in an escalating legal confrontation that has already paralysed the gaming firm’s operations and triggered wide-ranging concerns within India’s tech and digital entertainment sectors.

Justice Suraj Govindaraj, hearing WinZO’s writ petition, took note of the company’s challenge to the ED’s multi-day raids conducted between November 18 and 22 at its Eldeco Centre office in Delhi. WinZO has argued that the action—part of an investigation under ECIR/BGZO/25/2025 into alleged money laundering—was “illegal, void, and without statutory justification” because it lacked the mandated “reasons to believe” under Section 17 of the Prevention of Money Laundering Act (PMLA).

In Monday’s proceedings, the High Court heard arguments around the company’s contention that statements recorded during the search were taken under coercive circumstances, including late-night questioning. Justice Govindaraj observed that the petitioner’s concerns could be addressed if the ED were directed to produce the CCTV footage of the search before the bail court considering the matter of arrested company founders.

“I am of the considered opinion that this apprehension on part of the petitioner can be assuaged by directing the respondent to produce the CCTV footage before the bail court when the bail application is being considered,” the judge said. He added that the bail court would evaluate the footage alongside other records placed before it.

The ED’s counsel, however, argued that CCTV recordings were only one aspect of the broader evidentiary matrix and that factors beyond the footage—including material collected during the search—would influence decisions on bail, arrest, and the legitimacy of the seizure itself. The court responded that these arguments could be urged at the appropriate stage, noting the petitioner’s concern that the statements recorded at “3 am” were made when executives “were not thinking straight.”

WinZO’s petition seeks a declaration that the five-day search and the November 22 panchanama were unlawful; expunging of sections of the panchanama; and quashing of the ED’s subsequent freezing orders dated November 21, which immobilised the company’s bank accounts, escrow accounts and other financial instruments. The firm has also requested that all ED actions arising from the contested raid be stayed pending the court’s final adjudication.

In a move that could have implications beyond the gaming sector, the company has asked the High Court to lay down procedural guidelines on how search-and-seizure powers under PMLA should be exercised, arguing that unchecked discretion risks “overreach.”

WinZO has additionally sought the forensic production of its seized CCTV-DVR unit and disclosure of the ED’s stated “reasons to believe” that justified the multi-day action.

Monday’s hearing comes amid a near-complete shutdown of WinZO’s operations. Since December 2, users have been unable to access the app or website, both of which display a message citing “technical issues.” Social media platforms have seen a rise in complaints from users unable to withdraw or even view their deposited balances. While the company has attributed the outage to a “server disruption,” apprehension among customers has grown following the arrest of WinZO co-founders Saumya Singh Rathore and Paavan Nanda.

The founders were taken into custody after prolonged questioning at the ED’s Bengaluru zonal office, marking a decisive escalation in the ongoing probe. The agency has also frozen assets worth ₹505 crore—spanning deposits, FDs, bonds and mutual funds—linked to what it alleges are “proceeds of crime.”

Investigators claim that WinZO misled customers by stating that real-money games were free from bots or automated rival systems. The ED alleges the discovery of a “PPP” (past performance of player) algorithm used to influence match outcomes, generating illicit gains estimated at ₹177 crore over 14 months. Additional concerns flagged include algorithmic auto-matching without user consent, cross-border operations using common infrastructure for Brazil and the US, and alleged blocking of user wallets.

The agency has further alleged that WinZO held ₹43 crore of gamer funds even after the Union government’s ban on real-money gaming effective August 22, 2025.

WinZO has dismissed the allegations, asserting that “fairness and transparency are core to how WinZO designs and operates its platform.” Backed by global investors such as Griffin Gaming Partners, Maker’s Fund, Courtside and Kalaari Capital, the firm has rapidly grown into one of India’s largest multi-game platforms, offering more than 100 titles in 15 languages.

With the next hearing slated for December 15, the case is emerging as a pivotal test of the ED’s search powers under PMLA amid growing friction between startups and financial enforcement agencies. For the ₹300-crore-plus online real-money gaming sector already grappling with regulatory flux, the Karnataka High Court’s eventual ruling is likely to set important precedent.

For now, WinZO’s operations remain crippled, its founders remain in custody, and its users await clarity on access to their funds as the legal battle intensifies.