Breaking: Karnataka HC hears ZO Games plea to defreeze ₹24.5 crore; other WinZO petitions heard

The Karnataka High Court on Friday heard a plea by Zo Pvt Ltd (earlier known as Zo Games Pvt Ltd.), a wholly owned subsidiary of online gaming platform WinZO Pvt Ltd, seeking partial defreezing of its bank accounts and attached assets worth around ₹24.60 crore, as enforcement action by the Enforcement Directorate (ED) continues under the Prevention of Money-Laundering Act (PMLA), 2002. Earlier, the ED had frozen assets worth around ₹192 crore, including bank balances, fixed deposits and mutual fund holdings of ZO Games.

A Bench led by Justice B M Shyam Prasad considered the petition filed by ZO Games, which has sought limited access to its frozen funds to meet employee salary obligations and routine operating expenses. The attachment forms part of a wider ED investigation into alleged financial irregularities linked to the WinZO Games.

Appearing for ZO Games, senior counsel Sajan Poovayya told the court that the company had placed on record a compliance memo, along with supporting documents, detailing its monthly financial requirements. According to the submission, ZO Games employs around 220 people and incurs a monthly salary bill of approximately ₹11.5 crore. The total amount required for salaries and other essential operating expenses for January 2026 was stated to be about ₹24.6 crore.

Poovayya informed the court that the bench had earlier sought clarity on whether limited funds could be released for essential expenditures such as employee salaries. He submitted that the compliance memo addressing this issue had been served on the ED earlier in the day and formally placed on record.

The counsel further pointed to a board resolution to explain that ZO Games had taken over operational responsibilities from its parent entity, WinZO Pvt Ltd, after enforcement action was initiated against the latter. This restructuring, he argued, ensured that employees were paid directly by the subsidiary and not routed through the parent company, which continues to face ED proceedings.

Representing the ED, counsel Madhu Rao told the court that the agency would seek instructions on the request for partial defreezing and file a response. The court directed that the matter be listed again on January 27, when the ED is expected to place its stand on record.

According to the ED, proceeds of crime amounting to over ₹505 crore have been frozen so far in the form of bank balances, fixed deposits, bonds and mutual fund investments. The agency has alleged that the WinZO Games operated real-money gaming services in overseas markets such as the US, Brazil and Germany from India, and diverted funds abroad under the guise of overseas investments.

Other petitions heard

In addition to the defreezing plea, the High Court also heard two other petitions linked to WinZO on Friday.

In the second matter, WinZO sought quashing of an FIR registered by the Karnataka Police over alleged misuse of a PAN card and personal information. Poovayya, appearing for the company, argued that WinZO, as an intermediary under the Information Technology Act, could not reverse financial entries without a police complaint. He submitted that the complainant had been informed accordingly and that the entries were reversed once a complaint was filed and communicated to the platform.

The FIR invokes Section 420 (cheating) of the Indian Penal Code and Sections 66C and 66D of the IT Act. However, the company contended that the FIR merely reproduced the original complaint and did not disclose any dishonest intent on the part of the platform or its officials. The court has reserved its judgment on whether the investigation against the intermediary can continue in its present form.

In the third matter, WinZO founder Saumya Singh Rathore has challenged the ED’s jurisdiction to investigate the company from Bengaluru. Rathore and Nanda has sought quashing of an Enforcement Case Information Report (ECIR) registered on November 6, 2025, along with its addendum and all consequential proceedings, arguing lack of territorial jurisdiction.

Justice M Nagaprasanna, citing paucity of time, listed the matter for further hearing on February 6 and directed that the interim order in the case would continue for Rathore until then.

The ED’s probe stems from multiple FIRs alleging cheating, impersonation, blocking of customer accounts and misuse of identity documents. Based on these FIRs, the agency arrested Rathore and co-founder Paavan Nanda on November 26, 2025, under the PMLA. The agency has alleged that the platform deployed undisclosed algorithms in real-money games, restricted customer withdrawals and generated proceeds of crime from user losses.