Due process must be followed, Karnataka HC tells ED in Gameskraft PMLA case
The directive came in response to a writ petition filed by Gameskraft, which challenged the ED’s issuance of multiple summons and show-cause notices in connection with an investigation that began in 2021.
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The Karnataka High Court has directed the Enforcement Directorate (ED) to act strictly in accordance with the law in its ongoing probe against Gameskraft Technologies Pvt. Ltd., emphasizing the need for due process under the Prevention of Money Laundering Act (PMLA).
The directive came in response to a writ petition filed by Gameskraft, which challenged the ED’s issuance of multiple summons and show-cause notices in connection with an investigation that began in 2021. The gaming company argued that the agency's actions were excessive, particularly in the absence of any pending criminal proceedings or prima facie evidence of money laundering.
Gameskraft contended that it had complied with all requests from the ED, including submitting financial documents and written replies to the notices issued on November 30 and December 17, 2021. The company alleged that the ED continued to press forward with coercive steps despite ongoing litigation involving similar allegations by the GST department, which had previously been quashed by the High Court in 2023.
The company further argued that the continued enforcement action infringed upon its fundamental rights under Articles 19 and 21 of the Constitution and sought protection from any further summons or coercive measures during the pendency of the petition.
The court order (a copy of which is with Storyboard18) noted, " It is also submitted that a 'B' report (closure report) has already been filed in the predicate offence in relation to the summons issued by the respondent and as such, the respondent would not be entitled to proceed further against the petitioner."
In its response, the ED maintained that its actions were part of a preliminary inquiry and that the petition was premature. However, it assured the Court that it would consider the company’s replies in accordance with legal provisions.
The court stated, "Liberty is also reserved in favour of the petitioner to submit additional reply, representation, pleadings, documents etc. to the respondent, within a period of four weeks from today, which shall also be considered by the respondent, who shall proceed further in accordance with law, as stated supra.
"Liberty is also reserved in favour of the petitioner to take recourse to such other remedies, as available in law including approaching this Court subsequently, if occasion so arises."
Justice S.R. Krishna Kumar, while refraining from commenting on the merits of the case, disposed of the petition with a direction to the ED to provide a fair hearing to Gameskraft and proceed only after considering its submissions. The Court also granted the company liberty to file additional representations within four weeks.
