Karnataka HC Rejects WinZO US Bank Fund Transfer Amid PMLA Attachment

WinZO US Inc. Vs Union of India (Karnataka High Court)

Karnataka HC Rejects WinZO’s Plea to Transfer ED-Attached Funds to Another US Bank

Summary: The Karnataka High Court rejected WinZO US Inc.’s interim request to transfer attached funds from Silicon Valley Bank to another bank in the United States, observing that granting such relief before examining the attachment orders would dilute their effect. However, the Court permitted the company to approach the Enforcement Directorate (ED) for transfer of the funds to the agency’s designated account in India, with the attachment continuing over the transferred funds.

The order arose from I.A. No. 3/2026 in a pending writ petition challenging, among other matters, a show cause notice dated 4 April 2026 and a provisional attachment order dated 17 February 2026. A separate amendment application sought to challenge the confirmation order dated 4 August 2026.

The petitioners were stated to be wholly owned subsidiaries of WinZO Private Limited, which operates the WinZO App, an online real-money gaming platform. According to the ED, complaints alleged that the parent company cheated users through artificial intelligence or algorithms employed in games offered through the application. These were allegations forming part of the investigation, rather than findings of guilt recorded in the present order.

The ED further alleged that the parent company transferred funds to its subsidiaries in the United States and Singapore under the guise of foreign investment. Proceedings under the Prevention of Money Laundering Act, 2002 (PMLA) resulted in attachment of the petitioners’ bank accounts under Section 5(1). The attachment was subsequently confirmed under Section 8.

The immediate difficulty arose when Silicon Valley Bank communicated that its banking relationship with WinZO US Inc. would be terminated and its accounts closed with effect from 1 September 2026. The company consequently sought directions concerning movement of the attached balances.

WinZO proposed transferring the closure proceeds to its account with JPMorgan Chase Bank in the United States. It offered to place the balance existing on the attachment date in a separate deposit or sub-account, disclose the transfer through an affidavit within two weeks of the deposit, and continue treating the deposit as attached property.

The company requested that the transfer not be treated as a violation of the attachment or confirmation orders. It maintained that the funds had been remitted as foreign investment, should remain in the United States, and were required for its business operations there.

The petitioners also disputed the relationship between the alleged predicate offences and the scale of attachment. They submitted that several criminal cases had been closed or quashed and that the alleged loss involved in the predicate offence was substantially smaller than the attached balances. These submissions remained part of the dispute awaiting adjudication.

The ED opposed the application, citing a risk of dissipation of funds. It alleged that an attempt had previously been made to dissipate ₹22.48 crore during the judicial custody of a director. The agency also contended that the overseas entities were controlled from India and that WinZO US Inc. had no regular employees.

As an alternative, the ED proposed that the entire balance in the attached Silicon Valley Bank accounts, together with accrued interest, be transferred to its designated account with Indian Bank in India. According to the agency, the money would remain subject to the PMLA proceedings and the writ petition.

The Court examined the statutory framework, including the definition of “attachment” under Section 2(1)(d), which prohibits transfer, conversion, disposition or movement of property. It also referred to the provisions concerning proceeds of crime, investigation, attachment and adjudication.

The Court considered the Supreme Court’s decision in Vijay Madanlal Choudhary v. Union of India, including its observations that taking possession under Section 8(4), before formal confiscation, should be an exception assessed on the facts of each case.

On the material before it, the High Court noted that details of WinZO US Inc.’s operations and nature of business had not been placed on record. The funds were admittedly covered by the provisional attachment and confirmation orders, whose correctness remained to be decided.

The Court therefore concluded that permitting the proposed transfer at that stage would dilute the effect of the existing attachment and confirmation orders. It dismissed I.A. No. 3/2026, subject to the alternative arrangement identified in its directions.

WinZO was left free to request transfer in the manner proposed by the ED. If such a request was made, the ED was directed to facilitate it, with the funds remaining subject to attachment, confirmation proceedings and the outcome of the writ petition.

The ruling thus decided the interim transfer request, while leaving the merits of the attachment challenge open. The Court listed the amendment application for consideration on 6 November 2026.

Cases Discussed

• Vijay Madanlal Choudhary & Others Vs Union of India & Others, (2023) 12 SCC 1 (Supreme Court): Considered regarding the statutory scheme of attachment and the principle that possession under Section 8(4) before formal confiscation should ordinarily be exceptional and determined case by case.
• M/s. Deepak Steel and Power Ltd. Vs Enforcement Directorate, Government of India, Crl.M.C. No. 506/2025, order dated 22/09/2025 (Orissa High Court): Cited by the petitioners concerning the effect of a provisional attachment order and the extent of the authorities’ control over attached funds.

FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT

The present writ petition is filed, inter alia, impugning the show cause notice dated 04.04.2026 (Annexure S to the writ petition) and the Provisional Attachment Order1 dated 17.02.2026 (Annexure – D to the writ petition). IA No.2/2026 is filed under Order VI Rule 17 r/w Section 151 of the Code of Civil Procedure, 1908 and Articles 226 and 227 of the Constitution of India seeking amendment of the Writ Petition, to inter alia, impugn the Confirmation Order dated 04.08.2026 (Annexure AF along with I.A.No. 2/2026).

2. Objections of the respondents to I.A.No.2/2026 as well as the main petition, if any to be filed before the next date of hearing.

ORDER ON I.A.No. 3/26

3. IA No.3/2026 is filed by the petitioner seeking the following reliefs:

“ In the facts and circumstances stated above, it is most respectful ly prayed that this Hon’ble Court may be pleased to:

a. Take on record the subsequent events set out in the present Application, including the communications issued by Silicon Valley Bank in relation to the closure of the SVB Accounts of Petitioner No. 1;and

b. Pass such suitable directions as this Hon’ble Court may deem fit and proper in relation to the SVB Accounts of Petitioner No. 1 and the funds lying therein, which are covered by Provisional Attachment Order No. 08/2026 dated 17.02.2026 and the Ord er dated 04.08.2026 passed by the Adjudicating Authority; and

c. Pass such other and further orders as this Hon’ble Court may deem fit in the facts and circumstances of the case, in the interest of justice.”

4. In the said application, the petitioners have placed on record the communications received from the bankers of Petitioner No. 1, i.e., 1 Hereinafter ferred to as ‘PAO’ California, USA2, whereunder the petitioner N o.1 has been informed that the banking relationship of the B ank with petitioner No.1 would be terminated and accounts of the petitioner No.1 in the said bank would be closed effective on 01.09.2026. The various communications between petitioner No.1 and the B ank have been placed on record by the said application.

5. Before consideration of the said application on its merits, this Court had indicated that if the petitioner suggests a viable alternative to the respondents – Enforcement Directorate, the same could also be considered along with IA No.3/2026. Accordingly, the petitioner has filed a memo dated 28.09.2026 placing on record a communication dated 25.09.2026 made with the learned counsel for the respondents. The proposal made by the petitioner in the said communication is extracted hereunder for ready reference:

” (i) Petitioner No. 1 shall transfer the closure proceeds from its accounts with Silicon Valley Bank to account No. 2910615821 held by the Petitioner No. I with JPMorgan Chase Bank, N.A.

(ii) Such transfer shall not be treated as a violation of Provisional Attachment Order No. 0 8/2026 dated 17.02.2026 or of the order dated 04.08.2026 passed under Section 8(3) of the PMLA.

(iii) Petitioner No. 1 shall place the balance lying in its accounts with Silicon Valley Bank as on 17.02.2026 in a separate deposit or sub-account held with J PMorgan Chase Bank, N.Α.

(iv) Petitioner No. 1 shall, within two weeks of the deposit being made, file an affidavit before the Hon’ble High Court disclosing the particulars of the deposit and confirming the transfer and the deposit, with a copy to Respondent No. 2.

(v) The said deposit shall be treated as the property attached under Provisional Attachment Order No. 08/2026 dated 17.02.2026 and the order dated 04.08.2026, and the references in those orders to the accounts of Petitioner No. 1 with Silicon Valley Bank shall be read as references to the said deposit.

(vi) The above is subject to such further orders as the Hon’ble Court may pass, and is without prejudice to the rights and contentions of the parties in the writ petition.

5. We shall be gratefu l if you could obtain instructions and let us know your response before the hearing on 28.09.2026. We remain available for any further details or clarification that may be required.”

6. The respondents have filed their objections to IA No. 3, wherein made by the petitioner vide the communication dated 25.09.2026.

7. The factual matrix, in a nutshell, leading to the present petition is that various FIRs were filed against M/s. Winzo Private Limited (formerly M /s. Winzo Games Private Limited and M/s. Tictok Skill Games Private Limited). Petitioner Nos. 1 and 2 are stated to be the wholly owned subsidiaries of M/s. Winzo Private Limited3. The respondents have initiated proceedings in ECIR No.ECIR/EG 0/25/2025 dated 06.11.2025, consequent to which a Search and Seizure was conducted by the respondents of the Parent Company.

8. The allegation against the Parent Company is that it hosts an app called the “Winzo App”, which is an online real money gaming inte rmediary that provides users access through the platform to various games. It enables users to purchase and participate in the games of their choice, with the objective of winning monetary rewards.

That upon selection of the game and the corresponding stakeholder by a user/player, Winzo Gaming Systems and Software initiates a matc hmaking process to identify a player meeting similar criteria a nd once the players are matched, Winzo earns a commission depending on the nature of the game and the stakes involved.

9. It is the allegation of the respondents that various complaints/grievances were lodged alleging that the Parent Company was cheating gullible users by AI /Algorithm in real money games hosted through its mobile application. It is the allegation of the respondents that the Parent Company has incorporated the petitioners, which are the wholly owned subsidiaries of the Parent Company, with the petitioner N o.1 being situated in the United States of America4 and the petitioner No.2 being situated in Singapore. It is further alleged that the Parent Company has transferred various amounts to petitioner Nos. 1 and 2 as a foreign investment. Consequent to the search and seizure, the PAO dated 17.02.2026 (Annexure D to the writ petition) was passed, which was issued in terms of Sub -section (1) of Section 5 of the Prevention of Money Laundering Act, 20025. Vide the said PAO, the Bank Accounts of both the petitioners have been attached.

10. Since IA No.3/2026 pertains to the Bank Accounts of petitioner No.1 at USA the relevant details of the Bank Account of p etitioner No.1, which were the subject matter of the PAO dated 17.02.2024 is extracted hereunder for ready reference:

11. Consequent to the issuance of the PAO , the final order dated 04.08.2026 (Annexure – AF filed along with IA No.2/2026) has been passed whereunder the PAO dated 17.02.2026 has been confirmed in terms of Section 8 of the Act. The correctness of, inter alia, the provisional order and the final order are the subject matter of consideration in the present writ petition.

12. The respondents have filed objections to IA No.3/2026 opposing the reliefs sought for in the application. It is the apprehension of the respondents that there is a real and immediate risk of dissipation of funds in the Bank Account of petitioner No.1. It is also alleged that in the is on record that the D irectors of the petitioners attempted to dissipate a sum of Rs.22.48 crores from the Bank Accounts during the judicial custody of the Director of the petitioner.

13. With regard to the proposal of the petitioner made vide the communication dated 25.09.2026, it is necessary to notice the reply of the respondents which is extracted hereunder for ready reference:

“(iv) Transfer of the attached amount to India

11. Petitioner No. 1 has itself informed SVB (email dated 14.09.2026, Annexure- F) that it cannot authorise any transfer, remittance, withdrawal or issuance o f a cashier’s cheque unless directions are issued by the competent court. The attached amount cannot be permitted to be dissipated. The only direction that will secure the attached funds is their transfer to India. Respondent No. 2 therefore suggests that the entire balance in the attached SVB accounts, with accrued interest, be remitted by wire transfer to the following PD Account:

Account Name: Joint Director, Directorate of Enforcement

Account No.: 50383179001

IFSC: IDIB000B008

Bank: Indian Bank

12. The amount will remain in a Government account subject to the outcome of the proceedings under the PMLA, including the Writ Petition. No prejudice will be caused to they ultimately succeed. On the other hand, if the funds are released by way of a cheque to Petitioner No. 1, the attachment and the confiscation proceedings will be rendered infructuous.“

14. Heard submissions of learned Senior Counsel on behalf of the petitioner and the learned counsel for t he respondent on IA No.3/2026.

15. It is the vehement contention on behalf of the petitioner that the funds of petitioner No.1, which are in deposit in the B ank at USA will be transferred to another bank at USA, since petitioner No.1 has been intimated that the Bank Account s of the petitioner would be closed. It is further contended that any movement of funds having regard to the PAO and the Confirmation Order, which is the subject matter of challenge in the present writ petition, should not be construed as a violation of the same, a nd accordingly IA No.3/2026 is filed for suitable reliefs. It is further contended that the funds in the Bank Account of petitioner N o.1 having been transferred as a foreign investment, the situs and ought to be moved to another Bank in the USA. It is also contended that even after the subsequent transfer of funds, the same would be the subject matter of attachment by the said PAO and the Confirmation Order, which would be the subject to the outcome of the present writ petition. It is also contended that although the proceedings have been initiated by the respondents – Enforcement Directorate and the Bank Accounts of petitioner N o.1, which are in excess of Rs.500 cores have been attached, the predicate offence involves an alleged loss of Rs.42,00,000/- and the attachment with respect to the said amount is secured with the other attachments of the petitioners. It is further contended that the funds of petitioner No.1 are required to remain in the USA since petitioner No.1 is carrying on business in the said country and the amounts in the B anks are required for the said purpose. 16. The learned Senior Counsel has also referred to the various provisions of the Act as well as the judgment of the Supreme Court in the case of  Choudhary and Others Vs. the Union of India6, as also a Co-ordinate Bench judgment of Odisha High Court in the case of M/s Deepak Steel and Power Ltd. V. Enforcement7 to put forth contentions as to the effect of the Directorate, Government of India, PAO as also to the extent to which the respondents – Authorities hav ing control the attached funds.

17. Learned counsel for the respondent vehemently opposing the relief sought for IA No. 3/2026 contends that various complaints have been lodged against the Parent Company periodically. The investigation into the allegations made against the petitioner has not been completed. That having regard to the nature of crime that is alleged, it cannot be said that the predicate offence allege d against the petitioner is limited to Rs.42,00,000/-. It is further contended that under the guise of an overseas direct investment, the Parent Company has siphoned off funds of approximately Rs.447,86,53,725/- crores to the petitioner Nos. 1 and 2, which are the wholly owned subsidiaries of the Parent Company. It is further contended that the petitioner N o.1 has no regular employees and its management and foreign Bank Account s are handled from India by the Directors of the Parent Company. Hence, it is contended that any permission granted to the petitioner No.1 to move the funds from one bank to another as is sought to be done vide IA No.3/2026 would have the effect of diluting the orders of Provisional attachment and Confirmation which are the subject matter of challenge in the present writ petition.

18. The submissions of the learned counsels have been heard on the relief sought for in IA No.3/2026. Before noticing the contentions put forth by both the learned counsels, it is relevant to certain provisions of the Act. Sections 2(d), (na), (p), (u) and 3 of the Act read as under:

.“2 (d) “attachment” means prohibition of transfer, conversion, disposition or movement of property by an order issued under Chapter III;”

( na)“investigation” includes all the proceedings under this Act conducted by the Director or by an authority authorised by the Central Government under this Act for the collection of evidence;

(u) “proceeds of crime” means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad.

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3. Offence of money-laundering.— Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering.

Explanation.— For the removal of doubts, it is hereby clarified that,—

(i) a person shall be guilty of offence of money- laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes or activities connected with proceeds of crime, namely:—

(a) concealment; or (b) possession; or (c) acquisition; or (d) use; or (e) projecting as untainted property; or (f) claiming as untainted property, in any manner whatsoever;

(ii) the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted pro perty in any manner whatsoever.”

19. Section 5 of the Act p rescribes the manner in which a property that is involved in money laundering is attached. Section 8 of the Act deals with the manner of adjudication of a complaint made under Section 5 of the Act.

20. The Supreme Court in the case of Vijay Madanlal Choudhary6 , while considering the scope, purport and ambit of the Act, held as under:

“180. Section 5(4) clearly states that nothing in Section 5 including the order of provisional attachment shall prevent the person interested in the enjoyment of immovable property attached under sub- section (1) from such enjoyment. The need to take possession of the attached property would arise only for giving effect to the order of confiscation. This is also because sub -section (6) of Section 8 postulates that where on conclusion of a trial under the 2002 Act which is obviously in respect of offence of money- laundering, the Special Court finds that the offence of money- laundering has not taken place or the property is not involved in money- laundering, it shall order release of such property to the person entitled to receive it. Once the possession of the property is taken in terms of sub – section (4) and the finding in favour of the person is rendered by the Special Court thereafter and during the interregnum if the property changes hands and title vest in some third party, it would result in civil consequences even to th ird party. That is certainly avoidable unless it is absolutely necessary in the peculiar facts of a particular case so as to invoke the option available under sub-section (4) of Section 8.

181. Indisputably, statutory Rules have been framed by the Central Government in exercise of powers under Section 73 of the 2002 Act regarding the manner of taking possession of attached or frozen properties confirm ed by the Adjudicating Authority in 2013, and also regarding restoration of confiscated property in 2019. Suffice it to observe that direction under Section 8(4) for taking possession of the property in question before a formal order of confiscation is passed merely on the basis of confirmation of provisional attachment order, should be an exception and not a rule. That issue will have to be considered on case-to-case basis. Upon such harmonious construct ion of the relevant provisions, it is not possible to countenance challenge to the validity of sub- section (4) of Section 8 of the 2002 Act.”

21. H aving regard to the overview of the provisions of the Act and the position of law as held by the Supreme Court as noticed above, it is pertinent to notice that it is the vehement contention on behalf of the petitioner that out of 6 cases that were filed against the petitioner as enumerated in the present petition , 3 cases have been closed by the orders of the Jurisdictional Magistrate, 1 case has been quashed by this Court, 1 case is pending and 1 more has been registered after filing of the prosecution complaint. It is also contended that the value of the predicate offence is not in excess of about Rs.45,00,000/-.

22. It is forthcoming from the PAO as well as the Confirmation Order that the investigations as to the activities of the Parent Company have not culminated. Further, it is specifically alleged that the fun ds generated by the Parent Company from its activities within India amounting to hundreds of crores have been transferred to overseas entities without any external business justification and the same are the proceeds of crime. The defences/objections of the petitioner to the PAO have also been noticed in the Confirmation Order, which are the subject matter of consideration in the present writ petition. Specific reliance is placed by the learned counsel for the respondents on the definition of proceeds of cr ime in the Act which includes property held by an entity overseas.

23. It is the vehement contention of the Learned Senior C ounsel on behalf of the petitioner that the attachment already made ( although is the subject matter challenge in the present writ petition), sufficiently safeguards the allegations against the petitioners a merely by attaching the Bank Accounts, the petitioner No. 1 cannot be deprived of its usage for the purpose of its business operations. However, it is the contention of the respondents that the operations of petitioner No.1 as well as petitioner No.2 are controlled by the Directors of the Parent Company from India and that petitioner No.1 has no regular employees in its management. 24. It is pertinent to note that details of the operations and nature of business carried on by petitioner No.1 have not been placed on record. The amounts in the Bank Account s in question which is the subject matter of consideration of IA No.3/2026 are admittedly the subject matter of the PAO and the Confirmation Order, the correctness of which is to be adjudicated. Prior to consideration of the same, if the relief sought for in IA No.3 is granted, the same would tantamount to diluting the effect of the PAO and Confirmation Order. Accordingly, the request made in IA No.3/2026 does not merit consideration.

25. However, having regard to the proposal made by the petitioner and the response to the same by the respondent authorities in its statement of objections to I.A.No.3/2026 to transfer the funds (the relevant po rtion of which is extracted at para 13 hereinabove), it shall be open to the petitioner to make a request to the respondent authorities for transfer of the funds as indicated in the statement of objections to I.A.No.3/2026. If such a request is made, the respondents shall facilitate such transfer, which shall continue to be subject to the attachment and confirmation proceedings and subject to the outcome of the present proceedings. Subject to the same, I.A.No.3/2026 stands dismissed.

26. For consideration of I.A.No.2/2026, re- list on 06.11.2026.

Notes:

¹ Hereinafter ferred to as ‘PAO’

² Hereinafter referred to as “Bank”

³ Hereinafter referred to as Parent Company

⁴ Hereinafter referred to as “USA”

⁵ Hereinafter referred to as the “Act”

⁶ 2023 12 SCC 1

⁷ In CrL.MC No.506/2025, order dt.22.09.2025