Karnataka HC questions ED on ‘fresh material’ in Gameskraft founders’ arrest case

Founders of online gaming platform Gameskraft on Thursday told the Karnataka High Court that the Enforcement Directorate (ED) had launched a fresh money laundering case and carried out arrests in a “mala fide” manner after an earlier ECIR linked to the company had already been stayed by the court earlier this year.

On Wednesday, founders Vikas Taneja, Prithvi Raj Singh and Deepak Singh Ahlawat — were produced before the Bengaluru Principal City Civil and Sessions Court after the expiry of their earlier custody period. Special court judge Shankarappa Nimbanna Kalkani allowed the ED’s remand plea and extended the agency’s custody of the three executives until May 19.

The submissions were made before a vacation bench of the Karnataka High Court, Justice M.G.S. Kamal during the hearing of petitions filed by the company’s founders challenging the legality of their arrest under the Prevention of Money Laundering Act (PMLA).

Senior advocate S. Muralidhar, appearing for one of the petitioners, argued that the ED’s latest action stemmed from three FIRs registered in Telangana shortly after the High Court stayed the earlier ECIR on January 22, 2026.

According to the petitioners, the earlier predicate offence case had culminated in a closure report, which had been accepted by a trial court in July 2025. Despite that, the ED allegedly proceeded to register an ECIR, which was later stayed by the High Court. 

Two days after the stay order, a fresh FIR was registered in Telangana on January 24, followed by two more FIRs based on similar allegations involving online rummy games.

“The allegations are identical,” Muralidhar submitted before the court, contending that users had merely alleged monetary losses while playing online rummy, which the company maintains is a game of skill. 

He argued that no meaningful investigation had taken place in any of the Telangana FIRs and claimed the fresh proceedings were initiated only to revive the money laundering case through a different route.

The petitioners further argued that the ED had not produced any “new tangible material” distinct from the material relied upon in the earlier ECIR that was stayed by the High Court.

Muralidhar also questioned why the Bengaluru office of the ED was pursuing Telangana-based FIRs and conducting raids and arrests in Gurugram, where the founders reside, despite the absence of any predicate offence registered in Bengaluru.

The court repeatedly queried whether there was any fresh material available with the ED that justified the new ECIR and subsequent arrests. During the hearing, Justice Kamal observed that under Section 19 of the PMLA, the agency’s “reasons to believe” must be founded on “some tangible substantive material”.

The bench also cautioned that enforcement agencies could not invoke arrest powers casually and noted that officers could face consequences if powers were exercised without proper legal basis.

The ED, represented by standing counsel Madhu N. Rao, opposed the petitions and argued that the earlier ECIR related to the online poker platform Pocket52, while the present ECIR pertained to online rummy offerings operated by the company.

Rao argued that the petitions effectively sought judicial review of the ED’s “subjective satisfaction” under Section 19 of the PMLA, which, according to him, was impermissible in writ proceedings. He also pointed out that the founders had already moved bail applications before the special PMLA court.

However, the petitioners maintained that the present challenge was not a routine bail plea but a constitutional challenge to the legality of the arrests themselves under Article 226 of the Constitution. The founders argued that if the arrests were ultimately found illegal after weeks of custody, the damage would already have been done.

During the hearing, counsel for the petitioners also raised concerns over the operational impact of the ED’s action, claiming that all bank accounts linked to the company had been frozen, potentially affecting salary payments and business continuity.

The ED disputed those apprehensions, terming them speculative.

The High Court granted time to the ED to file its statement of objections before May 19 after serving advance copies to the petitioners. The matter has been posted for further hearing on May 19, the same day on which the founders’ remand proceedings are also scheduled before the special court.

The bench orally observed that if the ED failed to file its reply by then, the court would proceed to pass orders on the petitions.