The Karnataka High Court has issued a stern warning to the Enforcement Directorate (ED), stating it will impose a cost of ₹1 lakh on the agency if its appeal against the bail granted to WinZo co-founder Paavan Nanda is found to be “unnecessary.” The court emphasized that the agency must demonstrate a concrete violation of bail conditions or an active attempt to suppress facts to justify its challenge.
Background of the Case
The legal battle stems from a money-laundering investigation initiated by the ED against the promoters of the real money gaming (RMG) platform WinZo. In February this year, a local court in Bengaluru granted bail to Paavan Nanda.
The ED’s case is based on predicate offenses registered through First Information Reports (FIRs) in Bengaluru, Rajasthan, and Delhi. The agency has alleged that WinZo was involved in “criminal activities and unscrupulous practices,” including the use of AI bots and algorithms to play against human users.
ED’s Allegations of Fraud and Money Laundering
According to the investigative agency, WinZo generated approximately ₹3,522 crore in illegal proceeds between FY22 and August 22, 2025 (FY26). The ED claims the company used misleading terms such as Engagement Play (EP), Past Performance of Player (PPP), and “Persona” to hide the fact that customers were playing against bots rather than humans.
The agency further alleges:
- Commission Fraud: The company allegedly generated “proceeds of crime” in the form of rake commissions from matches where bots induced real players to spend more money.
- Withdrawal Restrictions: The platform reportedly restricted cash withdrawals, effectively appropriating customer funds to force continued play.
- Overseas Diversion: The ED alleges that a portion of these proceeds was moved to the United States and Singapore under the guise of overseas investments.
In connection with these probes, the ED’s Bengaluru zonal office provisionally attached movable properties worth approximately $56 million held in bank accounts in the US and Singapore. Additionally, the agency has frozen ₹1,194 crore in Indian bank accounts.
Court’s Observations
During the hearing on Friday, Justice S Rachaiah questioned the ED’s counsel regarding the necessity of challenging the bail order. The judge noted that for the appeal to be maintainable, the agency must establish that Nanda has either violated the terms of his bail or is actively interfering with the investigation by suppressing facts.
“Without these two, if the court were to find the ED’s challenge to be an unnecessary one, it would impose costs of INR 1 lakh on the agency,” Justice Rachaiah remarked.
Nanda’s Defense
Paavan Nanda has consistently denied all charges leveled by the ED. He has asserted full cooperation with the ongoing investigation and has independently challenged the legality of the search and seizure operations conducted by the agency at WinZo’s offices, the residences of its directors, and its accounting firm in late 2023.
The matter is now scheduled for further hearing on April 23.
