The Karnataka High Court has given relief to employees of online gaming platform Winzo by directing that their salaries must be paid, even though the Directorate of Enforcement (ED) has frozen the bank accounts of its subsidiary, Zo, which is responsible for handling salary payments. The freeze had left staff uncertain about receiving their wages.
The issue began when the ED carried out a search on 30 December, 2025, at the premises of Zo’s outsourced accounting firm. Following the search, the ED froze Zo’s bank accounts, mutual funds, and fixed deposits under Section 17(1A) of the Prevention of Money Laundering Act (PMLA). The ED argued that the freeze was necessary to prevent the use of alleged proceeds of crime linked to real-money gaming activities.
Zo challenged the action, claiming that the ED already knew Winzo had extended an unsecured loan of over Rs 230 crore to Zo, and that this transaction should not have been the basis for freezing accounts. Zo argued that at most, the ED could have used Section 5 of the PMLA, which deals with provisional attachment.
During the case, the High Court noted that Winzo had entrusted Zo with day-to-day operations, including salary payments, long before the ED’s search.
Employees of both Zo and Winzo were already on the rolls prior to the proceedings. Zo explained that while Rs193–230 crore was frozen, it only needed Rs 8–11 crore per month to pay salaries for staff working in permissible areas such as non-real money gaming and content creation.
The HC said that while the legality of the freeze must be decided by the adjudicating authority under the PMLA, employee salaries could not be blocked in the meantime. It directed Zo to submit a list of employees for January 2026 within a week to the ED, which must verify the details within three days and inform banks to release payments. Zo can seek similar permissions for February and March.
This order ensures that employees continue to receive their salaries despite the ongoing investigation, while Zo retains the right to contest the freeze before the adjudicating authority.
