The High Court of Karnataka has rejected an application by Winzo US Inc. seeking permission to transfer funds from its provisionally attached bank accounts at Silicon Valley Bank to JPMorgan Chase Bank. The ruling, delivered by Justice C.M. Poonacha, maintains the current status of the funds, which were frozen following investigations by the Enforcement Directorate (ED) into alleged money laundering activities linked to the parent company, Winzo Private Limited. The court determined that allowing such a movement of assets would undermine the ongoing legal proceedings under the Prevention of Money Laundering Act, 2002.

The controversy stems from the Enforcement Directorate’s probe into the business operations of Winzo Private Limited, which hosts a popular real-money gaming application. The agency has alleged that the parent company acted as an intermediary for online games and engaged in the illicit transfer of approximately Rs 447.86 crore to its wholly-owned subsidiaries, including the petitioner, Winzo US Inc., under the guise of foreign direct investment. Following search and seizure operations, the ED issued a Provisional Attachment Order on February 17, 2026, which was subsequently confirmed by the Adjudicating Authority on August 4, 2026.

Impending Account Closure and Legal Strategy

Winzo US Inc. approached the High Court with an interim application after receiving formal notification from Silicon Valley Bank that its banking relationship with the firm would be terminated, with the accounts set for closure effective September 1, 2026. Facing the prospect of losing access to the accounts altogether, the petitioner proposed a mechanism to migrate the funds to JPMorgan Chase Bank. Under this proposal, Winzo US Inc. argued that the funds would remain in a separate, identifiable account, thus preserving the attachment while ensuring business continuity in the United States.

Counsel for the petitioner argued that the situs of the funds should remain in the United States to support the company’s ongoing operations. Furthermore, they contended that the attachment of the bank accounts should not function as an absolute bar on necessary corporate banking activities, provided that the underlying assets remain effectively secured. However, the court remained unconvinced by this logic, emphasizing that the primary objective of the PMLA is to prevent the dissipation or layering of property deemed to be proceeds of crime.

Risk of Asset Dissipation

The Enforcement Directorate vehemently opposed the petitioner's plea, citing a significant risk of fund dissipation. In its objections, the agency highlighted that the directors of the parent company had previously attempted to move Rs 22.48 crore from these accounts while one of the directors was in judicial custody. The ED argued that permitting any movement—regardless of the purported destination—would weaken the enforcement orders.

Addressing the potential for financial loss, the court noted: "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 ." The court’s position reflects a cautious approach to the management of properties currently under legal scrutiny, ensuring that no further changes in the custody of these assets can occur until the main writ petition challenging the attachment and confirmation orders is fully adjudicated.

Interpretation of Statutory Attachment Provisions

The legal debate centered on the scope of the "attachment" of property under the PMLA. The court referenced the Supreme Court’s landmark judgment in Vijay Madanlal Choudhary v. Union of India , which clarified the extent to which authorities can control and possess property during the pendency of a money laundering investigation. The Supreme Court had previously observed: "The need to take possession of the attached property would arise only for giving effect to the order of confiscation."

While the High Court recognized the potential operational difficulties faced by the subsidiary in the United States, it concluded that the petitioner had failed to place sufficient details regarding its specific business requirements on the record. Consequently, the bench held that the court could not authorize the movement of funds that form the subject matter of an active dispute over their legal status.

A Path to Secure Transfer

While denying the petitioner's direct request for a court-monitored transfer to another private bank, Justice Poonacha provided a pragmatic alternative. The court observed that the Enforcement Directorate had, in its written objections, indicated a willingness to receive the funds in its own official government account. The court clarified that the petitioner is at liberty to request the ED to facilitate the transfer of the balance from the closing Silicon Valley Bank accounts directly to the agency’s designated account at the Indian Bank.

This directive creates a potential roadmap for securing the assets: if the petitioner makes such a request, the authorities are mandated to facilitate the transfer. The court emphasized that even if transferred to the government’s account, the funds will continue to be treated as property attached under the PMLA. They will remain subject to the ongoing investigation and the final outcome of the writ petition, ensuring that the company’s rights are protected should it ultimately succeed in its legal challenge.

With the interim application dismissed, the proceedings concerning the main writ petition are now scheduled for further consideration on November 6, 2026. The matter remains a critical test case regarding the limits of corporate asset management under the strictures of India’s anti-money laundering framework.