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Reserves Order on WinZO's Plea to Shift ED-Attached US Bank Funds
The on Wednesday reserved its order on an interim application filed by the foreign subsidiaries of gaming platform WinZO, seeking permission to relocate funds held in three US bank accounts that have been provisionally attached by the under the . The core question before Justice C.M. Poonacha was whether an under the PMLA permits the movement of frozen assets to another banking institution within the same jurisdiction while the freeze itself remains intact.
The petitioners— and —are challenging the of assets valued at ₹505 crore, alongside a broader to the validity of the . The ED, however, opposed the interim plea, arguing that the attached funds must remain under the supervision of the or as directed by the court. After hearing both sides, Justice Poonacha indicated that the order would be pronounced the following day.
A Clash Over Frozen Funds
At the heart of the dispute is a practical dilemma: the US bank holding the attached funds has terminated its relationship with the WinZO subsidiaries, leaving the petitioners unable to maintain the account.
, appearing for the petitioners, argued that the
does not vest the ED with operational control over the property.
"Keep it attached, but allow me to do other business. You cannot cause my
in the garb of this,"
he submitted, urging the court to permit the transfer of funds to another US bank account while preserving the attachment restrictions.
Aggarwal further contended that four of the five underlying the PMLA proceedings have been closed or quashed, and that the remaining proceedings involve only about ₹50 lakh. In contrast, the ED has attached properties worth approximately ₹1,000 crore, including around ₹550 crore belonging to the petitioner subsidiaries. He emphasised that the petitioners sought only to move the funds, not to use or unfreeze them, and that the merely prohibits transfer, conversion, or disposal—not relocation to a different bank.
The ED’s Stance: Supervision and
, representing the Enforcement Directorate, submitted that the agency had filed its counter and sought additional time to file objections in the main petition. He disclosed that the ED's investigation had identified alleged amounting to roughly ₹3,522 crore, which included substantial transfers from WinZO to its US subsidiary. The ED, he argued, required that the attached funds remain in an account that is either supervised by the or otherwise directed by the court to ensure the .
Deshpande did not oppose the transfer of funds per se, but insisted on a mechanism that would keep the assets within the reach of Indian authorities. The court, however, appeared focused on the narrow question of whether the existing permitted such a transfer, without delving into the merits of the underlying allegations.
Legal Implications: Attachment Without Paralysis
The case raises a nuanced issue under the PMLA: what happens when a banking relationship ends mid-proceedings? The under is a provisional measure designed to prevent the dissipation of alleged . But it does not, by its terms, grant the ED control over the property—only the power to restrain its transfer, conversion, or disposal. This distinction is critical for companies that rely on active bank accounts for their day-to-day operations, even when those accounts are frozen.
If the court permits the transfer, it could establish a precedent that allows entities under PMLA attachment to maintain their banking relationships by moving funds to a new account, provided the freeze continues. Conversely, a denial could effectively render such assets inaccessible for any purpose, potentially causing business disruption beyond the intended scope of the attachment.
The petitioners' broader challenge to the constitutional validity of the —which has not yet been heard on merits—adds another layer of significance. The outcome of the interim plea may influence how courts balance the ED's investigative powers with the right of entities to conduct basic business operations.
What Lies Ahead
The reserved order will decide only the sought by the WinZO subsidiaries; it will not resolve the validity of the attachment or the . However, the ruling is expected to provide guidance on a recurring practical issue: how to manage frozen assets when the financial institution holding them withdraws from the relationship. For legal practitioners advising clients under PMLA scrutiny, the decision will be closely watched for its implications on asset management during ongoing investigations.
The case is listed as Winzo US Inc and Another v. Union of India and Others (WP No. 22761/2026) before the . Justice C.M. Poonacha is expected to deliver the order shortly, offering clarity on the limits of an in a .
