The Karnataka High Court has refused WinZO US plea to shift ED-attached funds lying in US bank accounts to another bank, holding that the transfer would dilute the attachment.
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Bengaluru: The Karnataka High Court on Friday (October 9) rejected an interim application by WinZO US Inc. seeking permission to transfer funds lying in its US bank accounts to another bank in the United States while keeping the Enforcement Directorate’s (ED) attachment over the funds intact. The Court granted liberty to approach Silicon Valley Bank for release and subsequent transfer of the funds in accordance with the ED’s directions [WinZO US Inc. v. Directorate of Enforcement].
Justice C.M. Poonacha heard the matter. The ED’s allegations are untested, the Court has expressed no view on their merits, and the presumption of innocence applies to all those named.
The case
The two foreign subsidiaries of WinZO have challenged the provisional attachment of their assets worth Rs 505 crore under the Prevention of Money Laundering Act, 2002 (PMLA), and also question the constitutional validity of the PMLA Adjudicating Authority. The petitioners sought to move the funds after Silicon Valley Bank informed them that the banking relationship would be terminated and the accounts closed.
Contentions
Senior Advocate Siddharth Aggarwal, appearing for the petitioners, argued that the funds would stay attached even after a transfer to another US bank and that they needed to remain in the United States because the company carries on business there.
Advocate Madhukar Deshpande, appearing for the ED, opposed the plea, arguing that a transfer posed a risk of dissipation. The agency submitted that attempts had allegedly been made to dissipate Rs 22.48 crore while the company’s directors were in judicial custody, and that its investigation, which is continuing, involves the alleged siphoning of proceeds of crime of around Rs 3,522 crore through overseas transfers to WinZO’s wholly owned subsidiaries. These are the ED’s allegations and have not been tested.
What the Court said
Justice Poonacha observed that allowing the transfer would defeat the purpose of the attachment:
“tantamount to diluting the Provisional Attachment Order and the subsequent Confirmation Order”
The Court noted that the investigation was still continuing and that the details of the operations and business activities of the US subsidiary had not been placed on record. It also observed that the funds were already subject to the provisional attachment order and its subsequent confirmation, the validity of which is yet to be adjudicated in the pending writ petition.
The directions
The Court rejected the interim application, but granted the petitioners liberty to approach Silicon Valley Bank for release and subsequent transfer of the funds in accordance with the directions of the ED. It also allowed the petitioners to amend their writ petition to challenge the confirmation order dated August 4, 2026.
Why the order matters
The order shows that, while a challenge to a provisional attachment under the PMLA is pending, a court is unlikely to let attached funds be relocated on the strength of the holder’s business needs alone, even where the attachment is said to continue over the new account. The ruling rests on the pending challenge to the attachment and on the incomplete material about the subsidiary’s operations.
The order is interim. The validity of the attachment and of the Adjudicating Authority remains to be decided in the writ petition, and nothing in it is a finding on the allegations.
Case Title: WinZO US Inc. v. Directorate of Enforcement (interim application in a pending writ petition)
Bench: Justice C.M. Poonacha, Karnataka High Court
Date of Order: October 9, 2026
Appearances: Senior Advocate Siddharth Aggarwal for the petitioners; Advocate Madhukar Deshpande for the Enforcement Directorate