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Karnataka High Court Presses ED for "Fresh Material" in Gameskraft Founders' Arrest Case

Justice MGS Kamal warns enforcement agencies cannot invoke arrest powers casually, as Bengaluru special court extends ED custody of three cofounders to 19 May, when the agency must file objections to the writ petitions.

Category: iGaming News - India · By Growl Games Editorial Team · Sat May 16 2026 · Updated Thu Jul 23 2026

Karnataka High Court Presses ED for "Fresh Material" in Gameskraft Founders' Arrest Case

Contents

1. Summary

A vacation bench of the Karnataka High Court led by Justice MGS Kamal on 13 May pressed the Enforcement Directorate (ED) to demonstrate "fresh material" justifying the arrest of three Gameskraft Technologies cofounders — Deepak Singh Ahlawat, Prithvi Raj Singh and Vikas Taneja — under the Prevention of Money Laundering Act (PMLA). On 14 May, the court granted the ED until 19 May to file its statement of objections, while a special court in Bengaluru extended the founders' ED custody by seven days to the same date. The hearings represent the first sustained judicial test of the ED's post-PROGA arrest powers under the new central gaming regime that came into force on 1 May.

2. The 13 May Hearing: Section 19 and "Tangible Material"

Justice Kamal observed that under Section 19 of the PMLA, the agency's "reasons to believe" before exercising arrest powers must be founded on "some tangible substantive material." The bench cautioned that enforcement agencies cannot invoke arrest powers casually and that officers could face consequences if powers were exercised without proper legal basis. The court repeatedly queried whether the ED had fresh material to justify the new Enforcement Case Information Report (ECIR) and the subsequent arrests, given that an earlier ECIR linked to the company had been stayed by the High Court on 22 January 2026.

3. Petitioners' Argument: New FIRs, Old Allegations

Senior advocate S. Muralidhar, appearing for one of the petitioners, argued that the ED's latest action stemmed from three FIRs registered in Telangana shortly after the High Court's January stay. The petitioners say the earlier predicate-offence case had culminated in a closure report accepted by a trial court in July 2025. Despite that, the ED registered a fresh ECIR, which the High Court later stayed; two days after that stay order, a new FIR was registered in Telangana on 24 January, followed by two more on similar allegations involving online rummy games. The petitioners contend the writ petitions effectively challenge the ED's reliance on parallel FIRs to circumvent the earlier closure and stay.

4. ED's Position: Rummy vs Poker, Subjective Satisfaction

The ED, represented by standing counsel Madhu N. Rao, opposed the petitions. Rao argued that the earlier ECIR concerned the online poker platform Pocket52, while the present ECIR pertained to online rummy offerings operated by the company — including RummyCulture and RummyTime. He further argued that the petitions sought judicial review of the ED's "subjective satisfaction" under Section 19, which he submitted was impermissible in writ proceedings. The bench orally observed that if the ED failed to file its reply by 19 May, the court would proceed to pass orders on the petitions.

5. Custody Extended to 19 May

On 14 May, a special PMLA court in Bengaluru extended ED custody of Deepak Singh Ahlawat, Prithvi Raj Singh and Vikas Taneja by seven days, taking the remand to 19 May. The ED alleges the three diverted approximately ₹250 crore through fraudulent means tied to real-money gaming platforms; broader agency figures published earlier in the week put frozen movable assets at ₹526.49 crore and reference an alleged ₹1,154 crore fraud. The defence had argued that the ED lacked territorial jurisdiction since the predicate FIRs were registered in Telangana, but the special court accepted the agency's submission that Gameskraft's Bengaluru headquarters supplied the necessary nexus. Bail applications filed by the three founders are in abeyance pending the custody extension.

6. What's at Stake for the Sector

The case is the first major judicial test of the ED's PMLA powers as applied to operators caught by the Promotion and Regulation of Online Gaming Act, 2025 (PROGA), which came into force on 1 May along with the Promotion and Regulation of Online Gaming Rules, 2026. Three threads converge: whether the ED can pursue successive ECIRs after a stay; whether multiple FIRs in different states can sustain a money-laundering probe; and whether the agency's "subjective satisfaction" is reviewable in writ. With separate constitutional challenges to PROGA pending before a three-judge Supreme Court bench, and Gameskraft having cut over 400 jobs in restructuring tied to the regulatory shift, the 19 May orders — both at the special court on remand and at the High Court on objections — will set the early template for how India enforces its new gaming regime.

Sources


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