Karnataka High Court warned the ED of a ₹1 lakh fine for "frivolous" litigation
Paavan Nanda, WinZO co-founder, was granted bail in a ₹3,522 crore laundering case
ED allegations center on algorithmic manipulation, AI bots, and restricted user withdrawals
The Karnataka High Court has warned the Enforcement Directorate (ED) that it could be fined ₹1 lakh if its challenge to the bail granted to WinZO co-founder Paavan Nanda is found to be unnecessary or frivolous, Bar and Bench reported.
During the hearing on April 10, 2026, Justice S. Rachaiah reportedly said the ED must first show that Nanda violated his bail conditions or suppressed material facts. If it cannot establish either, the court may treat the appeal as unwarranted. The matter has been listed for the next hearing on April 23.
1 April 2026
Get the latest issue of Outlook Business
The warning comes amid an ongoing money-laundering investigation into WinZO and its founders.
According to the report, a Bengaluru sessions court granted Nanda bail on February 2, 2026, after the ED filed a case under the Prevention of Money Laundering Act.
The agency first searched premises in November 2025, arrested Nanda and co-founder Saumya Singh Rathore on November 27, 2025, and later proceeded against assets linked to the company.
ED Allegations
As reported, ED claims that WinZO’s real-money gaming operations relied in part on AI bots or algorithms rather than only human players, restricted user withdrawals, and generated proceeds of crime through rake commissions and related mechanisms. The agency has reportedly alleged illegal proceeds of about ₹3,522 crore between FY22 and FY26, up to August 22, 2025.
The agency has also frozen and attached large sums, including around ₹1,194 crore in the case, along with overseas assets in the US and Singapore.
Nanda has denied the charges and challenged the legality of the searches and seizure actions, according to the report. The High Court’s warning now places the ED under pressure to justify why the bail order should be disturbed at all.
At its core, the court’s message is procedural as well as substantive: an appeal against bail cannot be used as a routine pressure tactic. Unless the agency can point to a concrete violation after bail or a clear concealment of facts, the court appears ready to treat the challenge as lacking merit.
