New Delhi: The Karnataka High Court on Tuesday set aside the Enforcement Directorate’s case against the founders of online gaming platform Gameskraft, making it clear that their arrest was contrary to the law, and not supported by any fresh tangible material which could have led to the conclusion that they were guilty.
A bench of Justice M. Nagaprasanna ordered the release of three directors—Deepak Singh, Vikas Taneja and Prithviraj Singh—saying the arrests could not withstand “judicial scrutiny”, and the three must be restored their liberty.
The court took note of the fact that the foundation for the Enforcement Directorate’s case was the offence of cheating, for which the police had filed a closure report in July 2025. In fact, the Enforcement Directorate had itself acknowledged before the court that their reason for carrying out the search and seizure operations in November 2025was the allegation of cheating.
“Indeed, the Enforcement Directorate itself, in paragraphs 6, 9 and 12 of its objections, acknowledges that the “reasons to believe” …and the consequential search and seizure operations conducted between 18-11-2025 and 22-11-2025 were anchored upon the allegations emanating from the said crime,” the court noted in its 134-page judgment.
Taking the ED to task, the court said that an attempt was being made in this case to project that the Enforcement Directorate was “unaware” that the allegations of cheating had already met their juridical end with the acceptance of a ‘B’ report (closure report) by the police.
The HC pointed out that the allegations in the earlier ECIR (ED’s FIR), which was used for the searches and seizures, was being used again in the new ECIR. “The foundation may have been repackaged; it has not been reconstructed,” the court noted.
The case arose from four FIRs which were registered by people claiming they had received calls and messages urging them to play games and earn profits. After they started playing, these complainants claimed to have lost large sums of money. For instance, one of the complainants said they lost Rs 1.85 lakh, while another said he lost Rs 53,000.
The accused men told the HC that they were subjected to searches during the early morning of 8 May this year, after which they were taken into custody.
Terming the arrests as illegal, Gameskraft argued that there was a violation of Section 19 of the Prevention of Money Laundering Act, 2002, which essentially deals with the ED’s power to arrest, and states that the grounds of arrest must be supplied to the accused in writing, at the time of arrest. Gameskraft also said the accused’s fundamental rights to equality and life were being violated.
On the other hand, ED had said Gameskraft was luring gullible people by offering them bonus incentives, cash offers and referral bonuses on its digital platform, and was deploying robots to play against actual humans.
Significantly, the HC noted that the arrest was illegal, as six months earlier, on the basis of “substantially the same material” the ED itself did not consider arrest of the founders necessary.
“If the material then available did not warrant arrest, the mere registration of a new ECIR cannot transmute old allegations into a newfound necessity for arrest. Liberty cannot fluctuate due to changing procedural labels,” the court held.
The necessity to arrest must arise from new circumstances, new material, or new conduct; it cannot spring from the ashes of allegations that have remained unchanged, the court said.
How this case reached court
Deepak Singh, along with directors Vikas Taneja and Prithviraj Singh was running a company called Gameskraft, challenged the legality of the arrest by the Enforcement Directorate.
The company was founded in 2017, and was engaged in the business of operating technology platforms, which allowed users to play skill-based online games such as rummy, ludo and poker.
The company was also engaged in the real estate business earning income through rental and maintenance of owned properties. In 2024, a case was registered against the company under Sections 318(2) of the BNS and Section 66 of the Information Technology Act, 2000, for online fraud and digital cheating, by a man who said he had got addicted to the games over the last seven years, and lost Rs 3 crore.
The police investigation found no substance in the allegations and closed the case in July 2025. Although online games were not statutorily regulated till then, in August, last year, the Promotion and Regulation of Online Gaming Act, 2025 came into effect, causing Gameskraft to stop its operations.
However, long after the company had stopped operations, the ED registered an ECIR saying that the predicate offence was cheating, which is a scheduled offence. After search and seizure operations were carried out over a period of five days in November, the company approached the Karnataka HC saying that since the police had filed a closure report in July, 2025, with respect to the offence of cheating, the connected ECIR should also be quashed.
This is why the Karnataka HC, in January, this year, stayed further proceedings in the ED’s case against Gameskraft founders.
(Edited by Viny Mishra)
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