ED Account Freeze Under PMLA: Karnataka HC Seeks Employee Salary Details before Considering Interim Relief to WINZO subsidiary [Read Order]

In a recent hearing, the Karnataka High Court asked ZO Pvt. Ltd. to furnish employee salary details before it could consider granting interim permission to operate a bank account frozen by the Directorate of Enforcement under the Prevention of Money-Laundering Act, 2002.

ZO Pvt. Ltd. challenged the Enforcement Directorate's action in freezing its account under Section 17(1A) of the PMLA.

The petitioner is linked to its holding company, WINZO Pvt. Ltd., which is facing certain proceedings. Two Board Resolutions dated 19 January 2026 were placed on record, authorising the petitioner to help the holding company in day-to-day business and to disburse salaries, wages and other statutory dues.

Senior counsel for the petitioner argued that the ED had no justification to assume jurisdiction under Section 17(1A) of the PMLA. He explained that because of inter-corporate investments and loans, the petitioner was required to pay salaries of WINZO employees as per the Board Resolutions. He also pointed out that if limited permission was granted, WINZO Pvt. Ltd. would not make a similar request.

The counsel for the Enforcement Directorate submitted that the respondent had not completed its pleadings and was acting on tentative instructions. At this stage, the ED was not in a position to take a clear stand on the request for interim relief.

The bench comprising Justice B M Shyam Prasad observed that apart from the jurisdiction issue, the respondent should get an opportunity to verify whether the employees and salary claims were genuine. The court explained that such verification was necessary before granting any interim relief.

The court directed the petitioner to provide details of employees, their designation and bank account details for salary payment to the respondent at the earliest. The matter was re-listed on 29 January 2026 (Today). No interim relief was granted at this stage.

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