The High Court of Karnataka has declared as contrary to law the arrest of Deepak Singh, Vikas Taneja and Prithviraj Singh, directors of Gameskraft Technologies Pvt. Ltd., by the Directorate of Enforcement (ED) in May following searches conducted in connection with an alleged fraud-linked money laundering case, and ordered their release from prison.

The court found that the ED had arrested them without issuing them summons under Section 50 of the Prevention of Money Launder (PML) Act. Also, the court said that there was no new material to arrest them as they were not arrested despite searching their premises for a week during November 2025 on the same set of allegations based on which the searches were conducted again on May 7-8, 2026.

Justice M. Nagaprasanna passed the order on June 16 while allowing the petitions filed by Deepak Singh, founder and chief executive officer, Vikas Taneja and Prithviraj Singh, directors of the company, challenging only the legality of their arrest by the ED.

Can be summoned

However, the court made it “abundantly clear that the statutory powers vested in the ED under Section 50 of the PML Act remain wholly unaffected, and it shall be open to the ED to issue summons and proceed further in accordance with law, should the circumstances so warrant.”

The court noted that the ED had previously conducted extensive searches between November 18 and 25, 2025 by registering an Enforcement Case Information Report (ECIR) based on a FIR registered by the Bengaluru police in 2024 on a complaint lodged by a user of company’s online gaming platforms for alleged loss of ₹3 crore. At that time, the court pointed out, the ED did not deem arrest of the petitioners was necessary.

Also, the court noted the investigation against this ECIR was stayed by the High Court in January 2026 as the company pointed out that the Bengaluru police had filed ‘B’ report in the case as the company had settled the case with the complainant.

New ECIR

However, the ED registered a new ECIR in on February 23, 2026, based on three FIRs registered different police stations in Telangana on the same allegations of loss due to use of company’s gaming platforms between 2017 and August 2015, when the company stopped operation of its gaming platforms following enactment of Promotion and Regulation of Online Gaming Act, 2025, the court noted.

Also, the court noted the ED neither summoned the petitioners for participating in the probe despite registration of new ECIR in February 2026 nor conducted searches of their premises till May.

The new grounds for arrest, served to the petitioners after searches conducted on May 7-8, were merely repackaged the same old allegations from earlier ECIR.

Stale material

“...the attempt to justify arrest on the strength of material already in possession of the ED from earlier proceedings runs contrary to the very architecture of Section 19(1) of the PML Act. The provision contemplates an assessment of the material available at the time of arrest; it does not countenance the resurrection of stale material to manufacture a fresh justification for deprivation of liberty. Section 19 [power to arrest] is not elastic enough to permit arrest on recycled suspicion when no new incriminating material has emerged,” Justice Nagaprasanna observed.

“If the earlier ECIR, fortified by search and seizure operations spread over several days, did not persuade the ED that the arrest of the petitioners was either warranted or necessary, it is difficult to fathom how the very same material, merely paraphrased and transplanted into a new ECIR, could suddenly acquire the potency to justify their incarceration,” the court said.

The ED had alleged that company’s gaming platforms manipulated gameplay, cheated users crores of rupees through deceptive practices, and proceeds were laundered via foreign investments, movable and immovable assets, etc.