M/s Gameskraft Technologies Pvt. Ltd. & Ors. vs Null

The petitioners are six in number out of whom petitioner Nos.1 and 2 are companies engaged in the business of hosting online money games and petitioner Nos.3 to 6 are the subsidiaries of the 1^st petitioner. They are before the Court calling in question seizure proceedings initiated under Section 17 of the Prevention of Money Laundering Act, 2002 (hereinafter referred to as ‘the PMLA’ for short).

Shorn of unnecessary details, facts germane are as follows:-

On 05-12-2024, a complaint comes to be registered by one Mr. Nishant Srivastava before the Central CEN Crime Police Station which is registered as Crime No.722 of 2024 for offences punishable under Section 318(2) of the BNS and Section 66 of the Information Technology Act, 2000. The crime is registered against both these petitioners alleging that they are engaging in fraudulent online gaming activities and the loss caused to Nishant Srivastava was ₹3/- crores. The Police conduct investigation and file a ‘B’ report in Crime No.722 of 2024. The ‘B’ report is accepted by the concerned Court after hearing the complainant. The acceptance of ‘B’ report attains finality. Nothing happens for six months. After six months, on the basis of the crime in Crime No.722 of 2024, an Enforcement Case Information Report (for short ‘the ECIR’) comes to be registered for investigation into the offence under the PMLA. Pursuant to registration of ECIR, search and seizure proceedings happen between 18-11-2025 and 22-11-2025. On 12-12-2025, the Directorate of Enforcement files an Original Application (‘O.A’) before the Adjudicating Authority as obtaining under sub-section (4) of Section 17 of the PMLA in O.A.No.370 of 2025 seeking retention of the property and records seized during the search proceedings under the PMLA. On 22-12-2025, show cause notices were issued to the petitioners under Section 8 of the PMLA directing the petitioners to submit their reply to the show cause notices. On 22-01-2026, this Court grants an interim order of stay qua the petition challenging the ECIR on the score that predicate offence was closed prior to registration of ECIR. The Directorate of Enforcement registers an addendum to the ECIR or a new ECIR on the basis of predicate offences in other States. The Directorate of Enforcement then conducts search and seizure proceedings under Section 17 of the PMLA in the premises of the petitioners from 07.05.2026 to 14.05.2026. The present petition calls in question the search proceedings and the consequential proceedings arising therefrom.

Heard Dr. S.Muralidhar, Sri Vikram Chaudhary, Sri Sajan Poovayya, Sri Sandesh J Chouta, learned senior counsel appearing for the petitioners and Sri Zoheb Hossain learned senior counsel along with Ms. Anuparna Bordoloi, learned counsel appearing for the respondent / Directorate of Enforcement.

At the very threshold, before the Court could embark upon an examination of the merits of the controversy, the learned Senior Counsel Sri Zoheb Hossain, appearing on behalf of the Directorate of Enforcement, raises what he describes as a jurisdictional embargo. According to the learned Senior Counsel, the very maintainability of the present proceedings falls for consideration before any further step can be taken in the matter. It is contended that the impugned proceedings arise out of the exercise of powers under Section 17 of the PMLA, namely search, seizure and freezing of properties. Such proceedings, according to him, partake the character of civil proceedings and not criminal proceedings. The powers under Section 17, though exercised by an investigating agency constituted under a penal statute, ultimately culminate in proceedings concerning attachment, retention and confiscation of property before the Adjudicating Authority. Those proceedings, it is urged, stand on a plane entirely different from investigation into the offence of money laundering.

The submission, therefore, is that every challenge to a seizure order or a freezing order must necessarily travel before a Bench exercising civil writ jurisdiction under Article 226 of the Constitution of India and not before a Bench assigned criminal roster merely because the proceedings owe their origin to an ECIR. According to the learned Senior Counsel, the distinction between the criminal prosecution on one hand and the civil consequences concerning attachment of property on the other is too well entrenched in the statutory framework of the PMLA to be ignored. It is thus urged that this Court ought first to determine whether the petition is maintainable before the criminal roster and only upon answering the said question in the affirmative can the Court proceed to examine the legality or otherwise of the impugned seizure proceedings.

Per contra, Dr. S. Muralidhar, learned Senior Counsel appearing for the petitioners, would, with equal vehemence, submit that the objection projected by the Directorate of Enforcement is more attractive in form than sound in substance. The learned Senior Counsel would contend that proceedings under Section 17 of the PMLA cannot be viewed in splendid isolation, detached from the source from which they derive their very existence. Search, seizure, freezing, retention and eventual adjudication do not arise in a legal vacuum. They are but successive links in one continuous statutory chain, the first link of which is the ECIR. If the fountainhead itself is under challenge before this Court, every consequential action flowing therefrom necessarily travels with it. To compartmentalise the challenge and compel a litigant to assail the ECIR before one Bench and every consequential seizure before another Bench would, according to the learned Senior Counsel, amount to fragmenting one indivisible cause of action into artificial compartments unknown to law.

It is further contended that proceedings before the Adjudicating Authority are undoubtedly civil in complexion; yet, they are not independent civil proceedings in the ordinary sense of the expression. They are proceedings undertaken in aid of the criminal prosecution contemplated under the PMLA. Attachment of property is not the end in itself; it is but one of the statutory mechanisms devised to preserve the proceeds of crime pending culmination of proceedings under the PMLA. Therefore, to divorce such proceedings from the criminal investigation that gives birth to them would be to overlook the very architecture of the PMLA.

The learned Senior Counsel would further submit that the present petition has been instituted under Article 226 of the Constitution of India read with Section 482 of the Cr.P.C. The extraordinary jurisdiction of this Court cannot be curtailed merely because one of the consequential orders happens to concern seizure of property. The width of the constitutional jurisdiction is not to be constricted by an over-technical interpretation of roster allocation.

He would, therefore, submit that the objection of the Directorate of Enforcement is founded upon an excessively technical approach, one which seeks to divide judicial forums on the basis of individual reliefs instead of examining the substance of the lis. Such an interpretation, if accepted, would result in conflicting proceedings before different Benches concerning one and the same cause of action, a consequence which the law neither contemplates nor encourages.

Supplementing the aforesaid submissions, Sri Vikram Chaudhary, learned Senior Counsel, would draw sustenance from the decision of the Apex Court in OPTO CIRCUIT INDIA LIMITED v. AXIS BANK reported in (2021) 6 SCC 707. The learned Senior Counsel would submit that the freezing order questioned therein was itself subjected to challenge before a coordinate Bench of this Court in the proceedings exercising criminal jurisdiction. The matter thereafter travelled to the Apex Court without any objection as to the forum. According to him, judicial practice itself furnishes a complete answer to the objection now projected by the Directorate of Enforcement. He would submit that the reliance upon OPTO CIRCUIT INDIA LIMITED supra is not by way of an independent proposition but only to reinforce the submissions already canvassed by Dr. S. Muralidhar, namely, that proceedings which are consequential to an ECIR have consistently been examined by Courts exercising criminal jurisdiction.

In the backdrop of the rival submissions, the controversy narrows itself into a singular, yet significant, question. The issue does not concern the legality of the search or the validity of the freezing order at this stage. The issue lies at a stage anterior thereto. It is one of jurisdiction. The question that therefore falls for consideration is:

Whether proceedings initiated under Section 17 of the PMLA are required to be assailed only before a Bench exercising civil writ jurisdiction under Article 226 of the Constitution of India, or whether such proceedings, being inseparably connected with the ECIR and the predicate offence, can equally be questioned in proceedings under Article 226 of the Constitution of India read with Section 482 of the Cr.P.C.?

To answer the aforesaid issue, it becomes necessary to traverse the factual backdrop in a little greater detail before embarking upon an examination of the judicial landscape governing the field.

Before embarking upon an examination of the judicial precedents cited at the Bar, it becomes imperative to notice, in a little greater detail, the factual canvas upon which the present controversy is projected. A complaint came to be registered on 05-12-2024 for offences punishable under Section 318(2) of the BNS and Section 66 of the Information Technology Act, 2000 which culminated in registration of Crime No.722 of 2024. Investigation into the said crime, however, did not reveal material warranting prosecution. The investigating agency consequently submitted a 'B' report on 27-05-2025. The jurisdictional Court, after affording opportunity to the complainant, accepted the closure report on 05.07.2025. The order accepting the 'B' report remained unchallenged. Neither the investigating agency nor the complainant sought to question the said order before any superior forum. The inevitable consequence was that the predicate offence reached its legal culmination and attained finality. In the eye of law, the criminal proceedings stood concluded. Ordinarily, that ought to have marked the end of the matter. It did not. What had apparently reached its legal repose was sought to be resurrected after the passage of several months. The Directorate of Enforcement, resting its action upon proceedings that had already been judicially closed, generated an ECIR. The ECIR did not emerge contemporaneously with the predicate offence; it surfaced nearly four months after the acceptance of the 'B' report. It is this circumstance that lends significance to the controversy before the Court.

The generation of the ECIR was immediately followed by investigative measures. Search proceedings were undertaken between 18-11-2025 and 22-11-2025 in the business premises of the petitioners as also the residences of their Directors. Eight bank accounts belonging to the petitioners were frozen. Thereafter, invoking Section 17(4) of the PMLA, the Directorate of Enforcement approached the Adjudicating Authority in O.A. No.370 of 2025 seeking retention of the articles and records seized during the course of search. Consequential show cause notices came to be issued.

The matter did not rest there. This Court, while examining the challenge to the ECIR, granted an interim order of stay on 22-01-2026, prima facie noticing that on the date of registration of the ECIR, there existed no surviving predicate offence capable of sustaining proceedings under the PMLA. Although the present proceedings are not directly concerned with the correctness of the ECIR, the genesis of every subsequent action unmistakably traces itself to that very ECIR. Thereafter, between 07-05-2026 and 14-05-2026, yet another round of search and seizure operations was carried out. Several electronic devices, mobile phones, hard disks and other articles came to be seized. More significantly, by an order dated 13-05-2026, as many as 106 bank accounts belonging to the petitioners and associated persons were directed to be frozen.

It is this freezing order, together with the consequential proceedings for retention under Sections 20 and 21 of the PMLA and the show cause notices issued by the Adjudicating Authority, that now forms the subject matter of challenge before this Court. It is in the backdrop of these facts that the preliminary objection touching maintainability assumes significance. This Court must therefore survey the judicial landscape governing the field before recording its conclusions.

Sri Zoheb Hossain, learned Senior Counsel appearing for the Directorate of Enforcement, would anchor his preliminary objection principally upon the judgment of the three Judge Bench of the Apex Court in the case of VIJAY MADANLAL CHOUDHARY v. UNION OF INDIA^{11.2022 SCC OnLine SC 929}, wherein it is held as follows:

The Three Judge Bench, while delineating the statutory architecture of the PMLA, draws a clear distinction between the criminal prosecution for the offence of money laundering under Section 3 and the civil consequences relating to attachment, adjudication and eventual confiscation of the proceeds of crime. The learned Senior Counsel would submit that these observations unmistakably demonstrate that proceedings under Section 17 are civil in character and, therefore, any challenge thereto must necessarily be instituted before a Bench exercising civil writ jurisdiction.

To fortify the submission, reliance is also placed upon the judgment of the Apex Court in PAREENA SWARUP V. UNION OF INDIA^{22.(2008) 14 SCC 107}, wherein the constitutional validity of the institutional framework under the PMLA, including the constitution of the Adjudicating Authority and the Appellate Tribunal, came to be examined. The said judgment, according to the learned Senior Counsel, reinforces the independent civil character of proceedings before the Adjudicating Authority. The Apex Court has held as follows:

The Apex Court in the case of STATE OF WEST BENGAL v. SUJIT KUMAR RANA^{33.(2004) 4 SCC 129} has held as follows:

It is, therefore, his emphatic submission that the challenge in the present proceedings, being directed against search, seizure and freezing of property under Section 17 of the PMLA, ought not to be entertained by a Bench exercising criminal jurisdiction.

The petitioners, however, invite the Court to look at the issue from an entirely different perspective. Dr. S. Muralidhar and Sri Vikram Chaudhary, learned Senior Counsel appearing for the petitioners, would submit that the issue is no longer res integra. In BERMACO ENERGY SYSTEMS LIMITED v. DIRECTORATE OF ENFORCEMENT^{44.2024 SCC OnLine Bom.3833} the High Court of Bombay has held as follows:

(Emphasis supplied at each instance)

The Division Bench of the High Court of Bombay in the case of BERMACO ENERGY SYSTEMS LIMITED supra, after an exhaustive consideration of the very judgments now relied upon by the Directorate of Enforcement, has held that proceedings before the Adjudicating Authority, though civil in complexion, are nonetheless in aid of the criminal prosecution contemplated under the PMLA. Consequently, proceedings arising therefrom are liable to be entertained on the criminal side. The High Court of Bombay while interpreting the observations in VIJAY MADANLAL CHOUDHARY, unmistakably concludes that attachment proceedings cannot be viewed as islands unto themselves, disconnected from the prosecution under the PMLA. They constitute one continuous statutory mechanism designed to ensure that the proceeds of crime remain available for eventual adjudication and prosecution. It is for this reason that appeals arising from such proceedings are entertained before the criminal side of that Court.

Equally significant, according to the learned Senior Counsel, is the decision of the Apex Court in OPTO CIRCUIT INDIA LIMITED supra. The challenge in that case also arose out of a freezing order and travelled through proceedings instituted under Section 482 of the Cr.P.C. The fact that the issue was entertained both by this Court and by the Apex Court, without any demur as to jurisdiction, itself furnishes a significant indicator of the legal position.

Thus stands the judicial landscape—one stream of authority emphasising the civil complexion of attachment proceedings and another recognising that such proceedings are inseparably interwoven with the criminal process under the PMLA. It is this apparent divergence that now falls for reconciliation.

Having bestowed anxious consideration to the judgments cited at the Bar by both the learned Senior Counsel appearing for the petitioners and the learned Senior Counsel representing the Directorate of Enforcement, this Court finds itself unable to accede to the preliminary objection as to maintainability. The cumulative effect of the judicial pronouncements noticed hereinabove unmistakably points in one direction—that the present petition is maintainable, more particularly in the peculiar factual matrix obtaining in the case at hand.

The proceedings impugned before this Court have not sprung into existence in a legal vacuum. They are neither independent nor self-sustaining proceedings capable of existing de hors the statutory framework that gave birth to them. Every action undertaken by the Directorate of Enforcement under Section 17 of the PMLA must necessarily trace its lineage to an ECIR. In the case at hand, the immediate foundation is the fresh ECIR No. ECIR/BGZO/07/2026 dated 23-02-2026. The said ECIR, in turn, has not emerged in isolation. It owes its existence to FIR Nos.97 of 2026, 330 of 2026 and 10 of 2026, all registered before the jurisdictional police at Hyderabad and FIR No.29 of 2026 before the jurisdictional police at Lucknow. Those FIRs, as the record unmistakably discloses, themselves find their genesis in Crime No.722 of 2024. The chain is thus complete, each link deriving its strength from the one preceding it. The search, seizure and freezing proceedings are but the final manifestations of a process that commenced with the registration of the predicate offence.

It is now too well entrenched a principle of law to admit of any debate that an ECIR cannot exist in splendid isolation. It is not an autonomous instrument capable of independent existence. It derives both its legitimacy and jurisdictional competence from the existence of a predicate offence. The predicate offence may be one under the BNS or any other penal enactment notified in the Schedule to the PMLA; yet, without such foundational offence, the ECIR cannot find its existence. The predicate offence is the juridical bedrock upon which the entire edifice of proceedings under the PMLA is erected.

One may aptly borrow from the metaphor that naturally emerges from the statutory scheme itself. The predicate offence is the skeleton; the ECIR is the flesh and blood that envelopes it. A skeleton without flesh may remain incomplete; but flesh and blood without a skeleton is an anatomical impossibility. To hold that proceedings under the PMLA can survive independent of the predicate offence would be to breathe life into a body devoid of its skeletal frame. Such an interpretation would be contrary to the statutory architecture of the PMLA. Such a construction finds no approval, either express or implied, even in the three Judge Bench decision of the Apex Court in the case of VIJAY MADANLAL CHOUDHARY, which consistently recognises the inseparable nexus between the offence of money laundering and the existence of a scheduled offence.

If the statutory chain is viewed in its entirety, the conclusion becomes inevitable. Proceedings under Section 17 do not arise spontaneously. They are consequential to the registration of an ECIR. The ECIR itself is consequential to the existence of a predicate offence. The search, seizure, freezing and retention of property are therefore not isolated civil actions divorced from criminal proceedings; they constitute successive statutory steps flowing from the very registration of the predicate offence. To sever one link from the other would be to dismantle the legislative scheme itself.

Above all, one cannot lose sight of the object with which the Directorate of Enforcement has been constituted. The PMLA is not designed merely to regulate property. It is enacted to identify, trace, preserve and ultimately confiscate proceeds of crime generated from criminal activity. The jurisdiction of the Directorate of Enforcement is thus inextricably intertwined with criminality. Attachment of property is merely an instrumentality employed in aid of prosecuting the offence of money laundering. It cannot, therefore, be artificially divorced from the criminal proceedings that give it life.

Viewed thus, this Court has no hesitation in holding that where proceedings under Section 17 of the PMLA emanate directly from an ECIR, and the ECIR itself owes its existence to a predicate offence, a challenge thereto is unquestionably maintainable either in a petition under Section 482 of the Cr.P.C. or in a writ petition under Article 226 of the Constitution of India read with Section 482 of the Cr.P.C. The objection as to maintainability, therefore, deserves rejection.

The learned Senior Counsel appearing for the Directorate of Enforcement, however, places considerable reliance upon the decision of the Apex Court in PAREENA SWARUP supra, projecting it as the sheet anchor of the preliminary objection. The reliance, though attractive at first blush, dissolves upon a closer scrutiny of the judgment. PAREENA SWARUP was concerned with an altogether different issue. The Apex Court was examining the constitutional validity of the institutional framework under the PMLA, particularly the constitution of the Adjudicating Authority and the Appellate Tribunal. The judgment neither considered nor answered the question that arises for consideration in the present proceedings, namely, whether a challenge to search and seizure proceedings under Section 17, being consequential to an ECIR, must necessarily be entertained only by a Bench exercising civil writ jurisdiction or whether such challenge is maintainable before a Bench exercising criminal jurisdiction. The judgment is, therefore, clearly distinguishable and cannot be pressed into service to answer an issue that never arose before the Apex Court.

The fallacy in the submission of the Directorate of Enforcement lies in its attempt to compartmentalise one continuous statutory process into watertight compartments. Once an ECIR is questioned before a Bench exercising criminal jurisdiction, every consequential action flowing therefrom necessarily follows the same stream. It would indeed be anomalous if the legality of the ECIR were to be examined by one Bench, while the legality of the search undertaken pursuant to that very ECIR were to be relegated to another Bench exercising an altogether different roster. Such a course would inevitably invite conflicting opinions upon the same foundational facts and fracture what is otherwise one indivisible cause of action.

A search undertaken under Section 17 of the PMLA is not an independent civil exercise; it is a consequence of the ECIR, a continuation of the investigative process and is a statutory measure adopted to secure the proceeds of crime during the pendency of investigation into the offence of money laundering. Once viewed in that perspective, the argument that the search retains an exclusively civil character loses all force. This Court, therefore, holds that a petition invoking Article 226 of the Constitution of India read with Section 482 of the Cr.P.C., challenging search and seizure proceedings that emanate from an ECIR, is perfectly maintainable. The preliminary objection consequently fails.

The issue is answered accordingly.

Let the matter now proceed to be considered on its merit.