Karnataka High Court asks ED to justify its arrest of Gameskraft founders

The Karnataka High Court on Thursday directed the Directorate of Enforcement (ED) to justify their decision to arrest the founders of online gaming platform Gameskraft [Deepak Singh v Directorate of Enforcement]..The Court was dealing with petitions filed by the founders, Deepak Singh, Prithvi Raj Singh and Vikas Taneja, who have challenged their May 8 arrest as illegal. In yesterday's hearing, Justice MGS Kamal asked the ED to place on record its 'reasons to believe' that the Gameskraft founders could be guilty of money laundering to justify the agency's decision to make their arrest. The Court also noted that the ED's officers would be liable to two years of imprisonment if the arrest was made wrongfully. "You have to satisfy that you have been satisfied on the basis of some substantial tangible material. You are also responsible if you are not able to show, you will be prosecuted. You are also liable to be imprisoned for two years on wrong invocation (Section 62 of the PMLA Act deals with punishment for vexatious actions by ED officers). Therefore, be cautious. It is not a case where you can just get away with it. If you are not bringing on record (reasons to justify the arrest), he (arrested Gameskraft founder) can file against you and put you behind bars for two years.".Addressing the ED's counsel, Special Public Prosecutor Madhu N Rao, the judge added in a lighter vein,"Go behind the bars or defend.".Gameskraft's founders were arrested from Gurgaon earlier this month on allegations of luring players into real-money games and laundering approximately ₹250 crores.Following First Information Reports (FIRs) registered in Telangana, the ED arrested the founders of Gameskraft on May 8. The ED later produced them before a Bengaluru trial court, following which they were remanded to the ED's custody. The founders then filed petitions challenging the arrest. .Senior Advocate Dr S Muralidhar appeared for Deepak Singh and submitted that the arrest has been made with mala fide intentions. He argued that another identifcal ED case has already been stayed, after the underlying predicate criminal case was closed. He questioned why his client was arrested months after an identical case was stayed. "It beats me how within the period of arrest, that is 12 hours, they found material. They could drop all these grounds of arrest and reasons to believe which are no different from the ECIR of the earlier (offence) which has been stayed. Our main ground is that this entire exercise is mala fide. It's not as if Telangana doesn't have an ED office. There was absolutely no need for an ED in Bangalore, to pick up Telangana FIRs to go to Gurgaon from here and arrest me," he added. .Special Public Prosecutor Madhu N Rao, for the ED, countered that the latest FIRs concern rummy games played on Gamekraft, whereas the previously stayed ED case was for a different game, Pocket52. "(In the earlier offence), B report was filed and stayed by Court only with respect to that predicate offence investigations. This ECIR steps in with other 3 FIRs filed in Telangana. Earlier ECIR was with regard to Pocket52, this is in regard to rummy," he said. He also pointed out that the accused have already moved bail application before a special court dealing with money laundering cases. This led the Court to question whether the accused could pursue their reliefs before the special court. Senior Advocate Muralidhar replied that the High Court was better placed to examine the legality of the arrest. He pointed out that it may take time for the trial court to decide on the bail plea, adding that wrongful imprisonment should not be allowed to continue in the meanwhile."What about the legality of the arrest? If your lordships are ultimately going to decide one month later that my arrest was illegal then why should I have suffered all this custody?" he argued. The matter is likely to be heard next on May 19. .Senior Advocate Sajan Poovayya represented Prithvi Raj Singh and Vikas Taneja. Advocate Suhaan Mukherji also represented the petitioners.