The Allahabad High Court has ruled that assets originating from unknown sources of income cannot be automatically assumed to be the proceeds of crime under the Prevention of Money Laundering Act (PMLA).
The ruling was delivered by Justice Vikram D Chauhan as he granted bail to Sanjay Kumar, also known as Sanjay Dhiman, who is an accused in a money laundering case.
In his judicial order, Justice Chauhan stated that while an individual might hold assets from unidentified income sources, this alone does not create a legal presumption that the wealth stems from a scheduled offence. The court noted that at the current bail stage, the prosecution had not sufficiently shown identifiable proceeds of crime linked to a primary offense.
Case Background And Allegations
The Enforcement Directorate (ED) initiated the money laundering case against Kumar based on several local police reports concerning illegal mining activities in Himachal Pradesh. According to the federal agency, the revenue generated from those unauthorized operations was used to acquire a stone crushing unit in Uttar Pradesh. The ED alleged that this facility was subsequently used to facilitate further transactions related to illegal mining.
Arguments Presented In Court
During the bail hearing, Kumar’s legal counsel argued that his client was not named in any of the primary Himachal Pradesh police reports. The defense also pointed out that the investigations in those local cases had concluded with closure reports, several of which have already been accepted by competent courts.
Furthermore, the defense highlighted that Kumar had been detained in custody since November 18, 2024, while the trial has not yet started in earnest.
The ED strongly opposed the bail application, maintaining that Kumar played an active role in laundering illicit funds and asserting that the Uttar Pradesh stone crusher was purchased using money generated through the Himachal Pradesh mining operations.
Court Observations And Ruling
Upon examining the legal requirements of the PMLA, the High Court emphasized that money laundering charges require proof that the disputed assets are directly linked to criminal activity from a scheduled offence. The court pointed out that the prosecution failed to identify any specific assets connected to criminal activity that could be directly attributed to Kumar.
In its order, the court observed that merely accusing someone of possessing unexplained wealth does not automatically prove that the assets qualify as proceeds of crime under the anti-money laundering law.
Taking into account the completion of the investigation, the duration of Kumar’s custody, the fact that a co-accused had already been granted bail, and the materials presented during the bail stage, the High Court allowed the bail application.
