Assets From Unknown Sources Can T Be Presumed To Be Proceeds Of Crime Allahabad Hc

PRAYAGRAJ The Allahabad high court has held that assets purchased from unknown sources of income cannot be presumed to be derived from proceeds of crime provided in the Prevention of Money Laundering Act, 2002.

“A person may have assets derived from unknown source of income, however, that by itself cannot be presumed that the aforesaid assets are derived from schedule offence, the high court said.

With this observation, Justice Vikram D Chauhan granted bail to one Sanjay Kumar alias Sanjay Dhiman, an accused in a money laundering case registered under the PMLA Act, holding that, at the stage of considering bail, the prosecution had not sufficiently demonstrated identifiable proceeds of crime arising from a scheduled offence. The court also took note of the applicant’s prolonged custody and the fact that the investigation had already been completed.

The Enforcement Directorate (ED) initiated proceedings based on multiple FIRs relating to alleged illegal mining activities in Himachal Pradesh. According to the agency, funds generated from those activities were allegedly used to purchase a stone crusher unit in Uttar Pradesh, which was later alleged to have been involved in illegal mining-related transactions as well.

During the hearing, the counsel for the applicant argued that he was not named in the Himachal Pradesh FIRs and pointed out that investigation in those cases had resulted in closure reports, several of which had already been accepted by the competent courts. It was also submitted that he had remained in custody since November 18, 2024, while the trial was yet to begin.

The ED opposed the bail plea, maintaining that the applicant had played a role in the alleged laundering of funds and that the stone crusher in Uttar Pradesh had been acquired using money generated through illegal mining.

“The ‘proceeds of crime’ are assets derived from criminal activity relating to schedule offence”, the court said. It noted that in the present case, the prosecution had not identified any specific assets allegedly derived from the criminal activity connected to the scheduled offences, particularly in relation to the applicant.

The court in its July 1 order also observed that merely alleging possession of assets from an unexplained source would not automatically establish that they were proceeds of crime under the PMLA. It remarked that such issues could involve other legal consequences but could not, by themselves, satisfy the statutory requirements of the Act.