Accused Som Bahadur Nepali was on his way to Delhi from Nepal when he was arrested during a routine checking of the bus, he said.
The accused was on his way to Nepal from India to hand over the consignment, valued at about Rs 1 crore in the global market.
The village was built on 'No Man's Land' on the Indian side, after Nepalese people encroached upon it by erecting wood and concrete structures there.
The latest border dispute began over India's inauguration last month of a Himalayan link road built in a disputed region that lies at a strategic three-way junction with Tibet and China.
The pregnant woman, who was awaiting her turn for crossing over to India along with her husband, suddenly developed labour pain and became restless leading to the delivery of a baby boy.
Nepal shares a border of over 1,850 kms in the east, south and west with five Indian states, Sikkim, West Bengal, Bihar, Uttar Pradesh and Uttarakhand.
An unclaimed vehicle bearing the registration number of Punjab was seized from the border and a probe was on to ascertain its ownership and its connection with Honeypreet.