Retracted Statement and Diary Entry Evidence cannot alone sustain foreign exchange penalty or prove acknowledgement of debt
A retracted statement, without independent corroboration, cannot by itself sustain a penalty under the Foreign Exchange Regulation Act, 1973; on that basis, the Tribunal held the penalty unsustainable. A private diary entry noting dues does not amount to an acknowledgement of debt unless it contains a clear admission of liability in favour of a person with an actionable claim; on that basis, the alleged acknowledgement failed. The Tribunal therefore treated the penalty order as unsupported by reliable proof and allowed the appeal, with consequential refund of the pre-deposit amount.
Issues: (i) Whether a penalty under the Foreign Exchange Regulation Act, 1973 could be sustained solely on the basis of a retracted statement without independent corroboration; (ii) Whether a diary entry showing an amount due could amount to an acknowledgement of debt for the alleged violation.
Issue (i): Whether a penalty under the Foreign Exchange Regulation Act, 1973 could be sustained solely on the basis of a retracted statement without independent corroboration.
Analysis: The Tribunal found that the impugned order rested substantially on the appellant's retracted statement. In the absence of any independent or corroborative evidence, a retracted statement could not be treated as the sole basis for imposing penalty. Reliance was placed on the principle that a retracted statement, by itself, is insufficient to establish contravention under the foreign exchange law.
Conclusion: The penalty could not be sustained on the basis of the retracted statement alone, and the finding was in favour of the appellant.
Issue (ii): Whether a diary entry showing an amount due could amount to an acknowledgement of debt for the alleged violation.
Analysis: The Tribunal held that a mere entry in a private diary mentioning dues of another person does not amount to an acknowledgement of debt. An acknowledgement requires a clear admission of liability in favour of a person who has an actionable claim, which was absent on the facts.
Conclusion: The diary entry did not constitute an acknowledgement of debt, and the finding was in favour of the appellant.
Final Conclusion: The penalty order was unsustainable for want of reliable proof, and the appeal succeeded with consequential refund of the pre-deposit amount.
Ratio Decidendi: A retracted statement cannot, by itself and without independent corroboration, form the sole basis for imposing penalty under foreign exchange law, and a mere diary entry does not amount to an acknowledgement of debt.