Retracted confession and lack of corroboration defeated a foreign exchange penalty where voluntariness was not proved.

A penalty under the Foreign Exchange Regulation Act could not be sustained where the alleged confession was promptly retracted and voluntariness was not proved. Once coercion was asserted, the burden shifted to the respondent to establish that the statement was voluntary and truthful, with reliable corroboration. The adjudication was also undermined by the absence of material witnesses, denial of effective cross-examination, and inadequate evidence linking the appellant to the alleged foreign exchange transactions. On that record, the penalty was held legally unsustainable.

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Issues: Whether the penalty under the Foreign Exchange Regulation Act, 1973 could be sustained on the basis of a retracted confession and alleged recovery, when the voluntariness of the statement was not proved and the appellant was denied effective opportunity to test the evidence.

Analysis: The appeal turned on the evidentiary value of the statement allegedly recorded from the appellant and retracted almost immediately with allegations of duress. In such proceedings, a retracted confession cannot be acted upon unless the authority first satisfies itself that the statement was voluntary and truthful. Once the appellant asserted coercion and retraction, the burden shifted to the respondent to establish voluntariness and to support the allegation with reliable corroboration. The Court also noted that the adjudication was weakened by the absence of material witnesses, the denial of meaningful cross-examination, and the failure to produce adequate evidence connecting the appellant with the alleged foreign exchange transactions.

Conclusion: The penalty was not legally sustainable, as the respondent failed to prove that the statement was voluntary or to furnish sufficient corroboration for the alleged contravention.

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