FERA prosecution quashed where departmental exoneration and a retracted, uncorroborated statement left no safe basis for criminal liability.

Criminal proceedings under FERA may be quashed where departmental exoneration removes the factual foundation of the charge and the prosecution is left only with a retracted, uncorroborated statement. The Bombay High Court noted that adjudication and prosecution are distinct, but final exoneration on the same material is a relevant factor in deciding whether continuation of the case would serve any useful purpose. It further held that a retracted statement unsupported by independent documentary evidence or reliable corroboration cannot safely sustain criminal liability, especially where the remaining material is hearsay. The Court therefore found continuation of the prosecution to be abuse of process and quashed the proceedings.

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Issues: Whether criminal proceedings under FERA could be quashed after the adjudicating authority had exonerated the accused on the same material, and whether a retracted uncorroborated statement was sufficient to sustain the prosecution.

Analysis: The adjudicating authority had found that there was no documentary or other reliable material to connect the accused with the alleged receipt of money or transfer of foreign exchange, and that the retracted statement of the main witness, unsupported by corroboration, was insufficient to fasten criminal liability. The Court noted that although adjudication and prosecution are distinct, a final exoneration in departmental proceedings is a relevant factor in assessing whether continuation of the criminal case would serve any useful purpose. The Court also held that a retracted statement, standing alone and unsupported by independent evidence, could not form a safe basis for prosecution where the other material was only hearsay.

Conclusion: The prosecution could not be sustained and continuation of the criminal case would amount to abuse of process.

Final Conclusion: The application succeeded and the criminal proceedings were quashed in exercise of inherent jurisdiction.

Ratio Decidendi: Where departmental exoneration removes the factual foundation of the charge and the prosecution rests only on a retracted, uncorroborated statement, criminal proceedings may be quashed to prevent abuse of process.

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