Retracted statement and corroboration upheld contravention, but penalty failed without a clear factual finding.

A retracted statement was held reliable for proving contravention under the Foreign Exchange Regulation Act because it contained transaction details, was belatedly withdrawn, and was corroborated in part by seized documents; the contravention finding under section 5(1)(c) was upheld. By contrast, the penalty under section 5(1)(aa) could not stand because the record did not clearly establish that the two instalments were received by order of or on behalf of a person outside India, and the requisite factual finding was unsupported by adequate material; that penalty was set aside.

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Issues: (i) Whether the appellant's retracted statement could be relied upon for sustaining the finding of contravention under section 5(1)(c) of the Foreign Exchange Regulation Act, 1947. (ii) Whether the penalty under section 5(1)(aa) of the Foreign Exchange Regulation Act, 1947 was sustainable in the absence of a clear finding supported by adequate material.

Issue (i): Whether the appellant's retracted statement could be relied upon for sustaining the finding of contravention under section 5(1)(c) of the Foreign Exchange Regulation Act, 1947.

Analysis: The statement made by the appellant contained details of the transactions and was supported to a limited extent by the documents seized. Although the statement was retracted later, the retraction was delayed and the contemporaneous material furnished some corroboration of the essential features of the transactions. The absence of a rigid rule requiring full corroboration in every case of retracted confession meant that the authorities could rely on the statement where the main features were otherwise shown to be true.

Conclusion: The finding of contravention under section 5(1)(c) was upheld.

Issue (ii): Whether the penalty under section 5(1)(aa) of the Foreign Exchange Regulation Act, 1947 was sustainable in the absence of a clear finding supported by adequate material.

Analysis: The record did not disclose a clear finding that the two instalments of Rs. 10,000 each were received by the appellant by order of or on behalf of the person outside India. The material relied upon did not establish, with sufficient clarity, the receipt contemplated by section 5(1)(aa). In the absence of an adequate finding based on the record, the penalty under that provision could not stand.

Conclusion: The penalty under section 5(1)(aa) was set aside.

Final Conclusion: The appeal succeeded only to the extent of deleting the penalty imposed for contravention under section 5(1)(aa), while the penalty imposed for contravention under section 5(1)(c) was maintained.

Ratio Decidendi: A retracted statement may be relied upon where its essential features are corroborated by surrounding material and the retraction is belated, but a penalty cannot be sustained under a charging provision unless the requisite factual finding is clearly established on the record.

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