Retractions do not defeat corroborated confessions in foreign exchange contraventions; penalty may still be reduced if disproportionate.

A retracted statement may still sustain a finding of contravention under foreign exchange law when it is corroborated by surrounding circumstances, the transaction lacks a believable innocent explanation, and the maker offers no proof of coercion or duress. The claimed immunity under the 1991 exemption scheme and the argument that no foreign exchange loss occurred were rejected because the essential ingredients of the contravention were established on the evidence and supporting presumptions arising from human conduct and special knowledge. Where the contravention is sustained but the transaction is a single instance and the penalty appears disproportionate, the punishment may be reduced. The penalty was therefore moderated from Rs. 60,000 to Rs. 30,000.

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Issues: (i) Whether the appellant's liability for contravention of Section 9(1)(d) of the Foreign Exchange Regulation Act, 1973 could be upheld on the basis of the recorded statement and surrounding circumstances, notwithstanding retraction and the claim of immunity under the 1991 exemption scheme; (ii) Whether the penalty imposed required reduction.

Issue (i): Whether the appellant's liability for contravention of Section 9(1)(d) of the Foreign Exchange Regulation Act, 1973 could be upheld on the basis of the recorded statement and surrounding circumstances, notwithstanding retraction and the claim of immunity under the 1991 exemption scheme.

Analysis: The recorded statement admitting receipt of the cheque and payment of premium was found to be corroborated by the surrounding material, including the nature of the transaction, the absence of any believable explanation for the payment, and the circumstances showing that the transaction was not a genuine gift. The retraction was not supported by proof of coercion or duress sufficient to displace the probative value of the inculpatory statement. The plea of immunity and the argument that there was no loss of foreign exchange were rejected because the essential ingredients of the contravention were held to be established on the evidence, including the application of presumptions based on human conduct and the appellant's special knowledge.

Conclusion: The finding of contravention was upheld against the appellant.

Issue (ii): Whether the penalty imposed required reduction.

Analysis: The transaction involved a single instance, and the quantum of penalty was considered disproportionate in the circumstances. While the contravention was sustained, the punishment was moderated to reflect the limited nature of the transaction.

Conclusion: The penalty was reduced from Rs. 60,000 to Rs. 30,000 in favour of the appellant.

Final Conclusion: The appellant remained liable for the established contravention, but the monetary penalty was substantially reduced.

Ratio Decidendi: A retracted confession can be relied upon when it is corroborated by independent circumstances, and where the contravention is established but the penalty is excessive, the adjudicatory authority may reduce the quantum of punishment.

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