Retracted confession under foreign exchange law can be relied on when voluntary and corroborated by independent evidence.

A retracted statement under Section 40 of the Foreign Exchange Regulation Act was treated as reliable because it was found voluntary and supported by independent corroboration from seized documents, call records, and recovered cash. The allegation of coercion was not substantiated. On the facts, the appellant's liability was established by the retracted statement together with the documentary and circumstantial material, and Rajiv Gopalani's involvement was proved through seized entries, handwriting evidence, and his failure to explain the record. The contraventions under the foreign exchange law were therefore upheld, and the penalties and confiscation ordered by the Tribunal were sustained.

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Issues: (i) whether the statement recorded under Section 40 of the Foreign Exchange Regulation Act, 1973 was voluntary and could be relied upon after retraction; (ii) whether the evidence on record established contraventions of the Foreign Exchange Regulation Act, 1973 by the appellant and by the co-appellant Rajiv Gopalani.

Issue (i): Whether the statement recorded under Section 40 of the Foreign Exchange Regulation Act, 1973 was voluntary and could be relied upon after retraction.

Analysis: A retracted statement is not, by that fact alone, inadmissible or unusable. The authority may act upon it if the statement is shown to have been made voluntarily and if it is corroborated by independent material. The statement in this case contained detailed explanations of the seized loose sheets and transactions, and those details were not shown to have been fabricated by the officers. The allegation of coercion was found unsupported by credible material, and the surrounding circumstances did not displace the voluntary character of the statement. Independent corroboration was available from the seized documents, telephone records, and recovery of cash.

Conclusion: The statement under Section 40 was held to be voluntary and reliable after retraction, subject to corroboration.

Issue (ii): Whether the evidence on record established contraventions of the Foreign Exchange Regulation Act, 1973 by the appellant and by the co-appellant Rajiv Gopalani.

Analysis: In the appellant's case, the retracted statement was supported by the recovery of substantial cash, the loose sheets recovered from his residence, and telephone-call records linking the transactions with other noticees. The plea that the cash had already been declared under the voluntary disclosure scheme was found false on the record. In Rajiv Gopalani's case, his telephone number appeared in the seized material, the handwriting on a material page was proved to be his, and he declined to explain the entries. This corroborated the appellant's statement that Gopalani had instructed payment of foreign-exchange equivalent amounts, establishing the contravention under the Act.

Conclusion: The contraventions were proved against both the appellant and Rajiv Gopalani.

Final Conclusion: The common order of the Appellate Tribunal was sustained, and no interference was called for with the penalties and confiscation ordered under the foreign exchange law.

Ratio Decidendi: A retracted confession under Section 40 of the Foreign Exchange Regulation Act, 1973 can be acted upon if it is found voluntary and is corroborated by independent evidence; such a statement cannot be the sole basis of liability unless supported by surrounding documentary and circumstantial material.

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