Uncorroborated statements cannot sustain foreign exchange penalties without independent evidence proving the alleged contravention or receipt.

A penal finding under the Foreign Exchange Regulation Act, 1973 cannot rest on hearsay, untested assertions, or a bare admission when no independent documentary evidence proves the alleged contract, remittance, or receipt of foreign exchange. The record here lacked reliable corroboration, and the complainant's version remained internally inconsistent and unrebutted by cogent material. On that basis, the contravention finding was not sustainable and the penalties imposed under the Act were quashed.

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Issues: (i) Whether the finding of contravention under Section 16(1) of the Foreign Exchange Regulation Act, 1973 for alleged failure to realise foreign exchange was sustainable on the evidence; (ii) Whether the alleged admission regarding receipt of foreign exchange could sustain the penalty in the absence of corroborative material.

Issue (i): Whether the finding of contravention under Section 16(1) of the Foreign Exchange Regulation Act, 1973 for alleged failure to realise foreign exchange was sustainable on the evidence.

Analysis: The liability was founded mainly on the complaint and statements of a disgruntled brother who had earlier made allegations before other forums, while the contemporaneous material did not disclose independent documentary support for the alleged contract, receivable, or remittance. The defence that no such contract existed and that the allegations had earlier been rejected in connected proceedings remained unrebutted by reliable evidence. In the absence of corroboration, the adjudication was based on hearsay and untested assertions rather than proof of the alleged foreign exchange contravention.

Conclusion: The finding of contravention under Section 16(1) was not sustainable and was set aside.

Issue (ii): Whether the alleged admission regarding receipt of foreign exchange could sustain the penalty in the absence of corroborative material.

Analysis: The statement attributed to the managing director regarding receipt and settlement of foreign exchange was not supported by any independent documentary evidence, and the maker was not confronted with material proving the transaction. The record showed internal inconsistencies in the complainant's version and no reliable proof that the company or its directors had actually received the amounts alleged. A bare statement, particularly when alleged to have been obtained under pressure, could not justify penal consequences without supporting evidence.

Conclusion: The alleged admission could not, by itself, sustain the penalties imposed under the Act.

Final Conclusion: The impugned adjudication failed for want of cogent and independent evidence, and the appeal succeeded with the penalties quashed.

Ratio Decidendi: A penal finding under the Foreign Exchange Regulation Act, 1973 cannot be sustained on uncorroborated statements or hearsay allegations in the absence of independent evidence proving the alleged foreign exchange contravention.

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