Retracted confession in foreign exchange adjudication may be relied on if voluntary and corroborated; Evidence Act does not strictly apply.

A retracted confessional statement may still be relied upon in foreign exchange adjudication if it was made voluntarily and is broadly corroborated by other material; here, the delay in retraction and the supporting documentary and admission evidence justified sustaining the contravention finding under FEMA. Adjudication proceedings under FEMA are not governed by the strict rules of the Indian Evidence Act, 1872, because the Adjudication Proceedings and Appeal Rules expressly exclude that framework; the penalty was also found not to be harsh or disproportionate and was left undisturbed.

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Issues: (i) Whether the appellant's retracted confessional statement could be relied upon for sustaining the finding of contravention under the Foreign Exchange Management Act, 1999. (ii) Whether the Indian Evidence Act, 1872 applied to adjudication proceedings under the Foreign Exchange Management Act, 1999, and whether the penalty was excessive.

Issue (i): Whether the appellant's retracted confessional statement could be relied upon for sustaining the finding of contravention under the Foreign Exchange Management Act, 1999.

Analysis: A retracted confession is not automatically excluded from consideration. It may form the basis of a finding if it is shown to have been made voluntarily and its truth is supported by broad corroboration from other material. The retraction was not supported by any material showing coercion, inducement, or other vitiating circumstance, and it was made after considerable delay without explanation. The statement was corroborated by documentary material and by admissions of recipients examined in the course of adjudication.

Conclusion: The retracted confession was validly relied upon and the finding of contravention was upheld.

Issue (ii): Whether the Indian Evidence Act, 1872 applied to adjudication proceedings under the Foreign Exchange Management Act, 1999, and whether the penalty was excessive.

Analysis: Adjudication under the Foreign Exchange Management Act, 1999 is not bound by the strict rules of the Indian Evidence Act, 1872. Rule 4(5) of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 expressly states that the adjudicating authority is not bound by those provisions. The penalt y was also examined in relation to the amount of contravention and was not found to be harsh or disproportionate.

Conclusion: The Evidence Act did not govern the adjudication, and the penalty was not interfered with.

Final Conclusion: The adjudication order was sustained in full, and the appeal failed on merits.

Ratio Decidendi: In foreign exchange adjudication, a retracted confession can be relied upon if it is voluntary and broadly corroborated, and the proceedings are not controlled by the strict rules of the Indian Evidence Act, 1872.

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