1975 (9) TMI 198 - AT - FEMA

Penalty Under Foreign Exchange Regulation Act Overturned Due to Lack of Substantial Evidence and Corroboration.

L.K.R. AL. Alagappa Chettiar Versus Director of Enforcement

The appeal against the penalty under Section 5(1)(aa) of the Foreign Exchange Regulation Act, 1947, was allowed. The appellant's retracted confession ... - Issues:- Appeal against penalty imposed under Section 5(1)(aa) of the Foreign Exchange Regulation Act, 1947.Analysis:1. The appellant appealed against a penalty imposed for contravention of Section 5(1)(aa) of the Foreign Exchange Regulation Act, 1947. The appellant admitted to handing over $6,000 to a party in Malaysia with instructions to receive Rs. 20,000 in India, resulting in a gain of Rs. 5,000 through unauthorised channels. Despite denying the voluntary nature of the confession during adjudication, the appellant was found guilty and penalized.2. The appellant's counsel argued that there was no material linking the appellant to the alleged offence besides the retracted confession. It was suggested that departmental officers might have coerced the confession as no incriminating material was found during the search. Emphasis was placed on the lack of voluntary motive for confessing without evidence against the appellant.3. The respondent contended that although the confession lacked corroboration, the department had no reason to falsely implicate the appellant. The reliability of the intelligence used was highlighted, along with details in the confession consistent with being genuine and voluntary. Reference was made to a previous judgment allowing conviction based on a retracted confession and the relaxation of strict evidence rules in adjudication proceedings.4. Despite the retracted confession, no other evidence connected the appellant to the offence. The absence of details on how the Rs. 20,000 was spent and the lack of corroboration raised doubts. While adjudication can rely on retracted confessions, caution dictates corroboration for conviction. The absence of extraneous evidence supporting any part of the confession led to the conclusion that acting on the confession alone was imprudent.5. As there was no corroboration or extraneous evidence supporting the case against the appellant, the benefit of the doubt was given. The appeal was allowed, setting aside the penalty imposed by the Deputy Director. Any paid penalty was ordered to be refunded, considering the lack of substantial evidence against the appellant.