1999 (8) TMI 1030 - AT - FEMA

Court Overturns Penalty u/s 9(1)(b) of Foreign Exchange Regulation Act Due to Lack of Corroborative Evidence.

B. Venugopal Versus Director of Enforcement

The court allowed the appeal, finding insufficient evidence to sustain the charge under Section 9(1)(b) of the Foreign Exchange Regulation Act, 1973. The ... - 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment are:Whether the appellant contravened section 9(1)(b) of the Foreign Exchange Regulation Act, 1973 by receiving Rs. 45,000 in cash from an unauthorized source.Whether the evidence, particularly the appellant's statement and the circumstances of the cash receipt, was sufficient to sustain the charge of contravention.Whether the appellant's statement was voluntary and credible, or if it should be disregarded due to lack of corroborative evidence.Whether the adjudicating officer's reasoning and conclusions were sound and supported by adequate evidence.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Contravention of Section 9(1)(b) of the Foreign Exchange Regulation Act, 1973Relevant legal framework and precedents: Section 9(1)(b) of the Foreign Exchange Regulation Act, 1973, prohibits the receipt of foreign exchange or Indian currency from unauthorized sources.Court's interpretation and reasoning: The court questioned the validity of the appellant's statement, noting that it was the sole basis for the charge and lacked corroborative evidence. The court found the reasoning of the adjudicating officer unsound and illogical.Key evidence and findings: The primary evidence was the appellant's statement made under section 40, which was later retracted, and the seized amount of Rs. 5,000. The appellant also provided a bank passbook showing transactions that contradicted the charge.Application of law to facts: The court applied the law by assessing whether the statement and circumstances constituted a contravention. It found that the appellant's father's usual practice of sending money through bank drafts undermined the credibility of the alleged contravention.Treatment of competing arguments: The court considered the appellant's argument that the statement was not voluntarily made and that the money was not received as alleged. It found the appellant's explanation plausible and the adjudicating officer's rejection of this explanation unfounded.Conclusions: The court concluded that the charge could not be sustained due to insufficient evidence and lack of corroboration for the appellant's retracted statement.3. SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning: 'In my opinion, the case is built up on the basis of the appellant's retracted statement which is neither supported by any corroborative evidence nor can it be believed to be true statement.'Core principles established: The necessity of corroborative evidence in sustaining charges of contravention under the Foreign Exchange Regulation Act, 1973, and the importance of voluntary and credible statements.Final determinations on each issue: The appeal was allowed, the adjudication order was set aside, and the respondent was ordered to refund the Rs. 5,000 adjusted towards the penalty within 45 days.The judgment emphasizes the importance of corroborative evidence in cases of alleged contraventions of foreign exchange regulations and highlights the need for statements to be voluntary and credible to sustain legal charges.