FERA presumption, retracted statements, and seized account records can sustain contravention findings on a preponderance of probabilities.

Section 72 of the Foreign Exchange Regulation Act, 1973 presumption could not be applied to documents seized from the residence of a person who was not proceeded against jointly, so the presumption was unavailable on these facts. The appellant company was nevertheless correctly identified as the noticee because the seized material, the director's association with the entity, and the surrounding record resolved the identity issue. Retracted Section 40 statements retained evidentiary value where they were delayed in retraction and corroborated by seized records. Bound notebooks and registers, treated as account-like records, together with the witness evidence and surrounding circumstances, established the alleged contraventions on a preponderance of probabilities.

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Issues: (i) whether the presumption under Section 72 of the Foreign Exchange Regulation Act, 1973 could be invoked on documents seized from the residence of a person not arrayed as a noticee; (ii) whether the appellant company was correctly identified and proceeded against as the noticee; (iii) whether the statements of the witness recorded under Section 40 of the Foreign Exchange Regulation Act, 1973 and their retraction displaced the finding of contravention; and (iv) whether the seized notebooks and registers, read with the evidence on record, established the alleged foreign exchange contraventions on the preponderance of probabilities.

Issue (i): Whether the presumption under Section 72 of the Foreign Exchange Regulation Act, 1973 could be invoked on documents seized from the residence of a person not arrayed as a noticee.

Analysis: The documents relied upon by the department were seized from the residence of a person who was not made a noticee in the show cause notice. The statutory presumption under Section 72 applies where the document is seized from the custody or control of a person and is tendered against him, or against him and another person proceeded against jointly with him. Since the person from whose premises the documents were seized was not proceeded against jointly, the statutory presumption was held inapplicable on the facts.

Conclusion: The presumption under Section 72 of the Foreign Exchange Regulation Act, 1973 was not available to the respondent on these facts.

Issue (ii): Whether the appellant company was correctly identified and proceeded against as the noticee.

Analysis: The record showed that a director of the appellant company was associated with the entity at the relevant time, and the seized documents referred to that director in connection with Onkar Travels. Although there was another entity with a similar name operating from the same premises, the reference in the seized material, together with the director's association with the appellant company, resolved the identity issue in favour of the department.

Conclusion: The appellant company was correctly made the noticee in the proceedings.

Issue (iii): Whether the statements of the witness recorded under Section 40 of the Foreign Exchange Regulation Act, 1973 and their retraction displaced the finding of contravention.

Analysis: The statements were recorded on two dates, explained the entries in the seized records, and were made by a person who had worked with the appellant company for a substantial period. The retraction was made after a delay and was treated as an afterthought. The proceedings being adjudicatory in nature, the Court applied the test of preponderance of probabilities and accepted the statements as relevant and reliable evidence, especially when corroborated by the seized records.

Conclusion: The retraction did not render the statements unacceptable, and they retained evidentiary value against the appellant.

Issue (iv): Whether the seized notebooks and registers, read with the evidence on record, established the alleged foreign exchange contraventions on the preponderance of probabilities.

Analysis: The seized notebooks and registers were treated as books of account because they were bound, systematically maintained, and contained detailed entries that were explained by the witness. Independent corroboration was found in the witness statements and the surrounding circumstances. The criminal discharge of the appellant was held to have no controlling effect because adjudication and prosecution operate on different standards of proof. On this material, the findings of contravention were sustained.

Conclusion: The alleged contraventions were proved on the preponderance of probabilities.

Final Conclusion: The impugned adjudication was upheld and no interference was warranted, so the appeal failed and the penalty order remained undisturbed.

Ratio Decidendi: In adjudication under the Foreign Exchange Regulation Act, a finding of contravention may rest on retracted statements and seized account-like records if they are corroborated and are reliable on a preponderance of probabilities, while a statutory presumption tied to joint proceedings cannot be invoked against facts outside its scope.

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