Retracted statement without corroboration and cross-examination cannot sustain a penal finding under foreign exchange law.

A penal finding under section 9(1)(f)(i) of FERA could not be sustained where the appellant was linked to the alleged remittance only through a retracted co-noticee statement, with no independent corroborative material. The appellant had sought cross-examination of the statement maker, but the request was refused. In these circumstances, the tribunal found the evidentiary basis for contravention insufficient and held that denial of cross-examination undermined fair procedure. The impugned adjudication, so far as it concerned the appellant, was therefore set aside and the penalty annulled.

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Issues: Whether the penalty for contravention of section 9(1)(f)(i) of the Foreign Exchange Regulation Act, 1973 could be sustained when the finding against the appellant rested solely on a retracted statement of a co-noticee and the appellant was denied cross-examination.

Analysis: The order against the appellant referred only to the statement of Sudhir Kapadia to connect the appellant with the alleged remittance transaction. That statement had been retracted, and no independent corroborative material was shown to establish the appellant's involvement. The appellant had specifically sought cross-examination of the maker of the statement, but the request was refused. In the absence of supporting evidence and in view of denial of cross-examination, the evidentiary basis for the finding of contravention was found insufficient.

Conclusion: The penalty could not be sustained; the impugned order was liable to be set aside in favour of the appellant.

Final Conclusion: The appeal succeeded and the adjudication order, insofar as it related to the appellant, was annulled for want of reliable evidence and breach of fair procedure.

Ratio Decidendi: A retracted statement, without corroboration and without affording cross-examination to the affected person, is insufficient to sustain a penal finding.

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