Natural justice and corroborated retracted statements under FERA justified upholding contraventions while reducing penalties.

Adequate opportunity during adjudication, disclosure of relied-upon material, and absence of demonstrated prejudice meant the ex parte order was not vitiated by breach of natural justice or denial of cross-examination. Retracted statements were nevertheless admissible where supported by seized diaries, loose sheets, search-day statements, and subsequent investigation providing independent corroboration; the findings of contravention and abetment under FERA were sustained. Although the contraventions stood proved, the Tribunal reduced the penalties, taking account of the appellants' economic condition and the pre-deposit already made, and modified the monetary liability accordingly.

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Issues: (i) Whether the ex parte adjudication and denial of cross-examination vitiated the order for breach of natural justice; (ii) Whether the retracted statements and seized documents, supported by corroborative evidence, established the contraventions under FERA; (iii) Whether the penalties warranted reduction.

Issue (i): Whether the ex parte adjudication and denial of cross-examination vitiated the order for breach of natural justice.

Analysis: Multiple opportunities had been given during adjudication, but the noticees sought adjournments and did not effectively participate. The adjudicating authority had considered the replies on record and was not bound to grant a further hearing immediately before passing the order. The record also showed disclosure of relied-upon material, and no prejudice was demonstrated from the non-grant of cross-examination at the appellate stage.

Conclusion: The challenge based on breach of natural justice failed.

Issue (ii): Whether the retracted statements and seized documents, supported by corroborative evidence, established the contraventions under FERA.

Analysis: The seized diaries, loose sheets, statements recorded on the date of search, and subsequent investigations into persons named in the documents provided corroboration for the admissions contained in the statements. The later retractions were considered, but the adjudicating authority had recorded reasons for accepting the original statements. The material on record was sufficient to sustain the findings of contravention and abetment under the foreign exchange law.

Conclusion: The contraventions were proved and the findings of guilt were sustained.

Issue (iii): Whether the penalties warranted reduction.

Analysis: Although the contraventions were established, the Tribunal took note of the appellants' economic condition and the fact that the pre-deposit ordered earlier had already been made. In the interests of justice, the penalties were brought down to the amounts corresponding to the pre-deposit already made.

Conclusion: The penalties were reduced.

Final Conclusion: The findings of contravention were maintained, but the monetary liabilities were substantially scaled down, resulting in a modified order in the appellants' favour to that extent.

Ratio Decidendi: A retracted statement may be relied upon when it is supported by independent and cogent corroborative evidence, and an ex parte adjudication is not invalid where adequate opportunities were given and no prejudice from denial of cross-examination is shown.

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