Retraction of confession did not defeat corroborated foreign exchange contravention; penalty was reduced on proportionality grounds.

Retraction of a confession did not displace the evidentiary value of seized documents, recorded statements and corroborative material where the Tribunal found the confession voluntary, truthful and unsupported by proof of coercion or undue influence. On that basis, contravention of Section 9(1)(b) and Section 9(1)(d) of the Foreign Exchange Regulation Act, 1973 was upheld as established through mutually reinforcing evidence showing hawala transactions on instructions from persons outside India. While sustaining the violation, the Tribunal moderated the penalty on proportionality grounds, taking into account the appellant's age, the long pendency of proceedings and the amount already deposited, and maintained the confiscation.

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Issues: (i) Whether the appellant's contravention of Section 9(1)(b) and Section 9(1)(d) of the Foreign Exchange Regulation Act, 1973 was established on the basis of the seized documents, statements recorded during investigation, and corroborative evidence despite retraction of the confession. (ii) Whether the penalty imposed for the proven contravention required interference and reduction.

Issue (i): Whether the appellant's contravention of Section 9(1)(b) and Section 9(1)(d) of the Foreign Exchange Regulation Act, 1973 was established on the basis of the seized documents, statements recorded during investigation, and corroborative evidence despite retraction of the confession.

Analysis: The record showed search and seizure of cash and incriminating documents, recording of statements under the statutory power, and explanations given by the appellant regarding the coded entries and transactions. The seized documents, the appellant's statement, and the statements of co-noticees were treated as mutually corroborative and were relied upon to conclude that the transactions were hawala dealings undertaken on instructions of persons outside India. The retraction was not found to be supported by any satisfactory proof of coercion or undue influence, and the confession was treated as voluntary and truthful. On that basis, the evidentiary foundation for the contravention was held sufficient.

Conclusion: The contravention under Section 9(1)(b) and Section 9(1)(d) of the Foreign Exchange Regulation Act, 1973 was upheld against the appellant.

Issue (ii): Whether the penalty imposed for the proven contravention required interference and reduction.

Analysis: While sustaining the finding of violation, the Tribunal took into account the age of the appellant, the long pendency of the proceedings, and the amount already deposited towards pre-deposit. It considered the circumstances relevant to proportionality of penalty and found that the originally imposed amount warranted modification.

Conclusion: The penalty was reduced from Rs. 20 lakhs to Rs. 5 lakhs, while the confiscation of Rs. 21.80 lakhs was maintained.

Final Conclusion: The finding of violation was sustained, but the monetary penalty was substantially reduced, resulting in only partial relief to the appellant.

Ratio Decidendi: A voluntary and truthful confession, if corroborated by surrounding materials and not shown to be the product of coercion, may be relied upon notwithstanding later retraction, and the penalty may be moderated on proportionality considerations even where the contravention is upheld.

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