2009 (4) TMI 464 - HC - FEMA

Whether the Appellate Tribunal is right in relying on the confessional statement of the appellant dated 2-3-1981, which was retracted by him, in his letter dated 6-3-1981 sent from the Central Prison, Madras, which is inadmissible in law and cannot be used against him for any purpose in view of the retraction at the earliest point of time? Held that - The fact that adjudication proceedings does not mean that evidence and statements obtained by unfair and unlawful means can be accepted. The Court must be satisfied that it is reliable. Therefore, this Court cannot accept retracted statements made by the accused persons and convict them on the basis of such statements on the ground that the rigour of Criminal Procedure Code or the FER Act may not be applied to these proceedings. We have satisfied ourselves that even though the appellant claims that he has retracted the statements, the receipt of which is denied by the respondent there are enough corroborating materials and documentary evidence to confirm the finding against the appellant. Appeal dismissed.

Issues Involved:
1. Admissibility of a retracted confessional statement.
2. Burden of proof under Section 71(3) of the Foreign Exchange Regulation Act (FERA).
3. Corroboration of retracted confessional statements.
4. Procedural adherence in adjudication under FERA.

Issue-wise Detailed Analysis:

1. Admissibility of a retracted confessional statement:
The primary legal question was whether the Appellate Tribunal was justified in relying on the confessional statement of the appellant dated 2-3-1981, which was retracted by him on 6-3-1981. The appellant argued that the retracted statement was inadmissible and could not be used against him. The court examined various precedents, including judgments from the Supreme Court, which established that a retracted confession requires corroboration from independent evidence to be admissible. The court noted that while the appellant claimed the statement was made under duress, the corroborative evidence provided by other witnesses and documents seized during the investigation supported the validity of the original confession.

2. Burden of proof under Section 71(3) of FERA:
The appellant contended that he had lawfully brought $80,000 into India and that the $40,000 seized was part of this amount. The court held that under Section 71(3) of FERA, the burden of proving lawful possession of foreign exchange exceeding Rs. 15,000 lies with the individual. Although the appellant produced a Currency Declaration Form (CDF) as initial proof, the court found that he failed to provide evidence of how the remaining $40,000 was utilized or encashed. The court emphasized that the onus of proof is dynamic and shifts back to the appellant once the Department presents contrary evidence.

3. Corroboration of retracted confessional statements:
The court analyzed the corroborative evidence provided by the statements of other witnesses, including K.V. Chandran and L.A. Verma, and the documents seized during the investigation. The witnesses' statements, although claimed to be retracted, were not supported by evidence of retraction received by the Directorate. The court found that the statements and documents collectively corroborated the appellant's initial confession, thereby validating the retracted statement.

4. Procedural adherence in adjudication under FERA:
The appellant argued that the adjudicating authority and the Appellate Tribunal did not follow proper procedures and that the retraction letter was not considered. The court reviewed the procedural adherence under the Adjudicating Proceedings and Appeal Rules, 1974, and found that the proceedings were conducted in accordance with the rules. The court also noted that the retraction letter, allegedly given to the prison welfare officer, did not reach the Directorate, and thus could not be considered. The court emphasized that even in adjudication proceedings under FERA, the principles of natural justice and fair procedure must be followed, but the appellant failed to provide sufficient evidence to disprove the Department's case.

Conclusion:
The court concluded that the appellant failed to discharge his burden of proof under Section 71(3) of FERA and that the retracted confessional statement, corroborated by independent evidence, was admissible. The court upheld the findings of the adjudicating authority and the Appellate Tribunal, dismissing the appeal and confirming the penalty and confiscation imposed on the appellant.

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