1986 (12) TMI 371 - HC - FEMA

Summary

Issues:
1. Appeal under section 54 of the Foreign Exchange Regulation Act, 1973 against contravention of sections 5(1)(aa) and 5(1)(c) of the Foreign Exchange Regulation Act, 1947.
2. Retracted confession without adequate corroborations.
3. Imposition of penalty under section 5(1)(aa) without clear finding.

Analysis:

1. The appellant received funds from a person outside India without permission and made disbursements without authorization. The appellant admitted to these transactions in a statement but later retracted it. The Appellate Board considered the wealth of details in the statement and the belated retraction. The Board found sufficient grounds for contravention under section 5(1)(c) of the Act. The court noted that corroboration is not always necessary for a retracted confession, especially when main features of the story are proven true. The main features of the story were established in this case, supporting the contravention under section 5(1)(c).

2. The appellant was penalized under section 5(1)(aa) for receiving payments on behalf of a person outside India. However, the court found a lack of clear finding that the specific installments of funds were received on behalf of the appellant's brother. The penalty was solely based on the appellant's statement, which did not clearly indicate the receipt of the specific installments. The court determined that the penalty under section 5(1)(aa) lacked adequate supporting evidence. As a result, the penalty under section 5(1)(aa) was set aside, while the penalty under section 5(1)(c) was confirmed. The appeal was partially allowed, and the appellant was granted 15 days to comply with the order.

This judgment highlights the importance of corroborating evidence in cases involving confessions and the necessity of clear findings to support penalties imposed under specific sections of the law. The court meticulously analyzed the evidence and legal provisions to arrive at a reasoned decision, balancing the appellant's contentions with the requirements of the law.