2015 (11) TMI 77 - HC - FEMA

Confiscation of amount seized from appellant premises - amount was obtained by any unfair means - offence under Section 9(1)(b) of the Act - Held that - It is apparent that the alleged confessional statement dated 30.04.1991, said to have been recorded from the appellant by the Officers of the Directorate of Enforcement has not been corroborated by any independent witness. Further, neither Mohamed Hilal of Kuwait, nor Jahubar Nissar, from whose residence the alleged document was said to have been seized was examined in this case. Their statements were also not recorded. - neither the copy of the seized document (document serial No.35, sheet No.11 of bunch A) was furnished to the appellant nor its contents were disclosed to him. In the absence of independent and cogent evidence, it cannot be heard to say that the alleged confessional statement dated 30.04.1991, said to have been recorded from the appellant was proved by the Directorate of Enforcement. - alleged statement was subsequently retracted by the appellant in his reply. - retracted confession cannot be trusted and form basis to maintain the charge that the appellant had contravened the provisions of Section 9 (1) (b) of the Foreign Exchange Management Act 1999. Since the Directorate of Enforcement has miserably failed to substantiate their case, presumptions has to be drawn as contemplated under Section 114 of the Evidence Act in favour of the appellant. Impugned order set aside - Decided in favour of Appellant.

Issues Involved:
1. Justification for confiscation of the seized amount and imposition of penalty.
2. Establishment of any offense under the F.E.R. Act, particularly under Section 9(1)(b).
3. Validity of relying on a retracted inculpatory statement without corroborative material.
4. Proceedings based on documents seized from a third party without the opportunity to examine that party.
5. Appropriateness of the penalty imposed by the Appellate Tribunal.

Issue-wise Detailed Analysis:

1. Justification for Confiscation and Penalty:
The appellant challenged the final order dated 04.02.2010, which confirmed the adjudication order dated 12.11.1992, ordering the confiscation of Rs. 1,20,000 and imposing a penalty. The court noted that the appellant's statement, which was the basis for the adjudication, was allegedly obtained under duress and subsequently retracted. The appellant argued that the statement had no value without independent corroboration. The court found that the Directorate of Enforcement failed to provide independent evidence corroborating the appellant's statement.

2. Establishment of Offense under F.E.R. Act:
The court examined whether the facts and material on record established any offense under the F.E.R. Act, specifically Section 9(1)(b). The appellant's statement, which was retracted, was the primary evidence against him. The court emphasized that a retracted confession needs substantial corroboration by independent and cogent evidence, which was lacking in this case. Therefore, the court concluded that no offense under the F.E.R. Act was established.

3. Validity of Relying on Retracted Statement:
The court discussed the nature of the appellant's statement, distinguishing between "confession" and "admission." It was noted that a confession must be a voluntary acknowledgment of guilt. The court referred to precedents, stating that a retracted confession is unreliable unless corroborated by trustworthy evidence. The court found that the appellant's retracted statement was not corroborated by any independent witness or material, making it unsafe to rely on it for conviction.

4. Proceedings Based on Third-Party Documents:
The court addressed the issue of documents seized from the premises of one Mr. Jahubar Nissar, which were not disclosed to the appellant. The appellant was not given an opportunity to examine Mr. Nissar or challenge the documents' authenticity. The court found that no penal action or statement was taken from Mr. Nissar, and the documents were not proven to be reliable evidence against the appellant.

5. Appropriateness of Penalty by Appellate Tribunal:
The court reviewed the penalty imposed by the Appellate Tribunal. Given the lack of corroborative evidence and the unreliable nature of the retracted statement, the court concluded that the penalty was unjustified. The court ordered the refund of the penalty amount and the confiscated sum to the appellant.

Conclusion:
The appeal was allowed, and the orders of adjudication and the final order of the Appellate Tribunal were set aside. The appellant was discharged from the charges under Section 9(1)(b) of the Foreign Exchange Regulation Act, 1999. The court directed the refund of the penalty and the confiscated amount to the appellant.

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