2014 (3) TMI 1235 - AT - FEMA

Contravention of provision of Section 9(1)(d) of the FER Act 1973 - allegations of payment of Rs. 12, 98, 800/- to Shri Devkinandan (younger brother of Sh. Jagdish Prasad Karel) on the instruction of shri Dilip Saha of Bangladesh - effect of Retraction of the confessional statement by the appellant - whether the respondent has been able to prove the case as per standard as required in a case like this? - HELD THAT - the appellant was a Chartered Accountant was dealing in the profession of auditing tax matter consultancy. One telephone index containing the names addresses of various persons was recovered from the appellant but the same was not relevant because the appellant was an Income Tax consultant had so many clients. Nothing incriminating was recovered from the office of the appellant during raid as on 06.09.1996 at 08 15 p.m. Onus lies on the respondent to prove that the statement given by the appellant was true it was not caused by any inducement threat or promise by a person in authority. In this regard the respondent miserably failed as no plausible explanation was given by the Enforcement Directorate. Moreover the cross examination of Shri Jagdish Prasad Karel despite demand was also not allowed which is against the natural law of justice. There is momentum of force in the submissions of appellant when he emphasized that the retraction statement of the appellant was true and not an afterthought as it was mode by the appellant on the next very day i.e. on 07.09.1996 after his release from the custody of Enforcement Directorate on 06.09.1996 at 11 30 p.m. nothing incriminating was recovered from the office of the appellant during raid as on 06.09.1996 at 08 15 p.m. there was also no independent evidence in the present case against the appellant. So the confessional statement which was forcefully taken from the appellant is not voluntary. It is also relevant to mention that the present Appeal filed before this Tribunal pertains to the year 2003 i.e. more than 10 years old. There is no modicum of merit in the submissions of Ld. ALA for the respondent. Thus Impugned/Adjudicating Order passed by the Deputy Director Enforcement Directorate Calcutta is set aside qua the appellant Shri Naresh Kumar Agarwal (Noticee No.2) the appeal is allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether there has been a retraction of the confessional statement by the appellant.
Whether the respondent has been able to prove the case as per the standard required in such cases.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Retraction of Confessional Statement

Relevant legal framework and precedents: The legal framework involves the Foreign Exchange Regulation Act, 1973 (FERA) and the principles governing the voluntariness of confessional statements as discussed in the Supreme Court's decision in Vinod Solanki v. Union of India.
Court's interpretation and reasoning: The Tribunal observed that the confessional statement of the appellant was retracted immediately after his release from custody, suggesting it was not voluntary. The Tribunal emphasized that the burden is on the prosecution to prove the voluntariness of a confession.
Key evidence and findings: The appellant's confessional statement was retracted the day after it was made, and there was no independent evidence corroborating the confession. The Tribunal noted that the retraction was made promptly, indicating it was not an afterthought.
Application of law to facts: The Tribunal applied the legal principles from Vinod Solanki, emphasizing that the prosecution failed to demonstrate that the confession was voluntary and not obtained under duress.
Treatment of competing arguments: The respondent argued that the retraction was vague and unsupported by evidence, but the Tribunal found the appellant's prompt retraction credible and noted the lack of corroborating evidence.
Conclusions: The Tribunal concluded that the confessional statement was not voluntary and should not be relied upon to convict the appellant.

Issue 2: Proving the Case as per Required Standard

Relevant legal framework and precedents: The case revolves around alleged violations of Sections 9(1)(b) and 9(1)(d) of FERA, which require proof of unauthorized foreign exchange transactions.
Court's interpretation and reasoning: The Tribunal found that the Enforcement Directorate failed to provide sufficient evidence to substantiate the charges against the appellant.
Key evidence and findings: The Tribunal noted the lack of incriminating evidence from the appellant's premises and the absence of independent corroboration for the alleged transactions.
Application of law to facts: The Tribunal applied the standard of proof required in quasi-criminal proceedings, finding that the evidence presented did not meet this standard.
Treatment of competing arguments: The respondent's reliance on the appellant's confessional statement was undermined by the lack of corroborating evidence and the immediate retraction.
Conclusions: The Tribunal concluded that the respondent did not meet the burden of proof required to establish the appellant's guilt under FERA.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "A person accused of commission of an offence is not expected to prove to the hilt that confession had been obtained from him by any inducement, threat or promise by a person in authority. The burden is on the prosecution to show that the confession is voluntary in nature and not obtained as an outcome of threat, etc. if the same is to be relied upon solely for the purpose of securing a conviction."
Core principles established: The prosecution must prove the voluntariness of a confession, and a retracted confession requires careful scrutiny, particularly when made promptly after the alleged coercion.
Final determinations on each issue: The Tribunal set aside the Adjudicating Order, concluding that the appellant's confessional statement was not voluntary and that the respondent failed to prove the case to the required standard.

The Tribunal's decision underscores the importance of voluntary confessions and the necessity for the prosecution to meet its burden of proof in cases involving alleged violations of foreign exchange regulations.

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