2015 (1) TMI 1026 - HC - FEMA

Contravention of Sections 9(1)(b) and 9(1)(d) of FERA - penalty under Section 50 of the FERA - Held that - Retraction of the confessional statement containing admission of wrong-doings by the appellant came after more than ten years, at the stage of personal hearing only, and not before that. Had the appellant been subjected to threat, coercion or pressure as alleged by him rather belatedly, he would have retracted his confessional statement soon after making the same, once the alleged threat, coercion or pressure ceased to influence the action of the appellant. It is not his case that the said factors continued to influence him for 10 long years. Moreover, the appellant failed to disclose as to how he was pressurized, coerced, or tortured, and by whom, when he made the earlier confessional statement. The confessional statement was also duly corroborated by the aforesaid independent evidence viz. the list of persons to whom the monies had to be distributed, received by fax from Ubaidullah of Dubai. Thus, the plea of the appellant, founded upon his so-called highly belatedly retraction of his confessional statement, has to be rejected. Pertinently, though the appellant sought to produce bank transaction statements to show that he had been receiving monies from Ubaidullah of Dubai after the incident in question, and his consistent case is that he had been receiving monies from Ubaidullah of Dubai even earlier, he did not produce any material evidence to show that monies were earlier being received through a legal banking channel. - The appellant has been let off rather lightly considering that he had admitted to having received ₹ 13 Lakhs in all, i.e. ₹ 5 Lakhs on 16.11.1994 and ₹ 8 Lakhs in all, on two earlier occasions. The maximum fine, in these circumstances, could have been to the tune of ₹ 65 Lakhs. However, the appellant has been let off with a nominal fine of ₹ 1.5 Lakhs. - Decided against assessee.

Summary

Issues Involved:
1. Validity of the appellant's retracted confessional statement.
2. Sufficiency of corroborative evidence to support the confessional statement.
3. Appropriateness of the penalty imposed on the appellant.

Detailed Analysis:

1. Validity of the Appellant's Retracted Confessional Statement:
The appellant challenged the order of the Appellate Tribunal for Foreign Exchange, which upheld the penalty imposed under Section 50 of the Foreign Exchange Regulation Act, 1973 (FERA). The appellant's primary contention was that his confessional statement, recorded on 17.11.1994, was involuntary and made under coercion. He retracted this statement after more than ten years, on 15.12.2004, claiming he was unaware of the legal implications at the time and that he was pressured by Enforcement Directorate officers. The adjudicating authority, however, found the statement voluntary, noting that specific details known only to the appellant were included. The Appellate Tribunal also rejected the retraction, citing the lack of evidence to support claims of coercion and the significant delay in retraction.

2. Sufficiency of Corroborative Evidence to Support the Confessional Statement:
The adjudicating authority and the Appellate Tribunal emphasized the corroborative evidence supporting the appellant's confessional statement. This included documents seized from the appellant's residence, such as a list received by fax from Ubaidullah of Dubai, detailing the distribution of monies. The Supreme Court precedents in K.I. Pavunny vs. Assistant Collector (HQ), Central Excise Collectorate, Cochin, and K.T.M.S. Mohd. vs. Union of India were referenced, establishing that a retracted confession could be relied upon if corroborated by independent evidence. The appellant's failure to provide evidence of receiving money through legal banking channels further weakened his defense.

3. Appropriateness of the Penalty Imposed on the Appellant:
The penalty of Rs. 1.5 Lakhs imposed on the appellant was deemed lenient, considering the maximum possible fine could have been Rs. 65 Lakhs for the admitted receipt and distribution of Rs. 13 Lakhs. The appellant argued that no recovery of the alleged Rs. 5 Lakhs was made from him, and the confessional statement should not have been the sole basis for the penalty. However, the court found that the corroborative evidence and the voluntary nature of the initial confession justified the penalty. The appellant's late retraction and lack of substantial evidence to support his claims of coercion or legal receipt of funds did not merit a reduction in the penalty.

Conclusion:
The appeal was dismissed, with the court finding no merit in the appellant's arguments. The confessional statement, corroborated by independent evidence, was deemed voluntary and sufficient to uphold the penalty. The appellant was ordered to deposit the balance fine within four weeks.