Retracted Statement has No Evidentiary Value: Delhi HC on granting relief in FERA Violation Case [Read Order]

The High Court of Delhi has set aside an order passed by the Foreign Exchange Appellate Tribunal on the ground that the evidence on which such penalizing order was passed holds no value if such a statement is retracted.

A search was conducted at the residence of one Sh. Satish Kumar Sharma. An aggregate amount of ₹8,25,000/- and various documents were seized. According to the Enforcement Directorate, the said documents disclosed that certain payments had been made to one Ashish. Inquiries revealed that the telephone connection was corresponding to the telephone number which was installed in the office of M/s Anukampa Tours and Travels (P) Ltd and one Sh. Ashish Jain was employed with the said concern. The business premises of M/s Anukampa Tours and Travels was searched and Indian currency amounting to ₹7,95,000/- and various documents were found in the said premises. According to the Enforcement Directorate, Ashish Jain had stated that the said amount was received from some unknown person under the instruction of a person resident in Dubai. On the next day of the search, he retracted his statement. Though no incriminating documents were found, a show-cause notice was issued initiating proceedings under section 51 of the Foreign Exchange Regulations Act(FERA) violation and an amount of Rs 7,95,000/- was confiscated. The Appellant had stated before the Adjudicating Authority that Ashish Jain had retracted his statement as the same had been recorded forcibly and under coercion but it was not entertained and Penalty of Rs.75,00,000 was imposed.

Justice Vibhu Bakhru while setting aside the order held, “In the present case, neither the Adjudicating Authority (Deputy Director, Enforcement Directorate) nor the appellate authority (Special Director, Appeals) had applied their minds on the question whether the statement made by Ashish Jain was voluntary in view of its retraction on the very next day. In fact, the Tribunal had proceeded on the basis that it was accepted by the Appellate Authority (Special Director, Appeals) that the statement of Ashish Jain had no evidentiary value. This Court is of the view that the statement of Sh. Ashish Jain could not be relied upon as, first of all, it was retracted on the very next day. And, secondly, the statement was very vague and bereft of any particulars, inasmuch as, it did not name or describe any person from whom funds had been received and whom the said funds had been distributed to. . . . The appellant has been deprived of his funds for a considerable period of time. As observed earlier, the confiscation of the amount is wholly illegal and unsustainable. This Court notes that Rule 8 of the Foreign Exchange Management (Encashment of Draft, Cheque, Instrument, and Payment of Interest) Rules, 2000 provides for repayment of interest at the rate of 6% per annum from the date of seizure till the date of payment. Thus, this Court is of the view that the said amount is required to be returned to the appellant along with interest at the rate of 6% per annum. It is so directed.”