IMPORTANT POINTS
The salutary principles of mens rea and actus reus may not be applicable in cases under Special Acts.
The initial burden to prove that the confession was voluntary in nature would be on the Department/Prosecution.
Judgment not supported by materials on record cannot be sustained.

JUDGMENT

S.B. Sinha, J. —

1.Leave granted.

2.What would be the effect of a retracted confession for the purpose of levy of penalty under Foreign Exchange Regulation Act, 1973 (for short, “the Act”) is the question involved in this appeal which arises out of a judgment and order dated 30.11.2007 passed by the High Court of Judicature at Bombay in FERA Appeal No. 85 of 2007.

3.On or about 25.10.1994, the office premises of the appellant was searched. Recovery of Indian currency amounting to Rs. 2,65,000/- was made. He was thereafter detained. On the next two succeeding dates, i.e., on 26.10.1994 and 27.10.1994, he allegedly made two statements before the Authorities under the Act, disclosing that all the transactions in the name of M/s Sun Enterprises, Ahmedabad and M/s Suraj Enterprises, Bombay relating to import of goods had been made by him and no import of goods had taken place in the name of the said firms. He is stated to have confessed that he was responsible for remittance of the foreign exchange worth US Dollars 11,400 and US Dollars 22,830. In view of the said purported confession, he was arrested for alleged violation of the provisions of Section 8(3) and Section 9(1)(a) of the Act. We are not concerned with the rest of the statements.

4.He was produced before the learned Chief Metropolitan Magistrate, Bombay on 28.10.1994. Before the said court, he filed an application retracting his confession, stating:

“That from 26-10-94 evening till today when I am being produced before this Hon’ble Court, I was illegally detained in the office of the Enforcement Directorate, and during my illegal detention my involuntary, untrue and false statements have been recorded by force, coercion, threat and coercion and also threatened to detain under COFEPOSA if I will not write the statements as per their say and hence I retract my said statements as the same are not my true and voluntary statements.

I further state that Indian currency seized from me was my legitimate business money and had nothing to do with alleged FERA violation. I further say that I have no connection with any alleged import transactions, opening of bank accounts, or floating of company by name of M/s Sun Enterprises, export control, Bill of Entry and other documents or alleged remittances. I have not been furnished copy of Panchnama, though my signatures have been taken in token of having furnished the copy of the same.

I hereby rebut the false averments made in the remand application, Panchnama and in my alleged statements and hereby retract the same as the facts stated therein are not true and voluntary.

I pray that my application may be taken on record and copy of the same is annexed for the officer of the Dept.”

5.Respondents, however, initiated a proceeding under Section 8(3) of the Act. A show cause notice was issued on or about 25.4.1995, the operative part whereof reads as under:-

“NOW THEREFORE, the said Shri Vinod M Solanki is hereby required to show cause in writing (IN DUPLICATE) within 30 days from the date of receipt of this memorandum, why Adjudication Proceedings as contemplated in Section 51 of the Foreign Exchange Regulation Act, 1973 (46 of 1973) should not be held against him for the said contravention of Section 8(3) and 9(1) of the Foreign Exchange Regulation Act, 1973.

IN ISSUING this memorandum, reliance is placed inter alia on the list of documents as per Annexure ‘A’ the original of the said documents will, on demand, be made available for inspection to the party or his lawyer or other authorized representative at the office of the Deputy Director, Enforcement Directorate, Mittal Chambers, 2nd Floor, Nariman Point Bombay - 400 021 in his office by prior appointment with him on any working day.”

6.Pursuant to or in furtherance thereof cause was shown by the appellant, inter alia, contending that no reliance should be placed on the retracted confessional statement unless the same was corroborated substantially in material particulars by some independe