1. Appeal against penalty imposed for contravention of foreign exchange regulations under FERA. (Para 1 , 2 , 7 )
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2025 Supreme(Online)(ATFP) 13135
APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Balesh Kumar, Member, Rajesh Malhotra, Member
Shri Ishwar Gidwani – Appellant
Versus
The Deputy Director Directorate of Enforcement Mumbai – Respondent
FPA-FE-52/MUM/2019
Advocates:
For the Appellants/Petitioners: Prashant Pandey, Akshita Chand, Karan Kumar
For the Respondents: Girish Tripathi
For the Appellants/Petitioners: Prashant Pandey, Akshita Chand, Karan Kumar
For the Respondents: Girish Tripathi
A retracted confession under FERA can be relied upon if voluntary and corroborated by independent evidence; the authority must explicitly consider the retraction and reject it with reasons.
Headnote:(A) Foreign Exchange Regulation Act, 1973 - Sections 8(1), 8(2), 9(1)(f)(i), 14 - Show cause notice - Penalty - Retracted statements - Admissibility - Need for corroboration - Voluntary nature - Application of mind to retraction - Rule of prudence that retracted confession must be substantially corroborated by independent and cogent evidence - Authority must consider retraction and reject in writing. (Paras 8-10)
(B) Penalty - Reduction - Age of appellant - Pre-deposit - Adjustment - Ends of justice - Appellant aged 82, amounts already deposited and seized considered - Penalty reduced from Rs.30,00,000 to Rs.9,00,000. (Para 11)
Facts of the case:
A show cause notice dated 29.09.1994 was issued to the appellant for contraventions of FERA including acquiring foreign exchange at illegal rates, transferring foreign exchange outside India, receiving payment in India in lieu of foreign exchange paid abroad, and not surrendering foreign currency. The original order dated 26.08.2003 was set aside by the High Court for lack of effective opportunity, and the matter was remanded. The impugned order dated 15.03.2010 imposed penalties of Rs.30,00,000 under Sections 8(1) and 8(2), Rs.1,00,000 under Section 9(1)(f)(i), and Rs.5,000 under Section 14. The appellant appealed, arguing that the statements recorded were retracted and involuntary, and that the evidence was insufficient. The Tribunal considered the recorded statements, retraction letters, recovery of documents, and the interception of a co-noticee carrying US$17,000.
Findings of Court:
The Tribunal held that the statements made under Section 40 of FERA were admissible and voluntary. The adjudicating authority had duly considered the retractions and rejected them with reasons. There was independent corroborating evidence including documents recovered, payment of travel tickets, and the nexus between the appellant and the co-noticee. However, considering the appellant's age of 82 and the fact that he had already deposited Rs.5,10,000 and Rs.3,90,000 had been seized, the Tribunal reduced the total penalty to Rs.9,00,000, with the deposited amounts being adjusted.
Issues: The main issues were whether the retracted statements could be relied upon in the absence of corroboration, whether the adjudicating authority properly considered the retractions, and whether the penalty should be reduced on grounds of age and prior deposits.
Ratio Decidendi: A retracted confession may form the legal basis of a decision if the court is satisfied that it was true and voluntary, but it is a rule of prudence that it must be corroborated by independent and cogent evidence. The authority must apply its mind to the retraction and reject it in writing. Mere retraction does not render a statement involuntary; the maker must prove coercion. In this case, the statements were corroborated by documents, travel records, and the interception of foreign currency, and the adjudicating authority had adequately addressed the retractions.
Result: Appeal partly allowed; penalty reduced to Rs.9,00,000. The amounts already deposited and seized to be adjusted.
Legal Category Hierarchy
Table of Contents
2. Dispute over admissibility of retracted statements and sufficiency of corroborating evidence. (Para 3 , 4 , 5 , 6 )
3. Appeal partly allowed; penalty reduced in view of circumstances. (Para 11 , 12 )
4. Can a retracted confession be relied upon as evidence in adjudication proceedings under FERA?
Yes, if it is voluntary and corroborated by independent evidence; retraction alone does not render it inadmissible. (Para 8 , 9 , 10 )
5. What is the evidentiary value of a statement recorded under Section 40 of FERA when retracted?
It is admissible unless the maker proves it was obtained by inducement, threat, or coercion; retraction alone does not prove involuntariness. (Para 9 , 10 )
6. Is an adjudicating authority required to consider a retraction of a statement and record reasons for rejecting it?
Yes, the authority must apply its mind to the retraction and reject it in writing; failure to do so may vitiate the order. (Para 9 )
FINAL ORDER
19.11.2025
This Order disposes of the Appeal No. FPA-FE-52/MUM/2019 filed by Shri Ishwar Gidwani, against the Order No. ADJ/01/DD/SB/B/ 2010/2200 dated 15.03.2010 (Impugned Order) passed by the Deputy Director, Directorate of Enforcement, Government of India, Mumbai. Penalty of Rs. 30,00,000/- was imposed on the Appellant Shri Ishwar Gidwani for the contravention of Section 8 (1) and Section 8 (2) of the Foreign Exchange Regulation Act, 1976 (FERA) vide the Impugned Order. Further penalties of Rs. 1,00,000/- for the contravention of Section 9 (1) (f) (i) and of Rs. 5,000/- for the contravention of Section 14 of FERA were imposed vide the Impugned Order.
2. The Show Cause Notice (SCN) No. T-4/70-B/94 (SCH) was issued to the Appellant Shri Ishwar Gidwani on 29.09.1994, besides making Smt. Gopi T Hirdaramani, Shri Jayanti Lal B Shah and Shri Jayesh C Shah as Co-Noticees. A list of 23 documents was annexed to the SCN, as relied upon documents (RUDs). An Order-In-Original dated 26.08.2003 was passed by then Deputy Director, ED, Mumbai. Besides imposing penalty on other Co-Noticees (exception being Shri Jayesh C Shah, who had expired), penalty was imposed on the Appellant Shri Ishwar Gidwani. The Appeal filed by the Appellant against the Order dated 26.08.2003 was disposed of by this Tribunal on 18.12.2007. The Hon’ble High Court of Bombay in its Order dated 10.09.2009 in FERA Appeal No. 55 of 2009 set aside the Order-In-Original dated 26.08.2003 along with the Order dated 18.12.2007 of this Tribunal, remanding the matter to the Original Adjudicating Authority. This resulted in the Impugned Order being issued on 15.03.2010. Initially the Impugned Order was challenged before the Special Director (Appeals) FEMA, Mumbai, however, the Appeal was dismissed on 15.05.2019, as not maintainable with observations that the Appeal need to be filed before this Tribunal under Section 19 of Foreign Exchange Management Act, 1999 (FEMA). The present Appeal was filed on 05.09.2019. This Tribunal vide Order dated 14.03.2024 completely waived off the pre-deposit of penalty on the grounds that the Appellant had already deposited sum of Rs. 5,10,000/- vide draft dated 07.11.2005, while filing the Appeal against the Order dated 26.08.2003 and further Rs. 3,90,000/- having been seized from the Appellant was in custody of the Respondent Directorate.
3. Ld. Counsel for the Appellant stated that the Adjudicating Authority erred in law in imposing a penalty of Rs. 30,00,000/- (Rupees Thirty Lakhs only) u/s 8 (1) and 8 (2) for having otherwise acquired at illegal rates and/or transferring outside India foreign exchange equivalent to Rs. 40,36,842/- and of US $ 56,970, Fr. Fr. 26,120 and Stg £ 2850, Sing. $ 1,90,509.33; Rs. 1,00,000/- (Rupees One lakh only) u/s 9 (1) (f) (i) for receiving Rs. 1,60,075/- in India, in lieu of Sing. $ 7500 paid to Shri Khetsi Hirji Shah outside India, and Rs.5,000/-(Rupees Five Thousand only) u/s 14 for not surrendering Sing. $ 200 held by him outside India. Ld. Counsel argued that US $ 17000 seized from the Co- Noticee Smt. Gopi T Hirdaramani at Mumbai Airport cannot be accepted to have been given to her by the Appellant merely because she had not declared it at the Airport. He argued that none of the statement can be relied upon as these were subsequently retracted.
4. Ld. Counsel for the Appellant further contended that the follow up search conducted at the residential premises of the Appellant resulted in recovery of certain documents which were clearly written without any code, and could not have been also relied upon since it was a xerox copy, not written in his hand and without mention of any foreign currency. Ld. Counsel contended that the confessional statement of Smt. Gopi T Hirdaramani could not have also been relied upon. Ld. Counsel further contended that the alleged previous transactions between the Appellant and Smt. Gopi T Hirdaramani also could not have been relied upon as the same have not been corroborat
