(PER: HON'BLE MR JUSTICE SREENIVAS HARISH KUMAR)
This appeal filed under Section 54 of the Foreign
Exchange, New Delhi, in Appeal No.241/1995. On
2. Before answering the questions the material facts
necessary for deciding the appeal may be traced here.
establishment, M/s Vijaya Agencies at Mangaluru. It has a
bank account with Tamilnadu Mercantile Bank. On
documents. On the same day the statement under
(for short 'the Act') was recorded. The said statement was
owned a super market there. On the request of Abdul
in turn was assured of commission of Rs.100/- per lakh.
money to such persons as Abdul Salam would indicate.
employee of the appellant. On 28.09.1991 statement of
Pradeep Kumar, brother of the appellant was recorded.
On 29.09.1991 the officers of E.D. searched the house of
of K.K.Aboobacker, the son-in-law of K.Abdullah.
Appellant was arrested on 28.09.1991. On 01.10.1991
appellant retracted his statement. On 03.05.1995 the first
3. The Adjudicating Authority as also the Tribunal
provisions of Sections 9(1)(b) and (d) of the Act. Before
have been acted upon. All these contentions were
rejected by the Adjudicating Authority and the Tribunal.
4. We have heard the argument of Sri B.Satish
H.Jayakara Shetty, learned advocate for respondent No.1.
5. The main points urged by Sri. B. Satish Sundar
the earliest opportunity on 01.10.1991. The
6. Sri. Jayakara Shetty made the following
(ii) There is a clear finding that appellant was arrested
on 28.09.1991, and his statement was recorded
before he was arrested. His confession was
considered because it was voluntary and free from
inducement. Even though he retracted
subsequently, there is other corroborative
evidence which falsifies the appellant's retraction.
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(iii) The Indian Evidence Act is not applicable to
enquiry under the Act, and therefore there is no
bar for acting on the confession statements,
including that of co-accused. For the same reason
non-cross-examination of some persons enquired
by the officers do not vitiate the proceedings.
(iv) Nothing prevented the appellant from cross
examining the persons whose statements have
been considered if he really wanted to cross
examine them. It is false that he was denied of
opportunity of cross examination.
7. Keeping in mind the points of arguments, if the
rival contentions are put to analysis in the light of
decisions cited by either side, the obtaining picture is as
follows:
Section 40 of the Act empowers a gazetted officer of
Enforcement to summon any person he considers
necessary to give evidence or produce a document during
the course of investigation or proceeding under the Act.
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Any person includes that person who is suspected to have
contravened the provisions of the Act, and obviously,
many a time, he is the first person to be enquired. Once a
person responds to summons and appears before the
Enforcement Officer for the purpose of enquiry, he
subjects himself to the authority of such officer and as
sub-section (3) of Section 40 states the person so
summoned is bound to state the truth.
8. In this case, according to the appellant he was
under continuous control and custody of the Enforcement
Officer from 26.09.1991 to 29.09.1991, though the date of
formal arrest is shown as 29.09.1991 and it is for this
reason, it is strongly contended that the statement
obtained during prolonged custody period is vitiated. Sri
B. Satish Sundar has placed reliance on three rulings on
this point. In Nathu vs State of U.P [AIR 1956 SC 56]
referring to Section 24 of the Indian Evidence Act it is held
that a prolonged custody immediately preceding the
making of confession is sufficient to stamp it as
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involuntary unless it is properly explained. In the case of
Suaibo Ibow Casamma vs Union of India [1995 (80)
ELT 762 (Bom)] explaining the meaning of the word
'arrest' in the context of withholding a person for
investigation, it is held that the moment accused is
apprehended and put under complete control of
investigating officer with absolute restrictions on his
movements the arrest would be complete in law and he
should be produced before the Magistrate within 24 hours
excluding the journey time. 'Custody' means not
necessarily from the time of arrest, but the moment a
person's movements are restricted by police or any other
officer exercising police powers for the purpose of
investigation also amounts to 'custody'. This is now a well
established proposition, but whether there were
restrictions before formal arrest was effected is a question
of fact.
9. The Adjudicating Authority has found the
contention of the appellant that he was in custody from
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26.9.1991 to 28.09.1991 baseless. Its clear finding is that
appellant was merely summoned by the E.D officers and
not arrested on 26.09.1991 or 27.09.1991. It is the
finding that appellant was summoned to the office for the
purpose of interrogation and was not arrested. This
conclusion was drawn by the Adjudicating Authority by
referring to the statement of Pradeep Kumar, the brother
of the appellant who came to Mangaluru from Kannuru
after receiving a phone call from his mother. He reached
Mangaluru on 27.09.1991 at 9.30 a.m and went to his
brother's house. There he came to know from his mother
about the search conducted by officers in the office
premises of Vijaya Agencies belonging to the appellant.
Later the appellant himself came home and told that the
officers of Enforcement Directorate seized Rs.4,38,800/-
and some documents from his office. This was on
27.09.1991. Therefore the statement of Pradeep Kumar
who saw his brother, i.e., the appellant on 27.09.1991
falsifies the appellant's contention that he was under
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continuous detention and that his statement was obtained
during his detention period.
10. It is true that the appellant retracted his
statement by addressing a letter to the Enforcement
Officer on 01.10.1991. Perusal of this letter shows that he
was taken to the office of the Directorate of Revenue
Intelligence at Mangaluru on 26.09.1991 and he was kept
there till his production before the court at 4.30 p.m on
28.09.1991. When he was in the custody, he was
threatened and assaulted by the officers and he was
forced to write to their dictation even though he was not
fluent in English. Since his statement was obtained
exerting threat, promise and inducement the same did not
bind him. He also stated that he did not make any
statement voluntarily.
11. It is this retraction which is very much
emphasized by the learned counsel for the appellant to
argue that when a statement is retracted, the Adjudicating
Authority has to look for corroborative evidence. In this
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regard he has relied on three judgments, Vinod Solanki
vs Union of India 2009 [(233) ELT 157 (SC)], (2) A.
Tajudeen vs Union of India [2015 (317) ELT 177
(SC)] and (3) Commissioner of Customs (Imports),
Chennai-I vs Sainul Abideen Neelam [2014 (300)
ELT 342 (Mad)].
12. In Vinod Solanki it is held as below :
"22. It is a trite law that evidences brought on
record by way of confession which stood retracted
must be substantially corroborated by other
independent and cogent evidences, which would
lend adequate assurance to the court that it may
seek to rely thereupon. We are not oblivious of some
decisions of this Court wherein reliance has been
placed for supporting such contention but we must
also notice that in some of the cases retracted
confession has been used as a piece of corroborative
evidence and not as the evidence on the basis
whereof alone a judgment of conviction and
sentence has been recorded. {See Pon Adithan v.
Deputy Director, Narcotics Control Bureau, Madras
[(1999) 6 SCC 1]}
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13. In Tajudeen the following are the observations
of the Supreme Court on the facts of that case :
"18. We have no doubt, that evidence could
be gathered to substantiate that Abdul Hameed, the
person who is alleged to have dispatched the
money from Singapore, was a resident of Village
Pudhumadam in District Ramanathapuram, to which
the appellant also belongs. Material could also have
been gathered to show, whether he was related to
the appellant from his paternal side. Furthermore,
the Enforcement Directorate could have easily
substantiated whether or not, as asserted by the
appellant, the aforesaid Abdul Hameed had
contacted him over telephone from Singapore, to
inform him about the delivery of the amount
recovered from his residence on 25.10.1989.
Additionally, the Enforcement Directorate could
have led evidence to establish that the aforesaid
Abdul Hameed with reference to whom the
appellant made statements on 20.4.1989,
25.10.1989 and 26.10.1989, was actually resident
of Singapore, and was running businesses there, at
the location(s) indicated by the appellant. Still
further, the officers of the Enforcement Directorate
could have ascertained the truthfulness of the
factual position from Shahib, the shop boy of the
appellant - A. Tajudeen, whom he allegedly sent to
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hand over a sum of Rs. 60,000/- to Shahul Hameed
(a relative of Abdul Hameed) of Village
Pudhumadam. Had the statements of the appellant
and his wife been corroborated by independent
evidence of the nature indicated hereinabove, there
could have been room for accepting the veracity of
the statements made by the appellant - A.
Tajudeen and his wife T. Sahira Banu to the officers
of the Enforcement Directorate. Unfortunately, no
effort was made by the Enforcement Directorate to
gather any independent evidence to establish the
veracity of the allegations levelled against the
appellant, through the memorandum dated
12.3.1990. We are of the considered view, that the
officers of the Enforcement Directorate were
seriously negligent in gathering independent
evidence of a corroborative nature. We have
therefore no hesitation in concluding that the
retracted statements made by the appellant and his
wife could not constitute the exclusive basis to
determine the culpability of the appellant."
14. The Madras High Court in the case of Sainul
Abideen Neelam has held as below:
"14. The learned counsel for the Revenue
relied on the decision of the Hon''ble Supreme
Court in Surjeet Singh Chhabra Vs. Union of India
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and others,) and the decision of this court in
Roshan Beevi and Others Vs. Joint Secretary to
Government of Tamil Nadu and Others,) in support
of his contention that statement made before the
customs officer u/s 108 of the Customs Act, though
retracted later is an admissible evidence and
binding. Certainly, there is no quarrel about the
said proposition. The admissibility of such
statement as evidence is always there. However,
the question is whether the authorities can act on
such statement alone in the absence of any
corroborating materials to substantiate the contents
of such statement. Therefore, the admissibility of
an evidence cannot and should not be taken to
mean its acceptability as well. As we have already
pointed out, the statement made by Abdul Razak,
especially when retracted subsequently and
reiterated the original statement thereafter,
certainly raises a doubt with regard to the
genuineness of its contents. Therefore, even though
such statement made u/s 108 of the Customs Act is
admissible in evidence, the authorities are not
necessarily bound to accept the same as such in the
absence of further materials to substantiate the
contents of such statement. Therefore, by applying
the facts and circumstances of the present case,
the reliance placed on those above two decisions by
the Revenue will not help them in any way."
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15. The position of law is very clear that whenever a
confession is retracted by an accused, the burden is on the
prosecution that the confession was free of inducement,
threat or promise and it was voluntarily given by the
accused. When there is retraction, the confessional
statement cannot be based to inculpate the accused
without any corroboration. And at the same time the
genuineness of the retraction must also be examined
keeping in mind the attending circumstances such as the
time of retraction, its nature and the manner of retraction.
The retraction must have been made at the earliest
possible time. In the case of Commissioner of Income
Tax vs MAC Public Charitable Trust and Others
[MANU/TN/7984/2022], the Division Bench of the High
Court of Madras has held as below:
"63. The statements given to the Assessing officer
under Section 132 (4) have legal force. Unless the
retractions are made within a short span of time,
supported by affidavit swearing that the contents
are incorrect and it was obtained under force,
coercion and by lodging a complaint with higher
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officials, the same cannot be treated as retracted.
This position laid down in catena of decisions by the
various High Courts in CIT vs. Lekh Raj Dhunna
[344 ITR 352 (P&H)], Bachittar Singh v. CIT [328
ITR 400 (P&H)], Rameshchandra & Co. v. CIT [168
ITR 375 (Bom.)], Dr. S.C. Gupta v. CIT, [248 ITR
782 (All.)], CIT v. Hotel Meriya [332 ITR 537
(Kerala)], CIT v. O. Abdul Razak [350 ITR 71
(Kerala)]."
16. The Supreme Court in the case of K.T.M.S.
Mohd. And Others vs Union of India
(UOI)[MANU/SC/0349/1992], delving on voluntary
confession statement vis-à-vis retraction, has observed
that :
"33. We think it is not necessary to
recapitulate and recite all the decisions on this legal
aspect. But suffice to say that the core of all the
decisions of this Court is to the effect that the
voluntary nature of any statement made either
before the Custom Authorities or the officers of
Enforcement under the relevant provisions of the
respective Acts is a sine quo non to act on it for any
purpose and if the statement appears to have been
obtained by any inducement, threat, coercion or by
any improper means that statement must be
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rejected brevi manu. At the same time, it is to be
noted that merely because a statement is retracted,
it cannot be recorded as involuntary or unlawfully
obtained. It is only for the maker of the statement
who alleges inducement, threat, promise etc. to
establish that such improper means has been
adopted. However, even if the maker of the
statement fails to establish his allegations of
inducement, threat etc. against the officer who
recorded the statement, the authority while acting
on the inculpatory statement of the maker is not
completely relieved of his obligations in at least
subjectively applying its mind to the subsequent
retraction to hold that the inculpatory statement
was not extorted. It thus boils down that the
authority or any Court intending to act upon the
inculpatory statement as a voluntary one should
apply its mind to the retraction and reject the same
in writing. It is only on this principle of law, this
Court in several decisions has ruled that even in
passing a detention order on the basis of an
inculpatory statement of a detenu who has violated
the provisions of the FERA or the Customs Act etc.
the detaining authority should consider the
subsequent retraction and record its opinion before
accepting the inculpatory statement lest the order
will be vitiated. Reference may be made to a
decision of the full Bench of the Madras High Court
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in Roshan Beevi v. Joint Secretary to the Govt. of
Tamil Nadu, Public Deptt. etc; [1984] 15 ELT 289
(Mad)] to which one of us (S. Ratnavel Pandian, J.)
was a party."
17. That means an accused can go back upon his
confession statement, but it does not necessarily mean
that the disclosure made by him in the confession
statement should not be acted upon. Very necessarily the
court has to look for corroboration from other sources. If
corroboration is available, the obvious inference is that the
accused did make confession voluntarily and it is needless
to state that the retraction pales into insignificance. If
retraction has to be acted upon it must appear that it was
made at the earliest point of time and a complaint about
obtaining confession statement by exerting threat,
inducement or promise must have been made to an officer
higher in rank than the officer who obtained confession
statement or to the Magistrate when the accused is
produced before him after arrest. In the case on hand
both the Adjudicating Authority as also the Tribunal have
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held on facts that appellant gave his confession statement
voluntarily and that the retraction was an afterthought.
There was ample opportunity to the appellant to complain
before the Chief Judicial Magistrate that he was made to
give confession statement forcibly. His complaint dated
01.10.1991 about retraction was not addressed to the
higher officer. Moreover the Adjudicating Authority has
found corroboration from the statements of others namely
Pradeep Kumar and Lokesh, the brother and the employee
of the appellant respectively and also some documents
seized from the business premises of the appellant.
18. In regard to argument of Sri Satish Sundar that
the confession of the co-accused could not have been used
to implicate the appellant, it may be stated that such
statements cannot be the sole basis for drawing
inculpatory inferences against the accused as they do not
constitute substantive evidence. The concerned authority
must find supporting evidence before acting upon the
confession of the co-accused. If there are supporting
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materials, it can be inferred that the statements of the co-
accused are not bereft of truth. Sri Satish Sundar has
placed reliance on the judgment of the Supreme Court in
the cases of Haroon Haji Abdulla vs State of
Maharashtra [1999 (110) ELT 309 (SC)] and
Mohtesham Mohd. Ismail vs Special Director,
Enforcement Directorate [2007 (220) ELT 3 (SC)].
In both these decisions it is held that confession of co-
accused cannot be treated as substantive evidence and
that the court must seek corroboration from independent
sources. There cannot be second word with this
proposition. On facts both the authorities below have
found corroboration from other sources which does not
require reiteration here.
19. The last point of argument was that the
appellant was denied of cross-examining the persons who
were examined by the E.D officers. It appears that there
was no cross-examination of those persons. It has to be
stated in this regard that E.D officers are not bound by
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Rules of Evidence Act, but nothing prevents them from
following the Rules of Evidence Act, and what is more
important is that they must strictly adhere to Principles of
Natural Justice. Sri Satish Sundar has placed reliance on
unreported judgment of the Madras High Court in the case
of V.Bhaskaran and Others vs Special Director,
Enforcement Directorate [W.P.18918/2000 and
connected cases]; Telestar Travels Private Limited
vs Special Director of Enforcement [2013 (289) ELT
3 (SC)] and the judgment of the Delhi High Court in the
case of Shahid Balwa vs Directorate of Enforcement
[2014 (1) JCC 358]. The purport of these decisions is
that accused cannot be denied of an opportunity of cross-
examining the witnesses. It is needless to say that cross-
examination is the best way of testing the credibility of a
witness and if an opportunity is given to cross-examine a
witness, it demonstrates the fair play. Though in this case
there was no cross-examination, it cannot be said that the
findings of the Adjudicating Authority as also the Tribunal
suffer from infirmity merely for that reason. Sri Jayakara
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Shetty, learned counsel for respondent No.1 has also
relied on the judgment of the Supreme Court in Telestar
Travels where the clear observations are as below:
"18. There is, in our opinion, no merit even in that
submission of the learned counsel. It is evident
from Rule 3 of the Adjudication Rules framed under
Section 79 of the FERA that the rules of procedure
do not apply to adjudicating proceedings. That does
not, however, mean that in a given situation, cross
examination may not be permitted to test the
veracity of a deposition sought to be issued against
a party against whom action is proposed to be
taken. It is only when a deposition goes through
the fire of cross-examination that a Court or
Statutory Authority may be able to determine and
assess its probative value. Using a deposition that
is not so tested, may therefore amount to using
evidence, which the party concerned has had no
opportunity to question. Such refusal may in turn
amount to violation of the rule of a fair hearing and
opportunity implicit in any adjudicatory process,
affecting the right of the citizen. The question,
however, is whether failure to permit the party to
cross examine has resulted in any prejudice so as
to call for reversal of the orders and a de novo
enquiry into the matter. The answer to that
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question would depend upon the facts and
circumstances of each case. For instance, a similar
plea raised in Surjeet Singh Chhabra v. Union of
India and Ors. (1997) 1 SCC 508 before this Court
did not cut much ice, as this Court felt that cross
examination of the witness would make no material
difference in the facts and circumstances of that
case. .........................."
20. If the order of the Adjudicating Authority is
perused it becomes clear that the advocate for the
appellant urged seven grounds and in none of them, it was
contended that appellant was denied an opportunity of
cross-examining the noticees and that it resulted in
miscarriage of justice. It was for the first time before the
Tribunal that ground was taken. Before us also, the same
ground has been urged. On this point it may be stated
that no doubt the appellant had a right to cross-examine
the noticees but he should have exercised that right before
the E.D officer. Had he applied for an opportunity to
cross-examine and if it was denied, then the appellant is
justified in urging that ground before the Tribunal and also
before this Court. In all the decisions cited by Sri Satish
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Sundar, the accused therein applied for cross-examination
but that opportunity was denied. Here the same is not the
case. Therefore there is no merit in this point of
argument.
21. The above discussion answers the questions of
law raised in this appeal. We do not find any infirmity in
the order of the Tribunal. Appeal is therefore dismissed.
Sd/-
(SREENIVAS HARISH KUMAR)
JUDGE
Sd/-
(K. V. ARAVIND)
JUDGE
CKL
