Sathiadev, J.


Appellant was proceeded against under Section 54(1)(aa) and (c) and 9(1)(b) and (d) of Foreign Exchange Regulation Act, 1947, by issuing for show cause notices dated 5.1.1977, and also proposing to confiscate Indian currencies of Rs. 1, 500/- surrendered by him. He submitted his reply on 5.2.1977 denying the charges, and disowning the statements made by him on 1.6.1976 and 2.6.1976 by claiming that they were taken from him by coercion by the Enforcement Officer, and that he had not committed any contravention as charged, and which are listed in para 1 of the order of Deputy Director.


2.Respondent claimed that appellant during the period of 1974 to 1976 had received Rs. 25, 000/- on ten occasions from a local person under order of one R. Muthuswamy of Colombo, and made payments under his instructions to various parties in India, and further, between the years 1966 and 1973, on 29 occasions, he had received Rs. 50, 000/- from a local person by order or on behalf of the said Muthuswamy, and made payments to various parties in India on his behalf, and therefore, he has contravened the relevant provisions of the Act as mentioned in the show cause notices.


3.Respondent was relied upon letters seized from appellant and they show that Narayanaswami, his father-in-law had played an important role, and the letters dated 2.9.1975, 12.5.1976 and 20.5.1976 seized from the custody of appellant go to show about the nature of transactions indulged in by appellant, and which justify the charges framed as against him. The Deputy Director imposed a total penalty of Rs. 50, 000/- and also ordered confiscation of Rs. 1, 500/- surrendered by him. On appeal, the Appellate Authority confirming it, in this appeal Mr. K.P. Jagadeesan, learned Counsel for the appellant would submit that, the following substantial question of law is involved :

"When the letters relied upon by respondent themselves show that the amounts mentioned therein have been received by appellant by draft and through approved channel, would it be still open for respondent to reply upon the statements which contain certain particulars which are not supported by any document, and when those statements have been obtained by coercion?" *


4.In para 4 of the order, Deputy Director states that letters seized contained instructions to evidence payments, and proceeds to discuss regarding the contents of three letters. The amounts involved in those letters do not cover the entirety of the amount with regard to which appellant had been arraigned. In para 12, he would himself state that

"though the amounts are seen from the different letters seized when added will not exactly equal to the amounts indicated in the four show cause notices......." *


. The claim made by appellant in the two statements would prove that he had received amounts on behalf of Muthuswamy of Sri Lanka. Hence, the culpability of appellant was arrived at by looking into the contents of these seized letters, for amounts mentioned therein, and thereafter, for the entirety of the amount involved in the show cause notice, by a process of surmise alone, the contents of the said statements had been relied upon. This is a matter in which solely depending upon the statements, action had not been initiated, so as to attract the decision of this Court in C.M.A. Nos. 119 to 121 of 1981 dated 6-8-1986. Having reasoned out by relying upon the letters to corroborate the contents of the two statements dated 1-6-1976 and 2-6-1976, the burden is upon the respondent to establish that the letters seized from appellant show that contravention of the provisions of the Act had been committed.


5.The first letter relied upon by respondent is dated 2-9-1975, written to appellant which states that inclusive of the insurance amount of Rs. 1, 200/- to be paid, a sum of Rs. 3, 200/- was being sent by draft, and Rs. 2, 000/- is intended for him. The amount was sent out of the draft received from Colombo which could be changed only on the previous day. Reference is also made to amount of Rs. 2, 000/- payable to one Asokan, and instead of trusting him for adjustment, draft is being sent. This letter having been sent by his father-in-law, and nowhere any reference is being made therein to amount being received through an unauthorised source, it is not made out by respondent as to how this could be treated as a letter containing incriminating circumstances. His father-in-law had clearly stated that from Colombo he had received a draft, which means that the amount had come only through authorised source.


6.The next letter relied upon is dated 12-5-1976 written by his father-in-law to him. He had enclosed a draft for Rs.2, 300/-. Out of this a sum of Rs.2, 000/- is sent on what his brother Muthuswamy had asked him to give, and the balance amount of Rs.300/- which Ramesh had taken and returned by him has been forwarded. Hence, his father-in-law sending the amount by draft in India, out of his funds cannot tantamount to any contravention committed by appellant. This letter nowhere states that Muthuswamy had sent any amount to his brother through unauthorised source, and thereby asking for that amount to be sent to appellant. Appellant had stated that Muthuswamy was his God Father, and had reared him up when he was in Ceylon during his early years of life. Hence, this letter is also of no help to respondent in framing the charges.


7.The other letter relied upon by respondent is dated 20-5-1976 written by Muthuswamy to his brother i.e. (father-in-law of appellant). In the opening paragraph, he states that he had returned from Yashpanam, and seen his letter dated 12th, and had come to know that Narayanaswamy was in Madras. His Assistant Velayutham had told him that he had sent a registered letter to him, and in that he had enclosed a Decum Bank Receipt and hence, he may go to the Bank and check up. The rest of the letter dealt with the agricultural operations and about management of properties belonging to the family. Hence, here again, reference is made only to amount being sent through a Bank.


8.It is by relying upon these three letters above and not any other letter seized from appellant, and which even according to him, the respondent, they do not contain any incriminating statement, it is quite apparent that the two authorities have misguided themselves in reading into these lett

ers contravention as changed for huge sum and holding that contraventions of the provisions of the Act had been committed by appellant. Now that it is established that these letters do not contain any incriminating transaction, and the authorities themselves having realised that the total amount mentioned in the two statements is nowhere near the amounts mentioned in the letters received by the appellant, and when the circumstances of the case disclosing that the statements could not have been voluntarily made, it results in the appeal being allowed on the point as raised by the appellant with costs. The amount confiscated requires to be returned within six weeks from the date of receipt of the steno copy of this order.