Penalty discretion under foreign exchange law is a question of law, and disproportionate penalties may be further reduced.

Where an appellate statute confines the High Court to questions of law, the legality of the exercise of discretion in fixing penalty remains justiciable, so maintainability was upheld. The Court treated the quantum of penalty under the Foreign Exchange Regulation Act, 1973 as involving a legal question because the adjudicating authority must exercise statutory discretion within lawful bounds. On the facts, the absence of mala fides and the limited role of one appellant justified further moderation, and the penalties were reduced further.

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Issues: (i) Whether an appeal to the High Court was maintainable on questions relating to the quantum of penalty and the exercise of discretion under the Foreign Exchange Regulation Act, 1973. (ii) Whether the penalties imposed on the appellants required further reduction.

Issue (i): Whether an appeal to the High Court was maintainable on questions relating to the quantum of penalty and the exercise of discretion under the Foreign Exchange Regulation Act, 1973.

Analysis: The appellate provision confined the High Court's jurisdiction to questions of law. The penalty provision empowered the adjudicating authority to impose any penalty up to the statutory maximum, which necessarily involved the exercise of judicial discretion. The nature and correctness of that discretion, particularly in fixing the quantum of penalty, raised a question of law.

Conclusion: The appeals were maintainable.

Issue (ii): Whether the penalties imposed on the appellants required further reduction.

Analysis: The findings below showed absence of mala fides and no money-spinning adventure. In those circumstances, the earlier reduction made by the Appellate Board was treated as still too severe, and the penalties were further moderated having regard to the limited role of the wife and the quantum involved.

Conclusion: The penalties were further reduced to Rs. 2,000 for the husband and Rs. 1,000 for the wife.

Final Conclusion: The appeals succeeded in part, with the Court upholding maintainability and granting further relief by reducing the penalties imposed.

Ratio Decidendi: Where a statute limits appeals to questions of law, the legality of the exercise of sentencing or penalty discretion is itself a question of law, and the quantum of penalty may be interfered with when the statutory discretion has not been exercised proportionately.

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