JUDGMENT K.G. Shankar, J. 1. The two second appeals are directed against the orders of the Appellate Tribunal for Foreign Exchange, New Delhi (the Appellate Tribunal, for short), in Appeal Nos.125 of 2006 and 124 of 2006. A common order was passed by the Appellate Tribunal on 22-10-2008 in the two appeals. The appellants herein assailed the orders of the Appellate Tribunal. C.M.S.A.No.2 of 2009 is by the Managing Director of M/s. Heart Entertainment Limited, Hyderabad. C.M.S.A.No.3 of 2009 is by the Company itself viz., M/s. Heart Entertainment Limited, Hyderabad. As the appeals arise common questions, both the appeals are disposed of through this common judgment. 2. M/s. Heart Entertainment Limited, Hyderabad (the Company, for short), obtained the approval of the Reserve Bank of India (RBI, for short) for establishing a foreign concern in the United States of America (the USA, for short) in the field of animation software. The Company invested US $ 1,75,000 through two instalments in August, 1999. The Company however did not follow Regulation 15(iii) of Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2000 (the Regulations, 2000, for short) vide Notification No.FEMA 19/RB-2000, dated 03-5-2000, as it failed to submit Annual Performance Report (APR, for short). The Company also failed to furnish the information called for under Section 37 of the Foreign Exchange Management Act, 1999 (FEMA, for short) read with Section 131(1A) of the Income Tax Act, 1961, by failing to furnish information and details such as copies of the Audited Annual Accounts, APRs, copies of the Share Certificates and other documents in evidence of investment in foreign equity together with the details of dividend and royalty. 3. The Company responded to the Notice dated 27-02-2003 through reply dated 30-6-2004 that the Company obtained approval from the RBI on 02-02-1999 for investment of US $ 1,75,000 in Overseas Joint Venture in the USA, that the Company held 35% of the equity stock in M/s. Startoons Incorporation (Inc.,), that the Company has executed works worth US $ 2,27,430 and that the Company received Share Certificate from M/s. Startoons International LLC (Limited Liability Company), USA, for US $ 1,75,000. The Company further claimed that no dividend could be declared as the Company went into losses on account of slump in animation industry and that the Company had to close the operations to avoid further losses. The Company further claimed that no dividend could be declared as the Company went into losses on account of slump in animation industry and that the Company had to close the operations to avoid further losses. It also claimed that the APRs could not be furnished to the RBI and that the Company did not provide the requisite details which was because the accounts of LLC were not compulsorily auditable under the United States Local Laws. The Company claimed that it submitted APRs for the years 2000 to 2003 to the RBI and that the audited financial statements, Directors’ Report and Certificate of Incorporation of the Joint Venture could not be furnished owing to circumstances beyond the control of the Company. 4. Considering that the Company contravened the provisions of Section 6(3) of FEMA read with Regulation 15(iii) of the Regulations, 2000 [Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2000 through Notification No.456(E) (FEMA 19/2000-RB, dated 03-5-2000) of the RBI] and rendered themselves liable to be proceeded against under Section 13(1) of FEMA, 1999, Show Cause Notice dated 18-02-2005 was issued to the Company. Show Cause Notice was also issued to the Managing Director in terms of Section 42 (1) of FEMA holding that the Managing Director was responsible for the non-compliance of the Rules and Regulations. 5. The Company issued a reply to the Show Cause Notice reiterating their stand that it obtained approval of the RBI for direct investment of US $ 1,75,000 in Overseas Joint Venture in the USA with 35% of the equity stock and that as the Rules and Regulations in the USA did not obligate the Company to undergo audit, the accounts could not be audited by an Accountant in the USA. It claimed that the non-submission of APRs and audited accounts were beyond their control and that they were unintentional and without any mala fides. 6. The dispute came up before the Deputy Director, Directorate of Enforcement (FEMA), Government of India, Bangalore. Through orders dated 29-9-2005, the Deputy Director imposed a penalty of Rs.30,00,000/- upon the Company and Rs.20,00,000/- upon the Managing Director of the Company. Aggrieved by the same, the Company preferred Appeal No.124 of 2006 before the Appellate Tribunal whereas the Managing Director preferred Appeal No.125 of 2006. After considering the respective claims, the Appellate Tribunal dismissed the appeals. Hence, the present civil miscellaneous second appeals. 7. Aggrieved by the same, the Company preferred Appeal No.124 of 2006 before the Appellate Tribunal whereas the Managing Director preferred Appeal No.125 of 2006. After considering the respective claims, the Appellate Tribunal dismissed the appeals. Hence, the present civil miscellaneous second appeals. 7. The point for consideration is whether the Company and the Managing Director are liable for imposition of penalty, and if so at what rate ? 8. Sri S.Ashok Anand Kumar, learned counsel for the appellants, contended that there was no violation, much less intentional violation on the part of the Company and the Managing Director, so much so, neither of them is liable for prosecution and imposition of penalty. 9. Sri P.S.P.Suresh Kumar, learned counsel representing the Enforcement Directorate (respondents 2 and 3 herein), on the other hand, submitted that the appellants did not submit the APRs within the statutory period and never submitted the audited accounts and that the appellants consequently are liable to pay penalty under Section 13 of the FEMA, 1999. MAINTAINABILITY OF C.M.S.As: 10. The first question that arises for consideration is whether the appeals are maintainable and if so, on what basis ? 11. The Foreign Exchange Management Act, 1999 (FEMA, for short) was enacted to replace the Foreign Exchange Regulation Act, 1973 (FERA, for short). The present civil miscellaneous second appeals are laid under Section 35 of FEMA. The relevant portion of Section 35, FEMA reads: “35. Appeal to High Court Any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to him on any question of law arising out of such order: ………………………………………………………………………………………………………………” FEMA thus envisages an appeal from the decision or order of the Appellate Tribunal on any question of law arising out of such an order. 12. The learned counsel for the respondents 2 and 3 contended that there is no substantial question of law involved in these appeals and that these appeals therefore are not maintainable. 13. 12. The learned counsel for the respondents 2 and 3 contended that there is no substantial question of law involved in these appeals and that these appeals therefore are not maintainable. 13. The learned counsel for the appellants, on the other hand, drew a distinction between Section 100 C.P.C and Section 35, FEMA and submitted that under Section 100 C.P.C., a second appeal would lie on a substantial question of law in the case, whereas under Section 35, FEMA, a second appeal would lie if a question of law arises from such decision or order. 14. The first point to be noticed is that an appeal under Section 35, FEMA, lies if there is a question of law which need not be a substantial question of law. Secondly, question of law need not be relating to the case; it is sufficient if it arises from the decision of the Appellate Tribunal. 15. In Enforcement Directorate, Government of India, Hyd. v. Ilyas Moosa ( 2007 (4) ALD 35 ), a learned single Judge of this Court observed that a civil miscellaneous second appeal would lie on any question of law arising out of an order of the Appellate Tribunal in view of Section 35, FEMA. 16. The learned counsel also pointed out that there is no embargo under Section 35, FEMA that the High Court should formulate substantial question of law and then answer the same as in the case of a second appeal. 17. In a five-Judge Bench judgment of the Supreme Court in Commissioner of Income-tax, Bombay v. Scindia Steam Navigation Co. Ltd. ( AIR 1961 SC 1633 (1)) a question arose as to the maintainability of an appeal under Section 66(1) of the Income-tax Act, 1922. The majority considered a four-fold circumstance. The Supreme Court held that when a question is raised before the Appellate Tribunal and is answered by the Appellate Tribunal and a question is raised before the Appellate Tribunal but is not answered by the Appellate Tribunal, such question shall be considered to be points arising out of the order of the Appellate Tribunal. The Supreme Court held that when a question is raised before the Appellate Tribunal and is answered by the Appellate Tribunal and a question is raised before the Appellate Tribunal but is not answered by the Appellate Tribunal, such question shall be considered to be points arising out of the order of the Appellate Tribunal. While the Supreme Court further observed that if a question is not raised before the Appellate Tribunal but is answered by the Appellate Tribunal, such a question shall be treated as a question arising out of the order of the Appellate Tribunal; the Supreme Court further held that if a question is neither raised nor answered by the Appellate Tribunal, it would not be considered to be a question arising from the order. 18. The learned counsel for the appellants contended that the issue relating to the violation of the Regulations is indeed considered by the Primary Authority as well as the Appellate Tribunal and that the question relating to the violation of the Regulations by the appellants consequently is a question arising from the order of the Appellate Tribunal. 19. In an appeal arising under the Income Tax Act, 1922, in C.I.T., W.B.III v. K.S.RAMPURIA ( 1969 (3) SCC 644 ), the Supreme Court pointed out: “4. It is well established that the High Court is not a Court of Appeal in a reference under Section 66 of the Act and it is not open to the High Court in such a reference to embark upon a reappraisal of the evidence and to arrive at findings of fact contrary to those of the Appellate Tribunal. It is the duty of the High Court to confine itself to the facts as found by the Appellate Tribunal and answer the question of law in the setting and context of those facts. It is true that the finding of fact will be defective in law if there is no evidence to support it or if the finding is unreasonable or perverse. But in the hearing of a reference under Section 66 of the Act it is not open to the assessee to challenge such a finding of fact unless he has applied for a reference of the specific question under Section 66(1). But in the hearing of a reference under Section 66 of the Act it is not open to the assessee to challenge such a finding of fact unless he has applied for a reference of the specific question under Section 66(1). In India Cements Ltd. v. Commissioner of Income-tax (60 KTR 52), it was pointed out by this Court that in a reference the High Court must accept the findings of facts reached by the Appellate Tribunal and it is for the party who applied for a reference to challenge those findings of fact, first, by an application under Section 66(1). If the party concerned has failed to file an application under Section 66(1) expressly raising the question about the validity of the findings of fact, he is not entitled to urge before the High Court that the finding was vitiated for any reason. The same view has been expressed by this Court in a later case in Commissioner of Income-tax v. Sri Meenakshi Mills Ltd. (63 ITR 609). We are therefore of the opinion that the High Court was in error in reappraising the evidence before the Appellate Tribunal and in interfering with its finding that the Income-tax Officer had no reason to believe that there was an omission on the part of the assessee to disclose fully and truly all the material facts necessary for the assessment.” It was thus held that the High Court should confine itself to the facts as recorded by the Appellate Tribunal and answer the question of law in the setting and context of those facts. 20. In Oriental Investment Co. (P) Ltd., v. Commissioner of Income-tax, Bombay ( AIR 1969 SC 460 ), in an appeal arising under Sections 66(1) and 66(2) of the Income-tax Act, 1922, the Supreme Court elaborately considered the limits under Section 66 of the Income-tax Act, 1922; in the process of which, the Supreme Court also considered the meaning of question of law. The Supreme Court held that the conclusions of fact arrived at by the Tribunal or the Appellate Tribunal can be challenged on the ground that they are not supported by legal evidence or on the ground that the conclusions are perverse and that the High Court cannot otherwise go into the conclusions of fact arrived at by the Tribunal while exercising its powers under Section 66 of the Income-tax Act, 1922. Admittedly, Section 66 of the Income-tax Act, 1922, is para materia Section 35, FEMA, insofar as it relates to the jurisdiction of the High Court. 21. In J.K.BARUAH v. COMMISSIONER OF INCOME-TAX, ASSAM ([1984] 146 ITR 341), a Division Bench of the Gauhati High Court held: “If the Tribunal ignores or excludes admissible and relevant evidence and takes into consideration material irrelevant to the inquiry or considers material which is irrelevant to the inquiry, then this court can treat the same as a question of law and deal with the order of the Tribunal accordingly. Similarly, if it appears that the Tribunal has acted without any evidence or upon a view of the facts which could not be reasonably entertained, the question becomes a question of law which is examinable by the High Court.” The Division Bench further observed that a question of law not raised before the Tribunal and not dealt with by the Tribunal in its order cannot be said to have arisen from such an order. 22. The substratum of all these decisions is that if a question is raised by the Appellate Tribunal or answered by the Appellate Tribunal, whether raised or otherwise, it would constitute a question of law for the consideration of the High Court. Further, any perverse conclusion would also constitute a question of law. 23. Sri S.Ashok Anand Kumar, learned counsel for the appellants, pointed out that the Tribunal and the Appellate Tribunal held that the appellants contravened Regulation 15(iii) of Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004 and that when the order of the Appellate Tribunal is challenged, it is tantamount to a question of law, so much so, the appeal is maintainable. Evidently, the Primary Authority held and the Appellate Tribunal confirmed that the appellants violated the terms and conditions of Regulation 15(iii) read with Section 6(3), FEMA. Consequently, the appellants are primarily raising a question of law. As a question of law arises for consideration, these civil miscellaneous second appeals obviously are maintainable. FULFILLMENT OF THE CONDITIONS BY THE APPELLANTS: 24. The RBI informed the 2nd respondent that the appellants violated Regulation 15(iii) issued under Section 37, FEMA read with Section 131(1A) of the Income Tax Act, 1922. As a question of law arises for consideration, these civil miscellaneous second appeals obviously are maintainable. FULFILLMENT OF THE CONDITIONS BY THE APPELLANTS: 24. The RBI informed the 2nd respondent that the appellants violated Regulation 15(iii) issued under Section 37, FEMA read with Section 131(1A) of the Income Tax Act, 1922. When the appellants were put to notice through a Show Cause Notice, the Managing Director issued a reply denying that the appellants violated the conditions of sanction of foreign exchange, viz., the non-submission of APRs and Financial Statements, Directors’ Report and Certificate of Incorporation for Joint Venture. Holding that the explanation offered was not acceptable, penalty was imposed by the Primary Authority and was confirmed by the Appellate Tribunal. Consequently, the question of law that arises for consideration is whether the appellants violated the terms of Regulation 15(iii) of the Regulations, 2000, under FEMA. Inter alia, the learned counsel for the appellants contended that there was no violation of the Regulations by the appellants and that in fact, Regulation 15(iii) under FEMA is not a statutory Regulation, so much so, the violation of the same cannot attract penal consequences. 25. Section 47 of the FEMA empowers the RBI to make Regulations under the FEMA. The Regulations in question were made in exercise of the powers under Section 47 of the FEMA as well as under Section 6(3)(a) of the FEMA. Consequently, these Regulations have statutory force. The contention of the learned counsel for the appellants that the Regulations, 2000 are not statutory Regulations and are directory but not mandatory, therefore, cannot be accepted. The consequent contention of the appellants that the violation of Regulation 15(iii) of the Regulations, 2000 does not attract penal consequences also cannot be sustained. 26. In the Show Cause Notice dated 18-02-2005 issued by the Deputy Director of Enforcement, it was alleged that the approval of the RBI for setting up a foreign concern in the USA involving equity investment of US $ 1,75,000 was subject to the conditions that the Company shall submit certified true copies of audited balance-sheet as well as profit and loss account together with the report of the Directors on the working of the Overseas Foreign Concern during the year and a Certificate of Incorporation of the Joint Venture. The Show Cause Notice further envisages that the Company, which has acquired foreign security, shall submit to the RBI, APR each year in respect of each Joint Venture outside India within 30 days from the date of expiry of the statutory period as prescribed by the respective Laws. 27. It is the contention of the learned counsel for the appellants that no period is prescribed by the USA as the host country for the finalisation of the audited accounts and that the condition that the Company shall submit APR within 30 days, therefore, has become inapplicable. However, Clause (6) of the Sanction Letter issued by the RBI on 02-02-1999 contemplated that the APRs shall be submitted within 6 months from the date of the closing of the relevant accounting period of the host country in the event no statutory period is provided by the foreign country. Consequently, in the event the USA as the host country did not provide for any period, the 30 days’ period as envisaged in the Sanction Letter stands enlarged to 6 months before the expiry of which, the APRs and other details like audited accounts should be submitted to the RBI. 28. In response to the Show Cause Notice, the Company issued a reply on 10-3-2005. It was stated by the Company: “5. HEL could not submit the Annual performance reports to RBI as the JV Company did not provide us the details in time. The Directors/Managers of the JV Company informed us that, as the company being an LLC it is not bound by the local regulations/statutes to get their annual accounts audited by an Accountant. We expressed our inability to submit the audited accounts with RBI, Hyderabad. But the officers concerned were not appreciating the facts of the local regulations and insisting for the audited accounts. We explained them that getting the accounts audited by the Accountant in US would be costly and the JV partners were not inclined to spend that kind of money as the operations were not encouraging. HEL is helpess in this issue as we were unable to impress upon the JV Company to get the accounts audited. We explained them that getting the accounts audited by the Accountant in US would be costly and the JV partners were not inclined to spend that kind of money as the operations were not encouraging. HEL is helpess in this issue as we were unable to impress upon the JV Company to get the accounts audited. The copy of the APR’s filed with RBI, Hyderabad up to 31st March 2003 were enclosed.” The explanation further claimed in para 9: “The local regulations for LLC’s (Limited Liability Company) in US exempts the company from the conduct of regular meetings, annual general meetings, auditing of accounts etc. (The write downloaded from the Website is enclosed duly highlighted the relevant para).” 29. The learned counsel for the appellants contended that in the light of detailed explanation, the appellants cannot be considered to have violated Regulation 15(iii) of the Regulations, 2000 and that the appellants are not liable for levy of any penalty. It is contended by the appellants that it must be shown by the respondents 2 and 3 that the appellants contravened the provisions of the Regulations, 2000 and that there should be an adjudication of the contravention. Section 16, FEMA, deals with the adjudication by the Primary Authority while Section 28, FEMA, provides for the procedure and powers of the Appellate Tribunal. The main case of the appellants is that the host country did not provide for compulsory audit of the accounts of the Limited Companies and that it consequently became impossible for the appellants to submit duly audited accounts. It is the contention of the learned counsel for the appellants that the subsidiary Company in the host country was not willing to submit its accounts for auditing where there is no statutory compulsion for a Limited Company to get its accounts audited; because the subsidiary Company considered it expensive to get its accounts0 audited. 30. The learned counsel for the appellants, inter alia, contended that the order by the Primary Authority is not supported by reasoning and that the order more or less is imposition of penalty accepting the contentions of the charge. The learned counsel for the appellants contended that the order of the Primary Authority suffers from non-application of the mind. The order was subsequently confirmed by the Special Director as the Appellate Authority. The learned counsel for the appellants contended that the order of the Primary Authority suffers from non-application of the mind. The order was subsequently confirmed by the Special Director as the Appellate Authority. The order of the Primary Authority as well as the Appellate Authority have reasonably explained the circumstances in which the contention of the appellants herein could not be accepted. I regret to disagree with the claim of the learned counsel for the appellants that the orders of the Primary Authority and the Appellate Authority are laconic and deserve to be set aside. On the other hand, both the Authorities have expressed sufficient reasons for rejecting the contentions of the appellants herein. That apart, the learned counsel for the respondents 2 and 3 contended that when the RBI prescribed a condition, the condition is liable to be complied with and that if the appellants failed to establish that it complied with the conditions, the violation as alleged by the Enforcement Directorate has been made out. In fact, the conditions as provided by the Sanction Letter as well as Regulation 15(iii) of the Regulations, 2000, are identical obligating the appellants to comply with the conditions. It therefore is not open for the appellants to turn round now and claim that the conditions cannot be enforced. 31. One of the contentions raised by the learned counsel for the appellants is that the appellants shall fulfill their obligations on the happening of an event and that the appellants cannot be blamed for not fulfilling their obligations since the expected event did not occur. Clause (6) of the Sanction Letter obligated the Company to submit audited balance-sheet as well as the profit and loss account together with the Directors’ Report on the working of the Overseas Foreign Concern during the year and also APRs. The only contingency is that the concerned documents ought to be submitted within 30 days after the expiry of the statutory period for the finalisation of the audited annual accounts as applicable in the host country and in the absence of such a period for the host country, within 6 months from the date of the closure of the relevant accounting period of the foreign concern. As there is no provision of compulsory auditing of the accounts of the foreign concern, the appellants should have submitted the documents within 6 months from the date of the closure of the accounting period for the host country. It is not open for the appellants to now claim that the 30 days time as mentioned has become irrelevant, that such a contingent event did not take place, that the condition has not been fulfilled and that there is no obligation on the part of the appellants to submit the documents envisaged by Clause (6) of the Sanction Letter. It is not as though the appellants were not aware about their obligation. The appellants in fact submitted APRs from 2000 to 2003 belatedly on 25-8-2004. It is not open for the appellants to approbate and reprobate fulfilling one of the conditions of the sanction and failing to comply with the other conditions adamantly taking the stand that the conditions are not applicable. 32. The learned counsel for the appellants, inter alia, submitted that the appellants are minority stakeholders and that the question of mismanagement of the Company by the appellants would not arise. As rightly submitted by him, mismanagement of the Company is not the claim by the Enforcement Directorate. Their only case is that the Company failed to discharge its obligations and thus exposed itself to penal consequences. In summation, it may be pointed out that the appellants were sanctioned foreign exchange on certain conditions to be fulfilled in future, the failure of which would attract penal consequences. It is evident from the very contentions of the appellants that the appellants did not fulfill those conditions. In the reply to the Show Cause Notice, the appellants failed to explain the circumstances in which they did not fulfill the terms and conditions provided by Clause (6) of the Sanction Letter. Thus, the appellants themselves agree that the terms and conditions stipulated by the Sanction Letter have not been fulfilled by the appellants. The Primary Authority and the Appellate Authority therefore were perfectly justified in holding that the appellants violated the terms and conditions of the allotment and consequently violated Regulation 15(iii) of the Regulations, 2000. PENALTY: 33. The Primary Authority imposed penalty of Rs.30,00,000/- against the Company and Rs.20,00,000/- against the Managing Director under Section 42 read with Section 13 of the FEMA. Section 13(1) of the FEMA reads: “13. PENALTY: 33. The Primary Authority imposed penalty of Rs.30,00,000/- against the Company and Rs.20,00,000/- against the Managing Director under Section 42 read with Section 13 of the FEMA. Section 13(1) of the FEMA reads: “13. Penalties (1) If any person contravenes any provision of this Act, or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes any condition subject to which an authorisation is issued by the Reserve Bank, he shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to two lakh rupees where the amount is not quantifiable, and where such contravention is a continuing one, further penalty which may extend to five thousand rupees for every day after the first day during which the contravention continues. (2) ………………………………… Explanation.—For the purposes of this sub-section, “property” in respect of which contravention has taken place, shall include— 1. deposits in a bank, where the said property is converted into such deposits; 2. Indian currency, where the said property is converted into that currency; and 3. Any other property which has resulted out of the conversion of that property.” 34. The contravention of the provisions of the FEMA, the Rules or the Regulations attracts penalty which may extend up to thrice the sum involved in the contravention if the amount can be quantified and up to Rs.2,00,000/- if the amount covered by the contravention cannot be quantified and a further penalty up to an extent of Rs.5,000/- for each day’s contravention. Regarding the penalty, as an alternative relief, the learned counsel for the appellants contended that the contravention in this case is not quantifiable and that the appellants consequently can be penalised to a maximum extent of Rs.2,00,000/-. 35. In HINDUSTAN STEEL LTD. v. STATE OF ORISSA ( 1969 (2) SCC 627 ), penalty was sought to be imposed under the provisions of Orissa Sales Tax Act, 1947. The Supreme Court observed: “8. Under the Act penalty may be imposed for failure to register as a dealer—Section 9(1) read with Section 25(1)(a) of the Act. But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. The Supreme Court observed: “8. Under the Act penalty may be imposed for failure to register as a dealer—Section 9(1) read with Section 25(1)(a) of the Act. But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. Those in charge of the affairs of the Company in failing to register the Company as a dealer acted in the honest and genuine belief that the Company was not a dealer. Granting that they erred, no case for imposing penalty was made out.” 36. The Supreme Court thus observed that the imposition of the penalty was not automatic and that the penalty is imposed only when a party who failed to register as a dealer was acting deliberately in defiance of law or was guilty of dishonest conduct or was acting in conscious disregard of its obligations. 37. In CHAIRMAN, SEBI v. SHRIRAM MUTUAL FUND ( (2006) 5 SCC 361 ), regarding penalty for contravening provisions of Securities and Exchange Board of India Act, 1992, the Supreme Court observed that the quantum of penalty is discretionary for the authority. The decision of HINDUSTAN STEEL LTD. (6 supra) was indeed considered by this decision but the Court held that to constitute the contravention of the provision obligating the party to penal consequences need not be coupled with mens ria. The decision of HINDUSTAN STEEL LTD. (6 supra) was indeed considered by this decision but the Court held that to constitute the contravention of the provision obligating the party to penal consequences need not be coupled with mens ria. Obligation envisaged by Regulation 15(iii) of the Regulations, 2000, as well as Clause (6) of the Sanction Letter are mandatory. The failure to comply with them certainly attracts penal consequences under Section 13 of the FEMA. The question consequently is as to the quantum of penalty leviable against the two appellants. 38. The Primary Authority imposed penalty of Rs.30,00,000/- against the Company and Rs.20,00,000/-against the Managing Director of the Company. I may assume for the purpose of quantifying the penalty that the contravention cannot be quantified. The penalty in such a circumstance is not more than Rs.2,00,000/-. The rider however is that the contravener is liable to penalty up to an extent of Rs.5,000/- for each day’s contravention. While the Sanction Letter was issued on 02-02-1999, the Company would appear to have utilised the sanction in 1999 itself. Right from the beginning of 2000, the non-filing of the statements and returns envisaged by Clause (6) of the Sanction Letter is a violation attracting penalty of not more than Rs.5,000/-per each day. Even if the penalty is worked out at Rs.2,00,000/- and penalty at the rate of Rs.5,000/- per day is added to the same, it would be much more for the past over 12 years. The Appellate Tribunal confirmed the order on 30-3-2006. I consider that imposition of penalty at Rs.2,00,000/- and working out additional penalty at Rs.5,000/- per day for over 5 years from 2000 onwards is far less than Rs.30,00,000/-. The Primary Authority as well as the Appellate Authority would appear to be in fact sympathetic with the case of the appellants in imposing penalty of Rs.30,00,000/- against the Company and Rs.20,00,000/- against the Managing Director of the Company. The penalty imposed is quite reasonable and does not warrant interference. The penalty as imposed by the Primary Authority and confirmed by the Appellate Authority deserves to be confirmed. CONCLUSION: 39. For various reasons mentioned, the appeals are found to be devoid of merits and are accordingly dismissed. There shall be no order as to costs. The penalty imposed is quite reasonable and does not warrant interference. The penalty as imposed by the Primary Authority and confirmed by the Appellate Authority deserves to be confirmed. CONCLUSION: 39. For various reasons mentioned, the appeals are found to be devoid of merits and are accordingly dismissed. There shall be no order as to costs. The learned counsel for the appellants orally sought the permission of the Court to move the Supreme Court under Article 132 of the Constitution of India. I do not find any substantial question of law that is involved in the case. Hence, the oral request for permission to appeal to the Supreme Court is rejected.