VENKATARAMIAH, J. ( 1 ) THESE two petitions are directed against the levy of penal damages on the petitioner under S. 14b of the Employees' Provident Funds, Act, 1952 (hereinafter referred to as the Act) by the State Government, as per notices bearing No. FCL/123/lpf. 69 dated 29-4-1969 and No. FCL/86 pf. 69 dated 21-3-1969. After these notices were served on the petitioner, the petitioner made representations stating that the rates at which the damages had been computed under S. 14b of the Act were excessive. ( 2 ) THE petitioner also pleaded that the defaults in payment of the provident fund referred to in the notices were not wilful and the Government might take a sympathetic view while assessing the damages payable by the petitioner. Even after the petitioner showed cause to the notices, the Government was of the opinion that the damages already indicated in the. notices were the proper damages recoverable under the Act. The petitioner has questioned the aforesaid orders of the Government in these writ petitions. ( 3 ) IT is apparent from a Circular issued by the Regional Provident Fund commissioner bearing No. MY/pf/e. 10/5018/65 dated 3-11-1965 copies of which are enclosed to the two writ petitions, that the penal damages recoverable from parties committing default in payment of arrears of provident fund had to be made in accordance with the schedule mentioned therein. ( 4 ) IT is not clear under what provision of law such a) circular containing instructions regarding levy of penal damages could be issued by the Regional provident Fund Commissioner. Whatever that might be, under s. 14b of the Act, the State Government has to apply its mind to each case of default and then make an order regarding the quantum of penal damages in respect of each case of default as it may think fit to impose. This is manifest from the language of S. 14b of the Act which reads:"14b: Power to recover damages: Where an employer makes default in the payment of any contribution to the fund or in the transfer of accumulations required to be transferred by him under sub-sec. (2) of S. 15 or sub-sec. This is manifest from the language of S. 14b of the Act which reads:"14b: Power to recover damages: Where an employer makes default in the payment of any contribution to the fund or in the transfer of accumulations required to be transferred by him under sub-sec. (2) of S. 15 or sub-sec. (5) of S. 17 or in the payment of any charges payable under any other provision of this Act or of any scheme or under any of the conditions specified under Sec. 17, the appropriate Government may recover from the employer such damages, not exceeding twenty-five per cent of the amount of arrears, as it may think fit to impose. " ( 5 ) THE words "as it may think fit to impose" appearing in S. 14b of the act imposes a responsibility on the part of the Government to exercise its discretion in determining the extent of damages, subject of course to the maximum of 25 per cent of the arrears, without being influenced by any other extraneous circumstances such as the circular referred to above. This view of our receives support from a decision of this Court in Fernandes Bros. Cashew Factory v. State of Mysore, (1968) 2 Mys. L. J. 537 dealing with the scope of S. 14b of the Act, this is what this Court observed in that decision :"we are of the opinion that this criticism of the impugned demands is unassailable. S. 14b empowers the State Government to recover damages when an employer makes a default with respect to any one of the three distinct matters to which that section refers. Although it states that the upper limit of the damages which could be recovered in respect of such defaults is 25 per cent of the arrears, it contains a clear direction that the damages which could be recovered are those which the appropriate Government might think fit to impose. So it is plain that in each case which arises for consideration it is the duty of the appropriate Government to determine the amount of the damages which in its opinion could properly be recovered having regard to all the facts and circumstances of the case. So it is plain that in each case which arises for consideration it is the duty of the appropriate Government to determine the amount of the damages which in its opinion could properly be recovered having regard to all the facts and circumstances of the case. " ( 6 ) IN another part of the same decision, this is what was observed by this court with reference to a circular dated 2-9-1963 which was issued under similar circumstances:"the power created by S. 14b is to determine the amount of those damages as Government may think fit to impose. The words "may recover" occurring in the concluding part of that section demonstrate that in a given case Government have the power, if the circumstances justify the conclusion, to decide against the recovery of any damages, and it is that power of which the State Government stood denuded by the prescription of a rigid formula which in its opinion should settle all cases arising under that section. That formula also resulted in the abdication of the duty to consider the facts of each case even with respect to the measure of damages. " ( 7 ) WE find from the schedules appended to the impugned notices in these two petitions, the computation of damages payable by the petitioner appears to have been done in a mechanical way contrary to the letter and spirit of S. 14b of the Act and the observations of this Court in the decision referred to above. We are of the opinion that while assessing the damages under S. 14b of the Act, the Government is bound to take into account the explanation given by the employer regarding the delay in payment of the provident fund contribution etc. The default on the part of the employer may not be wilful but innocent. Sometimes the reasons for the default may be beyond the control of the employer, such as strikes, lock-outs, political disturbances. It is not possible to enumerate exhaustively all such relevant matters which may have to be taken into account in determination of damages. The Government has to make an adjudication in a reasonable way. The large number of cases in which such adjudication has to be made itself is not a ground to adopt a mechanical process. ( 8 ) IN the result, we quash the penal damages which are impugned in these two writ petitions. The Government has to make an adjudication in a reasonable way. The large number of cases in which such adjudication has to be made itself is not a ground to adopt a mechanical process. ( 8 ) IN the result, we quash the penal damages which are impugned in these two writ petitions. It is however now open to the Government to make a fresh order in accordance with law and in the light of the observations made above. The writ petitions are accordingly allowed. No order as to costs. --- *** --- .