Judgment :- Koshy, J. Employees’ State Insurance Corporation, the appellant herein, questions the order of the Employees’ Insurance Court in reducing the quantum of damages imposed by the Corporation under section 85B of the Employees’ State Insurance Act, 1948 (hereinafter referred to as ‘the Act’). The respondent was conducting a small scale industrial unit in partnership basis. There was some delay in payment of contributions. The establishment was closed due to financial difficulties and accumulated loss and the partnership itself was dissolved. The properties of the firm were sold for discharging the liabilities of the establishment. However, contributions due to the Corporation were paid, though there was some delay. The Corporation imposed damages under section 85B of the Act. Power of the Corporation to impose damages under section 85B of the Act, apart from interest on delayed payment of contribution, is not seriously disputed. 2. It is true that under section 85B of the Act, the ceiling limit of damages is 100% of the arrears. But, without taking into the circumstances of the matter, the Corporation imposed maximum damages payable under the Regulations. Regulation 31C of the Employees’ State Insurance (General) Regulations, 1950 reads as follows: “31C. 2. It is true that under section 85B of the Act, the ceiling limit of damages is 100% of the arrears. But, without taking into the circumstances of the matter, the Corporation imposed maximum damages payable under the Regulations. Regulation 31C of the Employees’ State Insurance (General) Regulations, 1950 reads as follows: “31C. Damages or contributions or any other amount due, but not paid in time:- If an employer fails to pay contributions within the periods specified under Regulation 31, or any other amount payable under the Act, the Corporation may recover damages, not exceeding the rates mentioned below, by way of penalty:- Period of delay Maximum rate of damages in per cent annum of the amount due i) Less than 2 months 5% ii) 2 months and above but less than 4 months 10% iii) 4 months and above but less than 6 months 15% iv) 6 months and above 25% Provided that the Corporation, in relation to a factory or establishment which is declared as sick industrial company and in respect of which a rehabilitation scheme has been sanctioned by the Board for Industrial and Financial Reconstruction, may:- a) in case of a change of management including transfer of undertaking(s) to workers’ Co-operative(s) or in case of merger or amalgamation of sick industrial company with a healthy company, completely waive the damages levied o leviable; b) in other cases, depending on its merits, waive upto 50 per cent damages levied or leviable; c) in exceptional hard cases, waive either totally or partially the damages levied or leviable.” So, Regulation 31C only gives a guideline. But, in all cases, maximum damages need not be imposed. Power to impose damages for delay in payment of contribution is penal in nature. Damages cannot, therefore, be levied in a cursory manner. When the Corporation imposed maximum damages, first respondent approached the EI Court. The Court considered the fact that the establishment of the respondent was running on a very heavy loss and the establishment itself was closed due to liabilities and assets of the establishment were sold after dissolving the partnership for discharge of the debts. Therefore, delay in payment of contribution was not deliberate. However, the EI Court held that 25% of the arrears of contribution will be enough punishment as contribution has to be paid with interest. Therefore, delay in payment of contribution was not deliberate. However, the EI Court held that 25% of the arrears of contribution will be enough punishment as contribution has to be paid with interest. The contention of the ESI Corporation is that under Regulation 31C, it is for the Corporation to reduce the damages and not for the Court. The EI Court is empowered to look into the correctness of the decision under section 75 of the Act. The EI Court found that while imposing damages, the Corporation did not apply the mind and it just imposed damages at the maximum rate without considering the facts of the case. We are of the view that the EI Court has considered the matter and found that, on the facts of this case, this is not a case to impose maximum damages. We see no ground to interfere with the decision of the EI Court. No substantial question of law is also raised in the appeal. The appeal is dismissed.