Judgment :- (1) The subject matter of challenge in this writ petition is an order dated 4th December. 2008, passed by the Regional Provident Fund Commissioner assessing damages payable under Section 14B of the Employees Provident Fund and Miscellaneous Provisions Act, 1952, hereinafter referred to as the said Act. (2) Mr. Sengupta, learned Counsel, appearing in support of the writ petition, has advanced the following submissions : (a) Power to recover damages conferred by the said Act under Section 14B is in addition to the power to recover interest provided under Section 7Q of the said Act. He submitted that the interest for the delay made by the writ petitioner in payment of the statutory dues has been separately assessed and paid. By the order, under challenge, damages have been assessed at a sum of Rs.27,79,020/-. He has drawn my attention to the extent of delay made by the writ petitioner in paying the statutory dues. The pattern of delay appears to be in most of the cases less than ten days. There have been delay exceeding ten days but majority of the payments were delayed by less than ten days. He submitted that in such a case, the concerned authority had a discretion in the matter of levying damages/penalty under Section 14B of the said Act. In support of his submission, he relied on a judgment of the Apex Court in the case of M/s. Hindustan Steel Limited v. State of Orissa reported in AIR 1970 SC 253 . He drew my attention to Paragraph 7 of the said judgment where Their Lordships did, in fact, hint at such a proposition with regard to liability arising out of the provisions of Orissa Sales Tax Act. Paragraph 7 of the said reported judgment reads as follows : "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. And order imposing penalty for failure to carry out a statutory obligation is a 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 misconduct, contumacious or dishonest, or acted in conscious disregard of its obligation. And order imposing penalty for failure to carry out a statutory obligation is a 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 misconduct, 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 technical or venial breach of the provisions of the Act or where the breach flows 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." (3) He drew my attention to Section 7Q of the said Act which provides that "the employer shall be liable to pay simple interest............." He wanted me to compare this provision with Section 14B of the said Act which confers power to recover damages by providing that the authority "may recover from the employer by way of penalty such damages...." He submitted that the provisions contained in Section 14B of the said Act appear to be directory rather than mandatory. He added that the concerned authorities can, in an appropriate case, recover damages but not as a matter of rule in all cases. (4) Developing his argument further, he drew my attention to a judgment in the case of Employees State Insurance Corporation v. H.M.T. Limited reported in (2008)3 SCC 35 . In that case, Their Lordships were considering Section 85B of the Employees State Insurance Act, 1948, which is similarly worded as Section 14B of the said Act. Their Lordships held that Section 85B of the E.S.I. Act did not envisage mandatory levy of damages. In Paragraph 18 of that judgment, stress was laid on the expression may recover. In that case, Their Lordships were considering Section 85B of the Employees State Insurance Act, 1948, which is similarly worded as Section 14B of the said Act. Their Lordships held that Section 85B of the E.S.I. Act did not envisage mandatory levy of damages. In Paragraph 18 of that judgment, stress was laid on the expression may recover. In Paragraph 26 of that judgment, existence of mens rea to contravene a statutory provision was also insisted upon as a necessary ingredient. (5) Mr. Sengupta contended that the pattern of delay would indicate that the delay was anything but intentional and, therefore, the levy of damages/penalty was bad and illegal. He therefore invited this Court to set aside the order. (6) Mr. Prasad, learned Advocate, appearing for the Provident Fund Authority, drew my attention to a judgment in the case of Organo Chemical Industries and Anr. v. Union of India and Ors., reported in (1979)4 SCC 573 . Mr. Prasad, learned Advocate, appearing for the provident fund authority, submitted that the liability under Section 14B of the said Act to pay damages is statutory. When there has been delay in payment, the liability to pay damages was instantly incurred. The provision contained in Section 14B of the said Act is a wholesome provision designed to secure compliance with the law and the Court shall be slow in interfering with the order passed by the statutory authority in exercise of the statutory power unless serious shortcoming in the order is pointed out which is not the case before this Court. He drew my attention to Paragraph 22 of the judgment in the case of Organo Chemical Industries (supra) wherein the following views were expressed : "The expression damages occurring in Section 14-B is, in substance, a penalty imposed on the employer for the breach of the statutory obligation. The object of imposition of penalty under Section 14-B is not merely to provide compensation for the employees. We are clearly of the opinion that the imposition of damages under Section 14-B serves both the purposes. It is meant to penalise defaulting employer as also to provide reparation for the amount of loss suffered by the employees. The object of imposition of penalty under Section 14-B is not merely to provide compensation for the employees. We are clearly of the opinion that the imposition of damages under Section 14-B serves both the purposes. It is meant to penalise defaulting employer as also to provide reparation for the amount of loss suffered by the employees. It is not only a warning to employers in general not to commit a breach of the statutory requirements of Section 6, but at the same time it is meant to provide compensation or redress to the beneficiaries i.e. to recompense the employees for the loss sustained by them. There is nothing in the section to show that the damages must bear relationship to the loss which is caused to the beneficiaries under the Scheme. The word damages in Section 14 B is related to the word default. The words used in Section 14-B are default in the payment of contribution and, therefore, the word default must be construed in the light of Para 38 of the Scheme which provides that the payment of contribution has got to be made by the 15th of the following month and, therefore, the word default in Section 14-B must mean failure in performance or failure to act. At the same time, the imposition of damages under Section 14-B is to provide reparation for the amount of loss suffered by the employees." (7) Mr. Sengupta, learned Counsel, appearing for the writ petitioner, in reply, submitted that in any event, the highest penalty provided for under the scheme prepared under the said Act could not have been levied except for special reasons: He submitted that for a delay of 59 days, the rate of damages/penalty is 17 % per annum. Where there has been delay of three days or five days or seven days, what is the justification for punishing a defaulter with a penalty fit for delay of a period of fifty-nine days. He submitted that it is a clear case of disproportionate penalty which has rendered the order irrational, and, therefore, violative of Article 14 of the Constitution of India. (8) Mr. He submitted that it is a clear case of disproportionate penalty which has rendered the order irrational, and, therefore, violative of Article 14 of the Constitution of India. (8) Mr. Prasad replied by relying on a judgment in the case of Peoples Union of Democratic Rights v. Union of India reported in AIR 1982 SC 1473 wherein the following view was expressed at page 1481 of the said report : "We do not propose to go into the details of these prosecutions launched against the contractors but we are shocked to find that in cases of violations of labour laws enacted for the benefit of workmen the Magistrates have been imposing only small fines of Rs. 200/- thereabouts. The Magistrates seems to view the violations of labour laws with great indifference and unconcern as if they are trifling offences undeserving of judicial severity. They seem to overlook the fact that labour laws are enacted for improving the conditions of workers and the employers cannot be allowed to buy off immunity against violations of labour laws they would be making profit which would far exceed the amount of the fine. If violations of labour laws are going to be punished only by meagre fines, it would be impossible to ensure observance of the labour laws and the labour laws would be reduced to nullity. They would remains merely paper tigers without any teeth or claws. We would like to impress upon the Magistrates and Judges in the country that violations of labour laws must be viewed with strictness and wherever any violations of labour laws are established before them, they should punish the errant employers by imposing adequate punishment". (9) I have considered the rival submissions advanced by the learned Counsel, appearing for the parties. The following issues, according to me arise for determination. (a) Is the provision contained in Section 14B of the Employees Provident Fund and Miscellaneous Act, 1952, mere directory ? (b) Is the impugned order bad because the authority concerned did not go into the question of mens real (c) Is the impugned order irrational? Does it offend Article 14 of the Constitution of India? (10) The first and the third issue may be taken up together for consideration in order to avoid overlapping of the reasons. (11) The answer to the first question must be in the negative. Does it offend Article 14 of the Constitution of India? (10) The first and the third issue may be taken up together for consideration in order to avoid overlapping of the reasons. (11) The answer to the first question must be in the negative. The scheme statutory enacted provides for recovery of damages where there has been default in making payment of the statutory dues within the prescribed time. Clause (5) of the said Act provides as follows :- "Clause 5. Recovery of damages for default in payment of any contribution.- (1) Where an employer makes default in the payment of any contribution to the Employees Pension Fund, or in the payment of any charges payable under any other provisions of the Act or the Scheme, the Central Provident Fund Commissioner or such officer as may be authorised by the Central Government, by notification in the Official Gazette, in this behalf, may recover from the employer by way of penalty, damages at the rates given below : (2) The damages shall be calculated to the nearest rupee, fifty paise or more to be counted as the nearest higher rupee and fraction of a rupee less than fifty paise to be ignored." (12) The use of the expression "may" both in Section 14B of the Act and in Clause 5 of the scheme viz. "may recover" merely empowers the authority to apply discretion as regards the rate of penalty. The consideration for recovery of damages under Section 73 of the Contract Act have no place here. Here the liability is statutory. Therefore, the concepts of the Contract Act cannot be imported. There is also a public purpose sought to be achieved. By making recovery of damages a statutory obligation, some sort of urgency has been imported which will act as goad for timely payment of these dues. It is, therefore, not possible to water down the provisions by holding that the provision contained in Section 14B of the said Act is mere directory. (13) Insofar as the third question is concerned, judgment relied upon by Mr. Prasad, learned Counsel for the respondents, in the case of Peoples Union of Democratic Rights (supra) does not stand in the way because Their Lordships laid stress upon "adequate punishment". There can be no denial of the fact that in this case the highest penalty had been inflicted for the default provided under the statute. Prasad, learned Counsel for the respondents, in the case of Peoples Union of Democratic Rights (supra) does not stand in the way because Their Lordships laid stress upon "adequate punishment". There can be no denial of the fact that in this case the highest penalty had been inflicted for the default provided under the statute. When for the delay of fifty-nine days damages at the rate of 17 per cent per annum are payable, what justification can there be for directing the defaulter to pay damages at the rate of 17% per annum when the default is for only three days ? This is anything but rational. In the scheme providing for the percentage of penalty the word upto has to be implied consistently with the permissive language used both in the act and the scheme. The authority was obliged to give special reasons as to why did it think the highest penalty provided under the Act to be appropriate in the present case or, in the alternative, they could have inflicted proportionate or adequate penalty. The Section 14B itself provides that the damages to be recovered are penal in nature. They are not compensatory. Going by the rules of compensation nothing other than interest could have been recovered. Reference in this regard may be made to the statutory illustration n to Section 73 of the Contract Act which provides as follows: "A contracts to pay a sum of money to Bon a day specified. A does not pay the money on that day. B, in consequence of not receiving the money on that day, is unable to pay his debts, and is totally ruined. A is not liable to make good to B anything except the principal sum he contracted to pay, together with interest upto the day of payment." (14) Their Lordships in the cases of HSL v. State of Orissa (supra) and E.S.I.C. v. HMT (supra) referred to mens rea which is essentially a requirement of the criminal law. Therefore the jurisprudence governing the criminal law should be applied in fixing the quantum of penalty as indicated in Section 354 of the Code of Criminal Procedure. (15) The authority concerned has obviously failed to live up to that standard. The third question is therefore answered in the affirmative. (16) The answer to the second question is bound to be in the negative. (15) The authority concerned has obviously failed to live up to that standard. The third question is therefore answered in the affirmative. (16) The answer to the second question is bound to be in the negative. By the expression "mens rea" all that is meant is whether the default was an intentional or unintentional one. No attempt was made by the learned Counsel, for the writ petitioner to establish that the default was unintentional. When the default was made and the petitioner wanted to show lack of intention the burden of proof obviously lay with the defaulter to satisfactorily establish that the default was made unintentionally. When no attempt was made by the employer to prove that the default was unintentional, the concerned authority was under no obligation to inquire into that aspect of the matter, more particularly when the liability is fixed by the statute. Not one word was shown to me to indicate that the default was an unintentional one. The learned Counsel did, in fact, draw my attention to a paragraph wherein various difficulties experienced by the Jute Industry have been detailed. But those allegations are of a general nature and do not go to show that any particular incident happened which incapacitated the writ petitioner to pay its statutory dues. When the writ petitioner could pay the salary of its employees, it is very difficult to believe that it was unable to pay its statutory dues. Therefore, the second question is answered in the negative. (17) In the result, this writ petition succeeds. The order under challenge is set aside. The concerned authority shall reconsider the matter and shall pass an appropriate order, in accordance with law, after hearing the parties, (18) There will be no order as to costs.