Judgment : The petitioner-Employees Provident Fund Organization constituted under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (for short ‘Act’), aggrieved by the order dated 30-3-2009 in A.T.A. No. 663 (6) 2003 of the Employees’ Provident Fund Appellate Tribunal, New Delhi, Annexure-B, has preferred this petition. 2. The 1st respondent an establishment falling within the definition of the said term under the ‘Act’, was required to deposit the Provident Fund contributions under Section 6 of the Act read with Paragraph 38 of Employees’ Provident Fund Scheme, 1952 (for short, ‘EPF Scheme 1952’); Pension Fund contributions under Section 6-A of the Act read with Paragraph 3 of the EPF Scheme, 1952; Administrative charge under Paragraph 38 of EPF Scheme 1952; Inspection charges under Section 17(3) of the Act read with Paragraphs 27 and 27-A of the EPF Scheme, 1952; Employees Deposit linked Insurance Fund contribution and administrative charges under Section 6-C of the Act and inspection charges under Section 17(3-A) of the Act. 3. The Petitioner, alleging that the respondent-Establishment failed to pay in time: (i) The Provident Fund Contributions; (ii) The Administrative/Inspection Charges; (iii) The Pension Fund Contributions; (iv) The Deposit Linked Insurance Fund contributions; (v) The EDLI administrative inspection charges as required by law for the months 3/1998 to 2/2001, issued notice dated 10-7-2002 to show cause as to why damages under Section 14-B of the Act should not be recovered from the Respondent after extending an opportunity of personal hearing. 4. In response to the notice, the respondent having submitted a reply dated 17-8-2002, was extended an opportunity of personal hearing on 27-8-2002 and 3-9-2002, whence it was conceded that there was delay in payment of contributions on dates indicated in the statement. The delay was sought to be explained by the respondent that it was a charitable Institution, dependant on contributions in the form of donations; having opened a school in a remote locality, hoping to be admitted to grant-in-aid by the State Government, which was not extended; were the cause for the delay in payment of the contribution. In addition it was asserted that the respondent was not aware that it was liable to pay contributions under the Act and in fact, had raised loans to pay the contributions. In the aforesaid premise, the respondent pleaded not to levy damages. 5. In addition it was asserted that the respondent was not aware that it was liable to pay contributions under the Act and in fact, had raised loans to pay the contributions. In the aforesaid premise, the respondent pleaded not to levy damages. 5. The Regional Provident Fund Commissioner, Mangalore of the petitioner-Organization, by order dated 24-9-2002, Annexure-A observed that a statutory obligation is cast on the Respondent, to pay the contribution and as the Act was a social welfare legislation, the successful welfare of the Social Security Scheme being dependant upon prompt compliance by employers declined to accept the respondent’s explanation for the delay, and accordingly levied damages of Rs. 80,520/-and directed the Respondent to deposit the same under the caption ‘Penal Damages’, within a time frame, failing which action would be initiated to recover the same with interest at 12% per annum as provided for by Section 7-Q of the Act and in the manner specified in Sections 8-B to 8-G of the Act. 6. The Respondent, aggrieved by the order, preferred an appeal before the Employees Provident Fund Appellant Tribunal, New Delhi, in A.T.A. No.663(6) of 2003, whence the Tribunal having observed the law laid down by the Apex Court in M/s. Hindustan Steel Limited v. State of Orissa1, coupled with the decision of the Apex Court in Organo Chemical Industries and Another v. Union of India and Others2, held that the petitioner-Organization had failed to look into the question as to whether there was any conscious failure on the part of the employer in non-payment of the contributions under the Act, more appropriately the plea that the respondent establishment was in dire financial straits and accordingly, by order dated 30-3-2009, restricted the damages up to 15% per annum on the arrears of contribution. Hence, this writ petition. 7. The first contention of the learned Counsel for the petitioner that the appeal memorandum before the Appellate Tribunal was opposed by filing Statement of Objections, must stand repelled in the light of the specific statement recorded in the order impugned that no counter was filed, coupled with the fact that no material is forthcoming in this petition to establish the said assertion. 8. 8. The second contention of the learned Counsel that Section 14-B invests the petitioner with the right to impose damages by way of penalty, and Paragraph 32-A of the EPF Scheme, 1952 provides for the scale of imposition of damages, which the Regional Provident Fund Commissioner, in accordance with the Scheme, imposed the damages. 9. In order to appreciate this contention. It is useful to consider the law in relation to imposition of damages. In M/s. Hindustan Steel Limited’s case, a three Judges Bench of the Apex Court, while considering the plea as to whether persons in-charge of affairs of a Company failing to register it as a dealer in honest and genuine belief that it was not a dealer under the Orissa Sales Tax Act, 14 of 1947, the imposition of penalty was justified, observed thus: “ 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”. 10. In Employees’ State Insurance Corporation v. H.M.T. Limited and Another1, a two Judges Bench of the Supreme Court, while considering the nature and scope of Section 85-B of the Employees’ State Insurance Act, 1948 read with Regulation 31-C of the Employees’ State Insurance (General) Regulations, 1950 relating to recovery of damages interpreting the provisions as penal, observed thus: “16. It is a well-known principle of law that a subordinate legislation must conform to the provisions of the legislative Act. Section 85-B of the Act provides for an enabling provision,. It does not envisage mandatory levy of damages. It is a well-known principle of law that a subordinate legislation must conform to the provisions of the legislative Act. Section 85-B of the Act provides for an enabling provision,. It does not envisage mandatory levy of damages. It does not also contemplate computation of quantum of damages in the manner prescribed under the Regulations. 17. The statutory liability of the employer is not in dispute. An employee being required to be compulsorily insured, the employer is bound to make his part of the contribution. An employee is also bound to make his contribution under the Act. But the same does not mean that levy of damages in all situations would be imperative. 18. Section 85-B of the Act uses the words ‘may recover”. Levy of damages thereunder is by way of penalty. The legislature limited the jurisdiction of the authority to levy penalty i.e., not exceeding the amount of arrears. Regulation 31-C of the Regulations, therefore, in our opinion, must be construed keeping in view the language used in the legislative Act and not de hors the same”. Further, “Only because a provision has been made for levy of penalty, the same by itself would not lead to the conclusion that penalty must be levied in all situations. Such an intention on the part of the legislature is not decipherable from Section 85-B of the Act. When a discretionary jurisdiction has been conferred on a statutory authority to levy penal damages by reason of an enabling provision, the same cannot be construed as imperative. Even otherwise, an endeavour should be made to construe such penal provisions as discretionary, unless the statute is held to be mandatory in character”. (emphasis supplied) Further, at Paragraph 25, observed thus: “25. The statute itself does not say that a penalty has to be levied only in manner prescribed. It is also not a case where the authority is left with no discretion. The legislation does not provide that adjudication for the purpose of levy of penalty proceeding would be a mere formality or imposition of penalty as also computation of the quantum thereof became a foregone conclusion. Ordinarily, even such a provision would not be held to providing for mandatory imposition of penalty, if the proceeding is an adjudicatory one or compliance with the principle of natural justice is necessary thereunder”. Ordinarily, even such a provision would not be held to providing for mandatory imposition of penalty, if the proceeding is an adjudicatory one or compliance with the principle of natural justice is necessary thereunder”. Paragraph 26, states thus: “Existence of mens rea or actus reus to contravene a statutory provision must also be held to be a necessary ingredient for levy of damages and/or the quantum thereof”. Section 14-B of the Act reads thus: “14-B. Power to recover damages.-Where an employer makes default in the payment of any contribution to the Fund, the pension Fund or the Insurance Fund or in the transfer of accumulations required to be transferred by him under sub-section (2) of Section 15 or sub-section (5) of Section 17 or in the payment of any charges payable under any other provision of this Act or of any Scheme or Insurance Scheme or under any of the conditions specified under Section 17, the Central Provident Fund Commissioner or such other officer as may be authorized by the Central Government, by notification in the Official Gazette, in this behalf may recover from the employer by way of penalty such damages, not exceeding the amount of arrears, as may be specified in the Scheme: Provided that before levying and recovering such damages, the employer shall be given a reasonable opportunity of being heard: Provided further that the Central Board may reduce or waive the damages levied under this section in relation to an establishment which is a sick industrial company and in respect of which a scheme for rehabilitation has been sanctioned by the Board for Industrial and Financial Reconstruction established under Section 4 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986), subject to such terms and conditions as may be specified in the Scheme”. Paragraph 32-A of the Employees’ Provident Fund Scheme, 1952 reads thus: “32-A. Recovery of damages for default in payment of any contribution,-(1) 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-section (2) of Section 15 or sub-section (5) of Section 17 of the Act or in the payment of any charges payable under any other provisions of the Act or Scheme or under any of the conditions specified under Section 17 of the Act, the Central Provident Fund Commissioner or such officer as may be authorized 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: Period of default Rate of damages (Percentage of Arrears per annum) .(a) Less than two months Seventeen .(b) Two months and above but less Twenty-two Than four months (c) Four months and above but less Twenty-seven Than six months .(d) Six months and above Thirty-seven. .(2) The damages shall be calculated to the nearest rupee, 50 paise or more to be counted as the nearest higher rupee and fraction of a rupee less than 50 paise to be ignored”. 11. A perusal of the aforesaid provisions of statute, what emanates is that, Section 14-B provides for recovery of damages with the use of the words ‘may recover’. The petitioner-Organization is empowered to recover damages in the event the employer fails to make payment of the amount due in respect of contribution; subject however to the condition that the amount thereof would not exceed the amount of arrears as specified in the EPF Scheme, 1952. The proviso thereto incorporates the principles of natural justice. 12. The obligation on the part of the respondent-employer to deposit the contributions of both employer and employee is not in dispute. What is in dispute is as to whether the amount of damages specified in Paragraph 32-A of the EPF Scheme, 1952 is imperative in character or not? 13. Applying the aforesaid principles of law, Section 14-B does not envisage mandatory levy of damages. It does not contemplate computation of quantum of damages in a manner prescribed under Para 32-A of the EPF Scheme, 1952. 13. Applying the aforesaid principles of law, Section 14-B does not envisage mandatory levy of damages. It does not contemplate computation of quantum of damages in a manner prescribed under Para 32-A of the EPF Scheme, 1952. Though the statutory liability of the employer cannot be in dispute, but levy of damages in all circumstances is not imperative. The use of the words ‘may recover’ in Section 14-B of the Act, identical to the very words in Section 85-B of the Employees’ State Insurance Corporation Act, 1948, in the matter of recovery of damages and levy of penalty, in my opinion, the levy of damages under Section 14-B of the Act is by way of penalty. The Legislature having limited the jurisdiction of the authority to levy penalty not exceeding the amount referred to in Paragraph 32-A of the EPF Scheme, 1952, must be construed, keeping in view the language deployed in the legislative act and not de hors the same. 14. Even if Paragraph 32-A of the EPF Scheme, 1952 prescribes general guidelines as to the limits to which the imposition of damages could be made, it cannot be contended that in no case, the mitigating circumstances can be taken into consideration by the adjudicating authority in finally deciding the matter and is bound to mechanically apply the uppermost or the lowermost table as the limit. 15. In the instant case, the Appellate Tribunal, having given its anxious consideration over the plea advanced of the respondent regarding the delay in payment of contributions, as satisfactory explanation for not having paid the contributions within the time frame, the rejection of the explanation without either application of mind or recording reasons as to why the grounds for delayed payment were not acceptable, interfered with the order Annexure-A of the Regional Provident Fund Commissioner. Regard being had to the fact that the respondent was a charitable organization imparting education to children in a remote locality, dependant upon donations by way of contributions to carry on its activity, fell in favour with the Appellate Tribunal as mitigating circumstances, in the matter of imposition and recovery of damages under Section 14-B read with Paragraph 32-A of the EPF Scheme, 1952. The Appellate Tribunal having restricted the damages to 15% per annum on the arrears of contribution, to meet the ends of justice, in my opinion, in the facts and circumstances of the case, cannot be found fault with. The writ petition is without merit and is accordingly, rejected.