ORDER : S. Abdul Nazeer, J. 1. In this case, the petitioner has called in question the validity of the order at Annexure-J, dated 2-1-2004 in No. KN/PF/PD/873E/1547/2002-03 passed by the first respondent and the order at Annexure-P, dated 11-9-2014 in ATA. No. 157(6)2004 passed by the Employees Provident Fund Appellate Tribunal, New Delhi. The petitioner has also questioned the validity of the order of attachment at Annexure-Q, dated 17-6-2015 in No. BG/YNK/873E/Recovery/2015-16/54 and the summons at Annexure-R, dated 6-7-2015 in No. KN/PF/BG/YNK/873E/Recovery88/2015-16 both issued by the second respondent. The petitioner is the Schedule A Central Public Sector Enterprise in the medium and light engineering sector under the administrative control of the Department of Heavy Industry, Ministry of Heavy Industries and Public Enterprises, Government of India, with 93.69% share holding held by the Central Government. It was incorporated on 7-2-1953 under the then Indian Companies Act, 1913 as Hindustan Machine Tools Private Limited. Subsequently, the name was changed to Hindustan Machine Tools Limited. Further, the name was changed as 'HMT Limited'. The company was started as a single product unit, over the years, it diversified into manufacturing of watches, tractors, printing machines, metal forming presses, die casting and plastic processing machinery, CNC systems and bearings becoming a multi product, multi technology, multi location and multi unit engineering conglomerate. The petitioner has reconstructed its operation forming subsidiaries based on business/product lines in order to meet the challenges of globalization initiated by the Government of India through new economic policies. It is a holding company, which has the tractor business and food processing machinery unit in its fold, while other businesses are operated through five subsidiaries of the company. 2. The petitioner is covered under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (for short 'the Act'). It is an exempted establishment under Section 17(1)(a) of the Act. It is the case of the petitioner that in pursuance of the exemption notification, it has established three Board of Trustees for administration of the provident fund as contemplated under Section 17(1-A)(b) of the Act. The Trusts are known as "HMT Machine Tools Limited, Jalahalli, Bangalore, HMT Watches Limited (Watch Factory-Bangalore) and HMTL Corporate Office and Marketing Division Provident Fund". The Trust has seven constituent members. It is contended that during the period 1997-2001, petitioner incurred loss on account of loss incurred by the constituents of the Trust. The Trusts are known as "HMT Machine Tools Limited, Jalahalli, Bangalore, HMT Watches Limited (Watch Factory-Bangalore) and HMTL Corporate Office and Marketing Division Provident Fund". The Trust has seven constituent members. It is contended that during the period 1997-2001, petitioner incurred loss on account of loss incurred by the constituents of the Trust. Therefore, requisite contribution was not paid on time. The petitioner received sanction of the President of India for payment of Rs. 250 crores vide communication at Annexure-F, dated 19-9-2000. On receipt of the said sanction, it utilised a portion of the amount to pay statutory dues including the provident fund contributions. 3. The first respondent issued notice to the petitioner on 26-7-2002 under Section 14-B for the period May 1997 to August 2001. It is contended that petitioner appeared before the first respondent and submitted the circumstances leading to delay in depositing the provident fund. Without considering the objections, the first respondent passed an order on 2-1-2004 levying Rs. 3,68,30,901/- as damages for belated remittances of contribution. The petitioner challenged the said order by filing a Writ Petition in No. 7449 of 2004 which was disposed of on the ground of availability of alternative remedy. Therefore, petitioner filed an appeal before the Employees Provident Fund Appellate Tribunal ('Appellate Tribunal' for short). The appeal was dismissed on 24-6-2010. The said order was challenged before this Court in W.P. No. 9883 of 2012. This Court quashed the said order and remitted the matter to the Appellate Tribunal for fresh consideration. The Appellate Tribunal has dismissed the appeal vide order dated 11-9-2014. 4. The respondents have filed their statement of objections opposing the writ petition. 5. Learned Counsel for the petitioner would contend that Section 14-B of the Act has conferred a discretion on the Commissioner to consider the mitigating circumstances and pass an order imposing damages. The damages is levied by way of penalty. The petitioner has never defaulted in depositing the contribution at any point of time except for the period May 1997 to August 2001. Even thereafter, it has not made any default. The constituent members of the Trust incurred loss. That is why requisite contribution could not be paid on time. The petitioner received sanction of the President of India for payment of Rs. 250 crores as per Annexure-F, dated 19-9-2000. Even thereafter, it has not made any default. The constituent members of the Trust incurred loss. That is why requisite contribution could not be paid on time. The petitioner received sanction of the President of India for payment of Rs. 250 crores as per Annexure-F, dated 19-9-2000. On receipt of such sanction, petitioner has utilised a portion of the amount to pay statutory dues including the provident fund contributions. The petitioner has paid interest at 12% per annum on the belated remittances of contribution. There are absolutely no complaints from the members regarding non-payment of their dues with fixed rate of interest. The Tribunal has not taken into account the mitigating circumstances. 6. On the other hand, learned Counsel appearing for the respondents submits that financial loss is not a ground for waiver of damages. Section 14-B was meant to impose penalty on the erring employers whereas payment of interest under Section 7-Q compensates the loss sustained. Therefore, payment of interest cannot be a ground for waiver of damages under Section 14-B. The petitioner has failed to transfer even 50% of the contributions deducted from the wages of the employees. Under these circumstances, the order passed by the authorities is just and proper. In this connection, he has relied on the decision of the Apex Court in Hindustan Times v Union of India and Others, AIR 1998 SC 688 : 1998 SCC (L and S) 481 : 1998-I-LLJ-682 (SC) : (1998) 2 SCC 242 . 7. I have carefully considered the arguments of the learned Counsel made at the Bar and perused the materials placed on record. 8. The Employees' Provident Funds and Miscellaneous Provisions Act, 1952 ('the Act' for short) has come into force with effect from 4-3-1952. It is an Act to provide for the Institution of provident funds (pension fund) and deposit linked Insurance fund for employees in factories and other establishments. 9. Section 14-B of the Act was inserted by Act 37 of 1953. This provision authorises the Competent Authority to recover the damages when the employer makes default in the payment of any contribution to the fund not exceeding the arrears as may be specified under the scheme. 10. 9. Section 14-B of the Act was inserted by Act 37 of 1953. This provision authorises the Competent Authority to recover the damages when the employer makes default in the payment of any contribution to the fund not exceeding the arrears as may be specified under the scheme. 10. The Hon'ble Supreme Court in Organo Chemical Industries and Another v Union of India and Others, AIR 1979 SC 1803 : (1979) 4 SCC 573 : 1979-II-LLJ-416 (SC), while upholding the validity of Section 14-B of the Act, has observed as under: "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 employee's. We are clearly of the opinion that the imposition of damages under Section14-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." It was further held as under: "38. ...Nor can it be accepted that there are no guidelines provided for fixing the quantum of damages. The power of the Regional Provident Fund Commissioner to impose damages under Section 14-Bis a quasi-judicial function. ...Nor can it be accepted that there are no guidelines provided for fixing the quantum of damages. The power of the Regional Provident Fund Commissioner to impose damages under Section 14-Bis a quasi-judicial function. It must be exercised after notice to the defaulter and after giving him a reasonable opportunity of being heard. The discretion to award damages could be exercised within the limits fixed by the statute. Having regard to the punitive nature of the power exercisable under Section 14-B and the consequences that ensure therefrom, an order under Section 14-B must be a 'speaking order' containing the reasons in support of it. The guidelines are provided in the Act and its various provisions, particularly in the word 'damages' the liability for which in Section14-B arises on the 'making of default'. While fixing the amount of damages, the Regional Provident Fund Commissioner usually takes into consideration, as he has done here, various factors, viz., the number of defaults, the period of delay, the frequency of defaults and the amounts involved. The word 'damages' in Section 14-B lays down sufficient guidelines for him to levy damages." 11. Section 7-Q provides for payment of interest by the employer. Section 7-Q was inserted by Act No. 33 of 1988 which has come into force with effect from 1-7-1997. This section makes it mandatory for the employer to pay simple interest at the rate of 12% per annum, or even higher rate of interest, as may be prescribed by the Scheme, but such higher rate of interest shall not be exceeding the lending rate of interest charged by any scheduled bank in case of delayed contributions. 12. The Scheme framed under Paragraph 32-A of the Employees' Provident Funds Scheme, 1952, provides for rates of damages, which has undergone changes from time to time. A sliding scale for imposition of damages based on the period of defaults has been reduced substantially. The Scheme, which has come into force with effect from 1-9-1971 provided the rate of damages as under: Sl. No. Period of Default Rates of damages (% of arrears per annum) (a) Less than two months 17 (b) Two months and above but less than four months 22 (c) Four months and above but less then six months 27 (d) Six months and above 37 13. No. Period of Default Rates of damages (% of arrears per annum) (a) Less than two months 17 (b) Two months and above but less than four months 22 (c) Four months and above but less then six months 27 (d) Six months and above 37 13. The aforesaid table in Paragraph 32-A of the Scheme was substituted with effect from 26-9-2008, which is as under: Sl. No. Period of Default Rates of damages (percentage of arrears per annum) (a) Lass than 2 months Five (b) Two months and above but less than four months Ten (c) Four months and above but less then six months Fifteen (d) Six months and above Twenty-five 14. As observed by the Hon'ble Supreme Court, the direction regarding payment of damages is compensatory as well as penal in nature. Where there is no wilful violation, the quantum of damages should be more or less compensatory in nature and where the default is continuous or intentional, damages payable in addition to being compensatory would be penal as well. The delay in making payments obviously should not prejudice the employees for whose benefit the fund is crated. Where default is found, but no apparent fault, the quantum of damages should be compensatory rather than penal in nature. 15. Therefore, if the employer is able to convince that the circumstances were such that he could not make the contribution in time and the delay was not willful, deliberate or intentional, further levy of damage would result in irretrievable prejudice, the Commissioner can use his discretion to levy the damages. However, the Authority has no power to waive the damages in its entirety. But its discretion to pass orders depends upon the facts and circumstances of each case. Just because different rates are prescribed in Para 32-A of the Scheme, it is not mandatory to levy the damage at such rate for the delayed period. Section 7-Q itself makes the employer liable to pay interest not less than 12% per annum or at such higher rate of interest. As such, the employees interest is protected by way of contribution and even in case of delayed contribution by way of interest. This is clear from the use of the expression 'may recover' both under Section 14-Bof the Act and also Paragraph 32-A of the Scheme. As such, the employees interest is protected by way of contribution and even in case of delayed contribution by way of interest. This is clear from the use of the expression 'may recover' both under Section 14-Bof the Act and also Paragraph 32-A of the Scheme. Therefore, discretion vests with the Commissioner to consider the mitigating circumstances and pass speaking order supported by reason. 16. In Hindustan Times case relied on by the learned Counsel for the respondents, Hon'ble Supreme Court has held that default on the part of the employer based on plea of power cut, financial problems relating to other indebtedness or the delay in realisation of amounts paid by the cheques or drafts, cannot be justifiable grounds for the employer to escape liability. It was also observed that in certain situations, the employer can claim the benefit of irretrievable 'prejudice' incase a demand for damages is made after several years. It was further held that for claiming the benefit of irretrievable prejudice, the defaulter must take necessary pleas in defence in reply to the show-cause notice and must satisfy the authority concerned with acceptable material. 17. In Employees' State Insurance Corporation v HMT Limited and Another, AIR 2008 SC 1322 : 2008-I-LLJ-814 (SC) : (2008)1 SCC (L and S) 558 : (2008)3 SCC 35 , the Supreme Court was considering the pari materia provisions of Employees' State Insurance Act, 1948 and after noticing the judgment in Hindustan Times case, held that the statute itself does not say that a penalty has to be levied only in the 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. It was held that ordinarily, even such a provision would not be held to be providing for mandatory imposition of penalty and if the proceeding is an adjudicatory one, imposition of penalty cannot be mandatory. The Supreme Court further held that 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. The Supreme Court further held that 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. Relying on the earlier decision in M/s. Prestolite (India) Limited v The Regional Director and Another, AIR 1994 SC 521 : 1994 Supp. (3) SCC 690 : 1995 II LLJ 622 (SC) : 1995 SCC (L and S) 202, it was held that even if the Regulations have prescribed general guidelines and the upper limits at which the imposition of damages can be made on account of payment of dues under the Act beyond the time frame, it cannot be said that in no case, the mitigating circumstances can be taken into consideration by the adjudicating authority in finally deciding the matter as the adjudicating authority is not bound to act mechanically in applying the upper most limit of the table. 18. It is not as if the respondent was bound to impose damages at the rates provided for. The rates provided for are of maximum damages which can be levied. It is settled that 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. 19. As noticed above, the petitioner-company is a Central Public Enterprise incorporated on 7-2-1953. During the period from 1997-2001, the petitioner has failed to deposit the contribution. It is not the case of the respondents that earlier to the aforesaid period, the petitioner has defaulted in depositing the contribution. After 2001, till this date, the petitioner has not defaulted in making the contribution. It has established its own Trust for the administration of the provident fund as contemplated under Section 17(1-A)(b) of the Act. During the period from 1997-2001, it could not deposit the requisite contribution because the constituent members of the Trust incurred loss. The petitioner has received sanction of the President of India for payment of Rs. 250 crores vide communication at Annexure-F, dated 19-9-2000. On receipt of the said sanction, petitioner utilised portion of the amount to pay statutory dues including the provident fund contributions. The petitioner has received sanction of the President of India for payment of Rs. 250 crores vide communication at Annexure-F, dated 19-9-2000. On receipt of the said sanction, petitioner utilised portion of the amount to pay statutory dues including the provident fund contributions. The petitioner has also paid interest at 12% p.a. on the belated remittances of the contribution. There are no complaints from the members with regard to non-payment of their dues with fixed rate of interest. The delay in making the contribution does not appear to be deliberate or intentional but due to the reasons beyond their control. The delay has not prejudiced the employees for whose benefit the fund is created. Having regard to the facts and circumstances of the case, I am of the view that the demand for payment of damages at 37% of the arrears of the contribution is excessive. It is just and proper to scale it down to 15% of the total damages levied by the authorities. In the result, the writ petition succeeds and it is allowed in part. The orders at Annexure-J, dated 2-1-2004, Annexure-P, dated 11-9-2014, the order of attachment at Annexure-Q, dated 17-6-2015 and the summons at Annexure-R, dated 6-7-2015 are hereby quashed. The first respondent is directed to requantify the damages payable by confining the same at 15% of the total damages levied, which they have to pay within a period of one month from the date of communication of the fresh order. No costs.