JUDGMENT : DR. B.R. SARANGI, J. 1. The petitioner, which is an authority under the provisions of Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, has filed this application challenging the order dated 27.01.2000 in Annexure-3 passed by Employees’ Provident Fund Appellate Tribunal in Appeal Case No. ATA-10 (15) 99 setting aside the order dated 04.08.1999 passed under Section 14-A imposing penal damages and remitting the matter back to the petitioner for reassessment of the damages in the light of the observation made therein. 2. The factual matrix of the case is that opposite party no.1-Sundergarh Mining Labour Contract Cooperative Society Ltd. is an establishment covered under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (for short “EPF and MP Act, 1952”) and carries on business of mining limestone at Purunapani. As per Para-38 of the Employees Provident Funds Scheme, 1952 (for short “EPF Scheme, 1952”), provident fund contributions are to be paid within 15 days of the claim of every month by deducting the employees contribution realized from the wages paid along with employer share. If the employer makes any default in payment of contribution, he is liable to pay penal damages under Section 14B of the EPF and MP Act, 1952. Para-32A of the EPF Scheme, 1952, which was introduced in 1991, envisages the rate of penal damages to be imposed for different period of delay. The rate has been so fixed in Para-32A in order to curb the imposition of 100% damages in all cases irrespective of the period of delay and this provision also left no discretion with the Regional Provident Fund Commissioner to go below the rates, which are fixed for imposition of penalty on an employer, who recovers from employees’ share but does not deposit the same within time specified. 2.1 Opposite party no.1, having defaulted and caused substantial delay in depositing the amount of contribution for the period from March, 1993 to February, 1997, was noticed on 08.10.1998 to file explanation and also appear before the petitioner on 18.11.1998 for personal hearing. In response thereto, opposite party no.1 filed reply on 23.10.1998 admitting the delay in each month and took a stand that deposit of EPF contribution was delayed due to non-payment of bills by the purchasers of limestone. In response thereto, opposite party no.1 filed reply on 23.10.1998 admitting the delay in each month and took a stand that deposit of EPF contribution was delayed due to non-payment of bills by the purchasers of limestone. The petitioner, being the acting authority under Section 14B of the EPF and MP Act, 1952, after considering the contention raised by opposite party no.1 for delay in payment of contribution, imposed penal damages at the graded scale fixed under Para-32A of the EPF Scheme, 1952 and demanded Rs.3,58,935/-towards penal damages. Against such demand, opposite party no.1, pending disposal of the review application filed by it on 13.08.1999, preferred OJC No.10603 of 1999 and this Court, by order dated 27.08.1999, declined to entertain the writ petition and directed opposite party no.1 to file appeal before the appellate tribunal. In compliance of the same, opposite party no.1 filed appeal under Section 7-I of the EPF and MP Act, 1952 and the appellate authority, by order dated 27.01.2000, set aside the order imposing penalty under Section 14B of the Act and remitted the matter back to the petitioner for reassessing the damages in the light of the observation made therein, hence this application. 3. Mr. S.K. Pattnaik, learned Senior Counsel appearing along with Mr. N.C. Mohanty, learned counsel for the petitioner vehemently contended that the rate of penal damages to be imposed in exercise of power under Section 14B of the EPF and MP Act, 1952 as per Para-32A of the EPF Scheme, 1952 and, as such, neither the Regional Provident Fund Commissioner nor the appellate tribunal has any discretion to vary the said rates fixed by the Central Government. When the appellate tribunal held that the employer is liable to pay the damages for delayed payment of the contribution, the direction to confine the rate of penal damages to 5% in addition to the interest accrued on the amount of default, without realizing the period of delay in depositing the contribution, is contrary to the provisions contained in Para-32A of the EPF Scheme, 1952. As such, the plea, that there was delay in payment of bills by the purchasers of limestone from opposite party no.1, should not have been accepted in absence of any proof. As such, the plea, that there was delay in payment of bills by the purchasers of limestone from opposite party no.1, should not have been accepted in absence of any proof. Thus, the conclusion arrived at by the tribunal cannot sustain in the eye of law and, as such, the order impugned passed by the appellate tribunal is liable to be quashed. In order to substantiate his contention, he has relied upon the judgments of the apex Court in Regional Provident Fund Commissioner v. S.D. College, Hoshiarpur, AIR 1997 SC 3645 ; M/s Hindustan Times Ltd. v. Union of India and others, AIR 1998 SC 688 ; and Chairman, SEBI v. Shriram Mutual Fund, AIR 2006 SC 2287 . 4. Mr. P.K. Mohanty, learned counsel for opposite party no.1, per contra, justified the order passed by the appellate tribunal and stated that the same is wholly and fully justified and does not warrant any interference by this Court. 5. As it appears, notice issued to opposite party no.2 was returned with valid service, but none has entered appearance on its behalf. More so, opposite party no.2 being an authority and the dispute involved in this case is confined to the petitioner vis-à-vis opposite party no.1, this Court, instead of awaiting any further for appearance of opposite party no.2, proceeded with the matter, as it is an old case of the year 2002. Further, despite sufficient opportunity being given no counter affidavit has been filed and this being a certiorari proceeding, on the basis of materials available on record, it is being disposed of finally upon hearing learned counsel for the petitioner and opposite party no.1. 6. There is no dispute with regard to the factual matrix as delineated above. Admittedly, opposite party no.1 is the employer, who caused delay in depositing the provident fund contribution of its workers, which had been deducted from their wages, and also employer share before the petitioner authority. 6. There is no dispute with regard to the factual matrix as delineated above. Admittedly, opposite party no.1 is the employer, who caused delay in depositing the provident fund contribution of its workers, which had been deducted from their wages, and also employer share before the petitioner authority. As per the provisions contained in Para-38 of the EPF Scheme, 1952, the employer shall, before paying the member his wages in respect of any period or part of period for which contributions are payable, deduct the employee’s contribution from his wages which together with his own contribution as well as an administrative charge of such percentage, and shall deposit the same within 15 days of close of every month to the provident fund by separate bank drafts or cheques on account of contribution and administrative charge. The employer shall also forward to the Commissioner, within twenty-five days of close of the month, a monthly abstract in such form as the Commissioner may specify showing the aggregate amount of recoveries made from the wages of all the members and the aggregate amount contributed by the employer in respect of all such members for the month. Thereby, duty has been cast on the employer to deposit the employee’s share as well as employer’s share of dues towards the provident fund contribution which the employer obliged to do under the provisions of EPF Scheme, 1952 within the time specified therein. In the event the amount is not deposited by the employer, the Commissioner has power to recovery the damages as per the provisions contained under Section 14B of the EPF and MP Act, 1952. In order to avoid arbitrary imposition of penalty, rate of damages has been envisaged in Para-32A of the EPF Scheme, 1952 (which was introduced w.e.f. 16.08.1991) for recovery of damages for default in payment of any contribution, which reads thus: “Period of Default Rate of Damages 1. Less than two months 17% 2. Two months and above but less than 4 months 22% 3. 4 months and above, but less than 6 months 27% 4. 6 months and above 37%” 7. Less than two months 17% 2. Two months and above but less than 4 months 22% 3. 4 months and above, but less than 6 months 27% 4. 6 months and above 37%” 7. The rate was so fixed to curb the imposition of 100% damages in all cases irrespective of the period of delay and this provision also left no discretion with the Regional Provident Fund Commissioner to go below the rates, which are fixed for imposition of penalty on an employer, who recovers from employees’ share but does not deposit the same within time specified, and the authority also recovers the interest accrued in the account of beneficiary irrespective of actual date of receipt of the amount of contribution. The interest is credited to the account of each member as per Section 6 of the EPF and MP Act, 1952 and Para-60 of the EPF Scheme, 1952. Apart from the contribution, the employer is liable to pay the other dues like administrative charges, as well as delay in payment of contribution loss, financial loss to the Govt. of India as well. 8. In the instant case, as opposite party no.1 defaulted in depositing the amount of contribution and caused substantial delay in paying the contribution for the period from March, 1993 to February, 1997, notice dated 08.10.1998 was issued to file explanation and to attend the office of the petitioner on 18.11.1998 for personal hearing. In response to the same, opposite party no.1 filed reply and appeared before the Commissioner. Its contention was that due to delay in receipt of payment from the purchasers of the limestone, delay was caused in depositing the provident fund contribution, but no materials were produced before the authority concerned to substantiate such contention. Consequentially, the petitioner imposed penalty under Section 14-B of the EPF and MP Act, 1952 demanding a sum of Rs.3,58,935/-towards penal damages by order dated 04.08.1999. Against the said order, opposite party no.1 filed review application and simultaneously approached this Court by filing OJC No.10603 of 1999. But this Court, by order dated 27.08.1999, declined to entertain the writ application and directed opposite party no.1 to prefer appeal. Consequentially, opposite party no.1 preferred appeal under Section 7-I of the EPF and MP Act, 1952. Against the said order, opposite party no.1 filed review application and simultaneously approached this Court by filing OJC No.10603 of 1999. But this Court, by order dated 27.08.1999, declined to entertain the writ application and directed opposite party no.1 to prefer appeal. Consequentially, opposite party no.1 preferred appeal under Section 7-I of the EPF and MP Act, 1952. The appellate authority, by order dated 27.01.2000, held as follows: “To my mind, the liability to deposit provident fund dues arrear when payment of salary/wages is made to the workers. If the interest of the justice penalty should be imposed in such a way always that interest portion is recovered so that employee may not suffer. There should be some penal portion also to deter the employer from making default. Penal portion should not be very exorbitant and source of the additional income to the organization. In the present case by the 14B authority it is to be seen when the wages were distributed to the employees and delay should computed from that date while assessing damages. Penal portion may be confined to 5% in addition to interest accrued on the amount of default for the period of default.” 9. The reasons assigned by the appellate authority, in the considered view of this Court, clearly runs contrary to the statutory provisions, more particularly Para-32A of the EPF Scheme, 1952, wherein the Central Govt. by way of notification fixed the rates of damages to be calculated for delay in depositing the contribution. The same cannot be altered/ modified or reduced in any manner. As such, the appellate authority has committed grave error in confining the rate of penal damages to 5% in addition to the interest accrued on the amount of default for the period of default. 10. In Organo Chemical Industries and another v. Union of India and others, AIR 1979 SC 1803 , the apex Court has considered the provisions of Section 14-B of EPF and MP Act, 1952 liberally and held that imposition of damages under Section 14-B serves both the purposes. It is meant to penalize defaulting employer as also to provide reparation for the amount of loss suffered by the employees. It is meant to penalize 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. 11. The word ‘damage’ 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 of 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. 12. In view of the aforesaid analysis, it is made clear that power conferred under Section 14-B on provident Fund Commissioner to impose damage on an employer defaulting in payment of contributions to the provident fund is not unguided nor arbitrary and, hence, its not violative of Article 14 of the Constitution. 13. Having regard to the punitive nature of the power exercisable under Section 14-B and the consequences that ensue there from, an order under Section 14-B must be a ‘speaking order’ containing the reasons in support of it. The guidelines are provided in the EPF & MP Act, 1952 and its various provisions, particularly in the word ‘damages’ the liability for which in Section 14-B arises on the ‘making of default’. While fixing the amount of damages, the Regional Provident Fund Commissioner usually takes into consideration 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 the Regional Provident Fund Commissioner to levy damages. 14. Similar view has also been taken by the apex Court in Regional Provident Fund Commissioner (supra), wherein it has been held that the employer is under a statutory obligation to deposit the amount to the credit of the Fund every month. 14. Similar view has also been taken by the apex Court in Regional Provident Fund Commissioner (supra), wherein it has been held that the employer is under a statutory obligation to deposit the amount to the credit of the Fund every month. In the event of any default committed in that behalf, Section 14B steps in and calls upon the employer to pay damages by way of penalty, the maximum of which is the accumulated arrears. 15. In Hindustan Times Ltd. (supra), the apex Court in paragraph-28 held as follows: “From the aforesaid decisions, the following principles can be summarised. The authority under Section 14-B has to apply his mind to the facts of the case and the reply to the show cause notice and pass a reasoned order after following principles of natural justice and giving a reasonable opportunity of being heard; the Regional PROVIDENT Fund Commissioner usually takes into consideration the number of defaults, the period of delay, the frequency of default and the amounts involved; 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; there is no period of limitation prescribed by the legislature for initiating action for recovery of damage under Section 14-B.” 16. In Chairman, SEBI (supra), considering the provisions contained in Securities and exchange Board of India Act, 1992, the apex Court held that penalty is sine qua non of the violation, mens rea is not essential element for imposing penalty for breach of civil obligation. In paragraph-35 of the said judgment, it has been stated as follows: “In our considered opinion, penalty is attracted as soon as the contravention of the statutory obligation as contemplated by the Act and the Regulation is established and hence the intention of the parties committing such violation becomes wholly irrelevant. A breach of civil obligation which attracts penalty in the nature of fine under the provisions of the Act and the Regulations would immediately attract the levy of penalty irrespective of the fact whether contravention must made by the defaulter with guilty intention or not. A breach of civil obligation which attracts penalty in the nature of fine under the provisions of the Act and the Regulations would immediately attract the levy of penalty irrespective of the fact whether contravention must made by the defaulter with guilty intention or not. We also further held that unless the language of the statute indicates the need to establish the presence of mens rea, it is wholly unnecessary to ascertain whether such a violation was intentional or not. On a careful perusal of Section 15(D)(b) and Section 15-E of the Act, there is nothing which requires that mens rea must be proved before penalty can be imposed under these provisions. Hence once the contravention is established then the penalty is to follow.” 17. In view of the law laid down by the apex Court, as discussed above, imposition of penal damages as contemplated under Section 14B of the EPF and MP Act, 1952 by the authority is well within its competency. As such, the rates of damages are to be imposed, as has been specified in Para-32A of the EPF Scheme, 1952, and the same cannot be modified or altered. Therefore, the direction issued by the appellate authority to recalculate the penal damages at the rate of 5%, in addition to the interest accrued on account of penalty for the period of default, is contrary to the provisions of law. Accordingly, the order dated 27.01.2000 in Annexure-3 passed by the appellate tribunal, being contrary to the provisions of law, is required to be set aside and accordingly the same is hereby set aside. The matter is remitted back to the Employees Provident Fund Appellate Tribunal-opposite party no.2 to rehear the appeal and pass appropriate order in conformity with the provisions of law by affording opportunity of hearing to the parties in compliance of the principles of natural justice. 18. The writ petition is allowed to the extent indicated above. No order to cost.