JUDGMENT : NIKHIL S. KARIEL, J. 1. Heard learned Advocate Mr. Krutarth K. Pandya on behalf of the appellants and learned Advocate Mr. Pankaj R. Desai on behalf of the respondents-employers in both the appeals. 2. ADMIT. Learned Advocate Mr. Desai waives service of notice of admission on behalf of the respondents. 3. With consent of learned Advocates for the parties, the present first appeals are taken up for final disposal. 4. The First Appeal No. 4982 of 2022 calls into question judgment and order dated 19.08.2019 passed by the learned Employees' State Insurance Court, Rajkot in ESI Application No. 15 of 2008, and whereas the First Appeal No. 296 of 2023 calls into question judgment and order dated 19.08.2019 passed by the learned Employees' State Insurance Court, Rajkot in ESI Application No. 02 of 2009. 5. Since the facts as well as the issues raised in both the appeals are identical, both the appeals are being taken up for final disposal together. 6. Learned Advocate Mr. Krutarth K. Pandya on behalf of the appellant-Corporation would submit that the impugned decisions passed in both the ESI Applications referred to hereinabove suffer from two major infirmities inasmuch as learned Advocate would submit that the learned ESI Court has set aside the Notices issued under Section 85-B of the Employees' State Insurance Act, 1948 (For short the “ESI Act”) imposing damages of Rs. 91,244/- and damages of Rs. 1,00,578/- respectively upon the respondents-Employers and whereas the learned ESI Court has also restricted the interest for a period of two years. Learned Advocate Mr. Pandya would submit that on both the counts, the learned ESI Court has committed grave error. 6.1 It is submitted by learned Advocate Mr. Pandya that as far as the aspect of damages is concerned, the appellant-Corporation can recover damages from the employer who fails to pay contribution within specified period as stated under Regulation 31 of the Employees' State Insurance (General) Regulations, 1950 (For short “the Regulations”) i.e. before 21st day of the calender month, more particularly as per the power granted under the Regulation 31C of the Regulations. Learned Advocate would submit that the respondents-employers were liable to pay contribution in respect of the employees within 21 days of the last day of the wages i.e. starting from April, 1997 and whereas the employers i.e. the respondents herein have made actual payment in the month of April, 2004. Learned Advocate would submit that as per the Table at Regulation 31C of the Regulations, the Corporation is entitled to impose damages at the rate of 25% for delay of six months and above. Learned Advocate would submit that the appellants having gone as per the statutory prescription, no fault could have been found with the appellant-Corporation. 6.2 Insofar as the aspect of interest is concerned, learned Advocate Mr. Pandya would submit that the issue is no more res integra inasmuch as according to learned Advocate, the Hon'ble Apex Court in a recent decision in case of Regional Director/Recovery Officer and Another vs. Nitinbhai Vallabhai Panchasara, vide order dated 17.11.2022 in Special Leave to Appeal (C) No. 16380 of 2022, has inter alia decided the said aspect. Learned Advocate would submit that as per the said decision the Hon'ble Apex Court has interfered with a decision of the ESI Court, whereby the ESI Court had reduced the period of interest for two years only and whereas learned Advocate would submit that in the instant cases also the learned ESI Court has reduced the interest for a period of two years and the same would stand covered by the decision of the Hon'ble Apex Court. Making such submissions, learned Advocate Mr. Pandya would request this Court to set aside the impugned decisions and to direct payment of damages as well as the interest from the date the same had accrued. 7. These appeals are vehemently contested by learned Advocate Mr. Pankaj R. Desai on behalf of the respondents-employers. At the outset, learned Advocate Mr. Desai would submit that the issue with regard to interest now stands covered by the decision of the Hon'ble Apex Court as contended by learned Advocate Mr. Pandya for the appellants and whereas learned Advocate Mr. Desai would fairly submit that the decision of the Hon'ble Apex Court, takes into its ambit, the issue raised in the present appeals, more particularly as having been considered by the learned ESI Court as regards payment of interest. Pandya for the appellants and whereas learned Advocate Mr. Desai would fairly submit that the decision of the Hon'ble Apex Court, takes into its ambit, the issue raised in the present appeals, more particularly as having been considered by the learned ESI Court as regards payment of interest. 7.1 As far as the aspect of damages is concerned, learned Advocate Mr. Desai would submit that while the Regulation 31C of the Regulations inter alia empowers the Corporation to recover damages but at the same time, a closer scrutiny of the Regulation 31C reveals that the power given to the Corporation is discretionary. Learned Advocate would submit that the Hon'ble Apex Court in similar situation has laid down the law that in case damages are to be imposed for non-payment of contribution within the period specified, then the mala fide intention or the mens rea of the employer would be the most relevant aspect and whereas only upon the mala fides or mens rea being proved that the employers would have been imposed with damages. Learned Advocate would submit that in the instant cases, the authority has not come to a conclusion that the employers had mala fidely not paid the contribution and whereas the learned Advocate would submit that having regard to such a situation, the learned ESI Court had, by the impugned decisions, set aside the notices for recovery of damages. Learned Advocate would further submit that as such, the employers are small factories and whereas though the employers were under obligation to pay contribution from the year 1997, yet for the first time, the inspection itself in the factories premises had taken place in the year 2003 and whereas the employers have paid contribution in respect of employees in the month of April, 2006. Learned Advocate would submit that there was never any aspect of evasion or never any aspect not to make appropriate payment of the contribution rather it was nothing but an ignorance of the relevant statutory provisions and whereas learned Advocate would submit that as far as the damages are concerned, this Court may not interfere with the impugned judgments and orders passed by the learned ESI Court. Learned Advocate Mr. Learned Advocate Mr. Desai in support of his submissions would reliey upon the observations of the Hon'ble Apex Court in case of Employees' State Insurance Corporation vs. HMT Ltd. and Another, (2008) 3 SCC 35 , Dilip N. Shroff vs. Joint Commissioner of Income Tax, Mumbai and Another, (2007) 6 SCC 329 and decision of the Madras High Court in case of Madras Hotel Ashoka Pvt. Ltd. vs. E.S.I.C. [A.A.O. No. 239/1986, dated March 31, 1993]. Learned Advocate Mr. Desai would in conclusion submit that even otherwise considering that the statute is a beneficial statute, and whereas though it is the case of the respondents that they are not entitled to be imposed with damages, yet if any reasonable amount is prescribed by this Court as damages, given some time the respondents would be ready and willing to make appropriate deposit of the same. 8. Heard learned Advocates for the parties who have not submitted anything further. 9. The issues which arise for consideration of this Court are as follows: (i) Whether the learned ESI Court has committed any error in setting aside the Notice under Section 85B of the ESI Act imposing damages upon the respondents? (ii) Whether the learned ESI Court could have restricted recovery of interest at the rate of 12% only for a period of two years? (iii) What order? 9.1 The aforesaid issues are answered as follows: (i) Partly in affirmative. (ii) In Negative. (iii) As per final order. 10. The reasons for arriving at the above findings are as under: Issue No. 1: 10.1 Insofar as the issue of damages is concerned, a perusal of Regulation 31C of the Regulations which empowers the Corporation to recover damages reveals the usage of word “may.” Without much ado, it could be discerned that use of the said term and the context of usage as discernible from a plain reading of the provision would clearly indicate the fact that while the Corporation is empowered to recover damages, such recovery, is discretionary and not mandatory. The said aspect could be further clarified from the fact that the statute imposed as laid down in the very Regulation, the maximum rate of damages in percent per annum of the amount due which could be charged by the Corporation. The said aspect could be further clarified from the fact that the statute imposed as laid down in the very Regulation, the maximum rate of damages in percent per annum of the amount due which could be charged by the Corporation. It thus could be discerned that while it is the discretion of the Corporation to recover damages in appropriate cases, but the amount which could be recovered as the maximum amount that could be recovered, has been specified by the Regulation itself, whereas there is no minimum prescription provided, leading to a very plausible inference that the statute did not envisage imposing of damages as mandatory. 10.2 In this regard, reliance is placed on the decision in case of Employees' State Insurance Corporation Vs. HMT Ltd. (supra), where the Hon'ble Apex Court at Paragraph Nos. 25 and 26 has inter alia observed below: “25. 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. 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 principles of natural justice is necessary thereunder. 26. 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.” (Emphasis supplied) 10.3 It would appear from the above quoted observations of the Hon'ble Apex Court that where the legislature empowers levy of damages, then as explained by the Hon'ble Apex Court there should be an existence of mens rea. It would appear that from a perusal of order imposing damages as supplied by learned Advocate Mr. Pandya under Section 85-B of the ESI Act, that the authority concerned has not come to a primary/preliminary conclusion as regards any mens rea on the part of the respondent-employer. The only reason for imposing damages is on account of delayed payment of regular contribution from 4/97 to 4/06. Pandya under Section 85-B of the ESI Act, that the authority concerned has not come to a primary/preliminary conclusion as regards any mens rea on the part of the respondent-employer. The only reason for imposing damages is on account of delayed payment of regular contribution from 4/97 to 4/06. In the considered opinion of this Court, more particularly in light of the law laid down by the Hon'ble Apex Court, it could be said that while the Corporation as per the Regulation 31C of the Regulations is empowered to recover damages from employers, but at the same time such recovery is not mandatory rather the same being discretionary and whereas the Corporation is required to come to a conclusion that the employer had acted mala fidely or with mens rea. In the instant cases, since it does not appear that the Corporation has come to such a preliminary conclusion, therefore the Notices for recovery of damages could not be sustained. 10.4 Furthermore, in view of the fair proposal submitted by learned Advocate Mr. Desai that inspite of the legal proposition yet since the Act is a beneficial legislation, the employers are ready and willing to pay damages as much as may be directed by this Court, therefore this Court directs the employers to pay 20% of the amount as fixed by the authority under Section 85-B of the ESI Act, as damages to the appellant-Corporation. Thus, issue No. 1 relating to whether ESI Court has committed any error in setting aside notice under Section 85-B of the Act imposing damages is answered partly in affirmative as above. Issue No. 2: 11. Insofar as the issue of interest is concerned, as submitted by learned Advocate Mr. Pandya on behalf of the appellant-Corporation, it clearly appears that the issue in question is no more res integra. It appears that the Hon'ble Apex Court in case of Regional Director/ Recovery Officer and Another vs. Nitinbhai Vallabhai Panchasara (Supra) as relied upon by the learned Advocate for the appellant-Corporation, has inter alia come to a conclusion that the Section 39(5)(a) of the ESI Act, imposes a liability to pay interest from the date such contribution has become due till the date of actual payment. According to the Hon'ble Apex Court, since the word used in Section 39(5)(a) is “shall” the same denotes that interest is leviable/payable mandatorily and whereas neither the Authority nor the Court would have any authority to either waive the interest and/or reduce the interest and/or the period during which the interest is payable. Relevant observations of the Hon'ble Apex Court in the said decision is quoted herein-below for benefit. “Having heard learned counsel appearing on behalf of the appellants, the short question which is posed for consideration of this Court is, “whether the ESI Court was justified in restricting the levy of interest under Section 39(5)(a) of the ESI Act for a period of two years only?” For the aforesaid purpose, Section 39(5)(a) of the ESI Act is required to be referred to, which reads as under: “39. xxx xxx xxx (5) (a) If any contribution payable under this Act is not paid by the principal employer on the date on which such contribution has become due, he shall be liable to pay simple interest at the rate of twelve per cent per annum or at such higher rate as may be specified in the regulations till the date of its actual payment. Provided that higher interest specified in the regulations shall not exceed the lending rate of interest charged by any scheduled bank.” On a fair reading of Section 39(5) (a) of the ESI Act, the organisation/employer in default is liable to pay the simple interest @ 12% per annum or, as such, higher rate as may be specified in the regulations till the date of its actual payment. The word used in Section 39(5)(a) is “Shall.” Therefore, the interest leviable/payable is a statutory liability to pay the interest. Neither the Authority nor the Court have any authority to either waive the interest and/or reduce the interest and/or the period during which the interest is payable. From the order passed by the ESI Court, it appears that the ESI Court has reduced the period of interest to two years only. The same is not supported by any statutory provision. On going through Section 39(5)(a) of the ESI Act, the liability to pay the interest is from the date on which such contribution has become due and till the date of its actual payment. The same is not supported by any statutory provision. On going through Section 39(5)(a) of the ESI Act, the liability to pay the interest is from the date on which such contribution has become due and till the date of its actual payment. Therefore, as such the ESI Court was not justified at all in reducing the period of interest to two years only. The respondent was liable to pay the interest under Section 39(5)(a) from the date on which the contribution became due and payable and till the date of actual payment.” 11.1 Having regard to the law laid down by the Hon'ble Apex Court in case of Regional Director/Recovery Officer and Another vs. Nitinbhai Vallabhai Panchasara (Supra), it would be clear that the restriction of recovery of interest for a period of two years only, could not have been imposed by the learned ESI Court. Hence the impugned decisions require interference on the said count also. Thus, issue No. 2 regarding restriction for charging interest only for 02 years by the ESI Court is answered in negative. Final Order: 12. In view of the above discussion, the impugned decisions dated 19.08.2019 passed by the ESI Court in the ESI Applications, are interfered with in part. Insofar as the damages are concerned, the respondents herein are directed to pay 20% of the damages which has been imposed upon them by the authority within a period of 45 days before the ESI Court, Rajkot. Insofar as the interest is concerned, the order reducing the claim of interest for a period of two years is quashed and set aside. It is directed that the respondents are liable to pay interest from the date on which the contribution has become due and payable till the date of actual payment. It is clarified at this stage that as per the statement made by learned Advocate Mr. Desai for the respondents that the respondents have paid interest for a period of two years, the respondents would only be liable to pay interest for the remaining period only. The said amount also shall be deposited by the respondents within 60 days from the date of receipt of this order before the ESI Court. The present appeals are allowed in part accordingly. 13. Registry to transmit the record and proceedings before the learned ESI Court concerned.