Discretionary damages under Employees State Insurance law must be decided afresh, not imposed automatically.

Damages under Section 85B of the Employees State Insurance Act are discretionary, not mandatory, because the provision uses enabling language and a subordinate regulation cannot turn a penal power into an automatic levy. The authority must consider relevant circumstances, including the nature of default and mitigating factors, before deciding whether to impose damages. The High Court was not justified in itself fixing the period or quantum in place of the statutory authority; the matter required fresh adjudication in accordance with law and natural justice. The impugned judgment was set aside and the damages issue remitted for reconsideration.

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Issues: (i) Whether the levy of damages under Section 85B of the Employees State Insurance Act read with Regulation 31C of the Employees State Insurance (General) Regulations, 1950 was mandatory or discretionary; (ii) Whether the High Court was justified in restricting the levy and substituting its own view, or the matter required fresh consideration by the statutory authority.

Issue (i): Whether the levy of damages under Section 85B of the Employees State Insurance Act read with Regulation 31C of the Employees State Insurance (General) Regulations, 1950 was mandatory or discretionary.

Analysis: Section 85B uses enabling language and confers power to recover damages rather than imposing an invariable command to do so in every case. A subordinate regulation must conform to the parent statute and cannot convert a discretionary penal power into a mandatory one. The provision being penal in character, it has to be construed strictly, and the adjudicating authority must retain discretion while considering relevant circumstances.

Conclusion: The power to levy damages is discretionary and not mandatory.

Issue (ii): Whether the High Court was justified in restricting the levy and substituting its own view, or the matter required fresh consideration by the statutory authority.

Analysis: Although the High Court was right that Section 85B is enabling, it ought not to have itself fixed the period or quantum in substitution of the statutory authority. The authority must decide the matter afresh on relevant considerations, including the nature of default and other mitigating factors, in accordance with law and natural justice. The levy of damages also cannot be treated as a mechanical consequence divorced from the adjudicatory process.

Conclusion: The matter had to be reconsidered afresh and the High Court's approach could not be sustained.

Final Conclusion: The appeal succeeded to the extent that the impugned judgment was set aside and the matter was remitted for fresh decision on damages in accordance with law.

Ratio Decidendi: A penal power framed in enabling terms under the parent statute remains discretionary, and subordinate legislation cannot compel automatic imposition of damages or displace the authority's adjudicatory discretion.

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