The River Damodar is called the `Sorrow of Bengal` because it frequently causes devastating floods. Option 1 correctly states that it gets flooded often causing havoc. The river`s turbulent flow and unpredictable nature make it prone to flooding, leading to significant damage to life and property in the region. The floods caused by the Damodar River have earned it the reputation of being a source of sorrow for the people of Bengal, as they have to constantly deal with the destruction and loss caused by these floods.

Option 2, which states that the river causes maximum soil erosion, is not the primary reason for it being called the `Sorrow of Bengal.` While soil erosion may also be a consequence of the river`s floods, it is not the main factor that led to this nickname.

Options 3 and 4 are not correct in explaining why the Damodar River is called the `Sorrow of Bengal.` It does not form dangerous waterfalls, and it is a perennial river, meaning it flows all year round.