Summarize the following court judgment. Appeal No. 1854 of 1992. From the Judgment and Order dated 18.12.1990 of the Kerala High Court in M.F.A. No. 800 of 1990. M.L. Verma	 V.J. Francis	 V. Subramanian and Padmakumar for the Appellant. P.S. Poti and R. Sasiprabhu for the Respondent. The Judgment of the Court was delivered by MOHAN	 J. This appeal by special leave is directed against i.e. judgment of the High Court of Kerala in M.F.A. No. 800/90 dated 18.12.90. The short facts leading to this appeal are as under: The respondent Hotel is situated in Kaloor	 Cochin 17. It is a commercial establishment. In July	 1985 this establishment obtained a Bar licence whereupon a Bar was started. After running the business for some time it was closed down with effect from 31.3.88. The Insurance Inspectors of the appellant verified the records of the respondent establishment on 29.9.87	 9.10.87 and 19.10 87. It was reported that the employment strength of the respondent establishment including Chembaka Restaurant and Mayuri Bar was more than 19 as on 17.7.85. Therefore	 it was treated as covered under the (hereinafter referred to as the Act) with effect from 11.7.85 provisionally. The fact of coverage was intimated to the respondent by notice dated 21.3.88. Since the final date of coverage could be decided only after verifying all the records pertaining to the date of functioning of the establishment	 the respondent was requested to produce all the records such as attendance register	 wage register	 ledgers etc. from the date of starting of the establishment. The respondent was also called upon to start 222 compliance under the Act with effect from 11.7.85. But there was no compliance. Hence	 a notice was issued in Form C 18 dated 26.3.88 along with a draft order for contribution amount of Rs. 49	399.75 which was assessed under section 45 A of the Act for the period 11.7.85 to 313.88. Though the respondent was afforded an opportunity to appear before the officer	 it was not availed of However	 a letter dated 13.7.88 was received but the explanations were not acceptable to the appellant. Subsequently	 a detailed order dated 3.8.88 under section 45 A of the Act was passed calling upon the respondent to pay a contribution of Rs. 49	399.75 together with interest at 6 per cent	 failing which it would be covered as an arrears of land revenue. Again	 reminder was sent on 22.9.88. No reply was received. Hence	 in order to recover the contribution under section 45 A of the Act	 a claim in Form 19 was sent to the District Collector	 Ernakulam on 31.10.88 requesting to recover the contribution for the period from 11.7.85 to 31.3.88. Challenging these proceedings the respondent filed an application under section 75 of the Act before the Employees ' Insurance Court	 Alleppey. Inter alia it was contended that the applicant (respondent in this appeal) at no time employed 20 or more persons during the relevant time. The order was illegal because under section 45 A of the Act the respondent was entitled to a reasonable opportunity of being heard. That was not afforded. These contentions were refuted by the appellant. It was incorrect to state that on no occasion the respondent employed 20 or more workmen since the inspection report dated 8.12.86 clearly established to the contrary. The contention that no opportunity had been afforded before initiating the revenue recovery proceedings	 was also denied in view of Form C 18 dated 23.6.88	 show cause notice dated 3.8.88 and reminder dated 22.9.88. By its order dated 6th June	 1990 the Employees ' Insurance Court	 Alleppey came to the following conclusion: "In the result	 I can only uphold the assessment made by the ESI Corporation. But when the question of recovery is considered	 certain other aspects cannot be ignored. The adhoc assessment itself was made by the opposite party after the 223 closure of the entire establishment. All the employees working in the establishment had left by that time after accepting the termination of their services. In respect of those employees who had already left	 the ESI Corporation is now trying to recover contribution. Now the position emerges is that despite the collection of contribution it will be impossible to bring under coverage those employees	 because	 they are not at all available for coverage and for enjoying the benefits under the scheme. Therefore	 even if the proceedings initiated earlier were sus tainable	 so long as the employees are not available for the purpose of coverage	 there is no meaning in collecting contribution alone. In these circumstances	 I can only hold that the applicant had failed to comply with provisions of the ESI Act at the appropriate time. Therefore	 according to me	 after the closing of the establishment such recovery steps are not justified but only the prosecution as contemplated under sec. 85 of the ESI Act is attracted. Therefore	 it is upto the ESI Corporation to decide whether any prosecution should be launched against the applicant for the contravention or noncompliance of the requirements of the ESI Act and Rules. ' Aggrieved by the same the appellant Corporation preferred an appeal in M.F.A. No. 800 of 1990. A Division Bench of the Kerala High Court by its order dated 18th December	 1990 posed the question for determination as to whether the appellant could proceed against respondent for realisation of contribution under the ESI scheme	 after the closure of establishment. The High Court upheld the finding of Insurance Court that the respondent had failed to comply with the provisions of the Act at the appropriate time. However	 it proceeded to hold that the respondent establishment was closed on 31.3.88. P3 notice calling upon the respondent to pay the contribution was only on 23.6.88. Since the scheme was made after the closure of the establishment	 the appellant was not justified in proceeding against the respondent. In this view	 it dismissed the appeal. It is under these circumstances	 the ESI Corporation has come up by way of special leave to appeal. Mr; M.L. Verma	 learned senior counsel for the appellant urges the 224 following: 1. The closure of the respondent establishment was on 31.3.88 but the liability with reference to contribution arose earlier. The demand is for the period 11.7.85 to 31.3.88. So long as the establishment is covered by the provisions of the Act it is not open to the respondent to circumvent its liability by contending that before actual recovery proceedings it had closed down. If the finding of the High Court is accepted it would be the easiest way to evade the provisions of the Act. In R.M. Lakshmanamurthy vs The Employees ' State Insurance Corporation	 Bangalore	 This Court has held that it is a beneficial piece of social security legislation in the interest of labour. Further	 the provisions of the Act will have to be construed with that end in view in order to promote the scheme and avoid the mischief. Under section 26 of the Act all contributions are paid into a common fund. Such a fund will have to be administered for the purposes of the Act as indicated under section 28. Therefore	 the employer cannot contend that he did not collect the employees ' contribution and hence	 he cannot be called upon to pay. Thus the impugned judgment is wrong and is liable to be set aside. Per contra	 Mr. P. Surbramanian Poti	 learned senior counsel for the respondent would argue that the contention of the respondent throughout was that at no time it engaged 20 or more employees. Therefore	 it was under the belief that the Act would not be applicable. In that belief the employer did not recover from the employees any contribution. Nor was the employer called upon during that relevant time to comply with the provisions of the Act. It was entirely due to the fault of the Officers of the appellant	 the respondent did not make the contribution. In any event	 the establishment had been closed down on 31.3.88. It will be unjust to enforce the provisions of the Act and to seek to recover contribution after the closure	 more so	 when the employees have settled their claims and have gone away. Certainly	 such a situation is not con templated under the Act. From this point of view the judgment of the High Court is right and does not call for any interference. In order to appreciate the rival contentions	 it would be useful to set 225 out the necessary legal background. The is an act for certain benefits to employees in cases of sickness	 maternity and employment injury and to make provision for certain other matters in relation thereto. Section 1(4) makes it applicable to all factories	 in the first instance ' Under sub section (5) of the said section	 the Government may	 by a Notification	 extend the provisions of the Act to any other establishment or class of establishment; industrial	 commercial	 agricultural or otherwise. Admittedly	 in this case	 the hotel industry like that of the respondent has been notified under the Act. Under section 26	 a fund called Employees ' State Insurance Fund is created by all the contributions paid under this Act	 the purposes	 for which it may be expended	 are cataloged under section 28. Section 38 requires all employees in factories or establishments shall be insured. Section 39 talks of contribution. In respect of an employee it shall comprise of contribution payable by the employer (employer 's con tribution) and contribution payable by the employee. It is this contribution which has to be paid to the Corporation. Section 40 imposes the liability to pay contributions	 in the first instance	 on the principal employer. After such contribution the employee 's contribution could be deducted from his wages. Sub section (4) of section 40 is important. That says as follows: "(4) Any sum deducted by the principal employer from wages under this Act shall be deemed to have been entrusted to him by the employee for the purpose of paying the contribution in respect of which it was deducted." (Emphasis supplied) Therefore	 this sub section puts the matter beyond doubt that there is an entrustment. In other words	 the employer is a trustee. Under section 44 there is an obligation on the employer to furnish returns and maintain registers. The benefits available to the insured persons are stated in section 46: 1. Sickness 2. Maternity 3. Disablement 226 4. Injury 5. Medical treatment for and attendance on insured persons. Lastly	 there is power to prosecute under section 85 which includes punishment for failure to pay contributions as well as for contravention of or non compliance with any of the requirements of the Act. In the above legal background we may analyse the factual situation. Two facts stare at us. The liability to contribution of the respondent employer relates to a period between 11.7.85 to 31.3.88. 2. The respondent establishment was closed on 31.3.88. The contention of the respondent that at no time there were 20 or more employees in his establishment has to be rejected because at no point of time the respondent sought an adjudication on this aspect. On the contrary	 the inspections made by the officials of the appellant on 8.12.86	 September 87 and October 87 state to the contrary. Therefore	 we have to proceed on the basis that the provisions of the Act are applicable to the respondent establishment	 since (i) it is a notified industry	 (ii) in the establishment more than 20 employees were working at the relevant time. From the above provisions it is clear that from the date of his commencement of business	 namely	 11.7.85	 there was a liability to contribute. It has already been seen under section 40 the primary liability is his	 to pay	 not only the employer 's contribution but also the employee 's contribution. Therefore	 he cannot be heard to contend that since he had not deducted the employee 's contribution on the wages of the employees	 he could not be made liable for the same. The object of making a deeming entrustment sub section (4) of section 40 will be altogether rendered nugatory if such a contention were to be accepted. After all	 when he makes employee 's contribution he is entitled to deduct from the wages. Therefore	 by force of the application of the statutory provisions	 the liability to contribute	 during this relevant period	 namely	 11.7.85 to 31.3.88	 arose. There is no gain saying in that. Hence	 we reject the arguments of Mr. Subramanian Poti	 learned senior counsel for the respondent. From the above statutory provisions	 it would be clear that from out 227 of the common fund maintained under section 26	 the employees derive various benefits like sickness	 maternity	 disablement	 injury	 medical treatment for and attendance on insured persons. Therefore	 it is a beneficial piece of social security legislation. As a matter of fact	 this Court had occasion to consider the same in B.M. Lakshmanamurthy 's case (supra). At page 370	 paragraph 16 it was held : "The Act is thus a beneficial piece of social security legislation in the interest of labour in factories at the first instance and with power to extend to other establishments. Provisions of the Act will have to be construed with that end in view to promote the scheme and avoid the mischief." Mr. M.L. Verma	 learned senior counsel for the appellant is right in his submissions in this regard. The Insurance Court as well as the High Court have correctly upheld the demand for contribution. But it is rather strange to conclude that the demand could not be enforced against a closed business. If this finding were to be accepted it would not promote the scheme and avoid the mischief. On the contrary	 it would perpetrate the mischief. Any employer can easily avoid his statutory liability and deny the beneficial piece of social security legislation to the employees	 by closing down the business before recovery. That certainly is not the indentment of the Act. To hold	 as the High Court has done	 would set at naught all these beneficial provisions. It is equally fallacious to conclude that because the employees had gone away there is no liability to contribute. It has to be carefully remembered that the liability to contribute arose from the date of commencement of the establishment and is a continuing liability till the closure. The very object of establishing a common fund under section 26 for the benefit of all the employees will again be thwarted if such a construction is put. We cannot also accept the finding of the High Court that because Ext. P3 notice was issued on 23.6.88 after the closure of the respondent establishment on 31.3.88	 the appellant was not justified in proceeding against the respondent. The proceeding for the recovery is of the dues of contribution which arose prior to the closure on 31.3 88. Therefore	 it matters little when notice was issued	 calling upon to pay the contribution. 228 In our considered view	 such a notice is only a reminder to the employer to discharge his statutory obligation. For all these reasons	 we have little hesitation in setting aside the impugned judgment of the High Court which in turn upholds the order of Employees ' State Insurance Court. The appellant will be entitled to proceed with the recovery proceedings in accordance with law. Accordingly	 the appeal will stand allowed with costs. G.N. Appeal allowed.

The Respondent Hotel which was also running a Bar for sometime	 closed down its business after several years. Th Inspectors of the appellant Corporation verified the records of the establishment and reported that at certain point of time the employment strength of the establishment including the bar was more than 19. Therefore	 the establishment was treated as covered provisionally under the Employees State Insurance (ESI) Act	 1948. Since the final date of coverage could be decided only after verifying all the records	 the Respondent was asked to produce them. The Respondent did not avail the opportunity afforded to it Though the Respondent sent Its explanation	 It was not acceptable to the appellant Corporation and so it passed a detailed order under S.45 A calling upon the Respondent to pay the contribution with interest at 6% failing which It would be recovered as arrears of land revenue. Since this order and the reminder thereto	 did not evoke any response from the Respondent	 the appellant sent a claim in Form 19 to the District Collector requesting him to recover the said amount The Respondent challenged the proceedings by filling an application under S.75 of the Act before the ESI Court	 which upheld the assessment made by the appellant Corporation	 but stated that recovery steps were not justified after the closure of the establishment	 and only prosecution as contemplated section 85 of the Act was attracted. The appellant Corporation preferred an appeal against the said decision of ESI Court The High Court dismissed the appeal and held that since the scheme was made after the closure of the establishment	 the 219 220 appellant was not justified in proceeding against the Respondent Being aggrieved by the judgment of the High Court	 the appellant Corporation preferred the present appeal contending that so long as the establishment was covered by the provisions of the Act	 the Respondent could not circumvent its liability by claiming that before actual recovery proceedings	 it had closed down the establishment. Allowing the appeal	 this Court	 HELD: 1.1. Admittedly the hotel industry like that of the respondent has been notified by the Government thus extending the provisions of the to hotel industry. Therefore	 on the date of commencement of its business	 namely	 11.7.85	 there was a liability on the Respondent to contribute to the ESI fund. Under section 40 the primary liability is on the employer to pay	 not only his contribution but also the employees contribution. As such the employer can not plead that since he had not deducted the employees ' contribution from their wages	 he could not be made liable for the same. After all when he makes employees ' contribution he is entitled to deduct from the wages. Thus by force of the application of the statutory provisions	 the liability to contribute during the relevant period	 namely	 11.7.85 to 31.3.88	 arose. [226E G] 1.2. The Insurance Court as well as the High Court have correctly upheld the demand for contribution. But it is rather strange to conclude that the demand could not be enforced against a closed business. If this finding were to be accepted it would not promote the scheme and avoid the mischief. On the contrary	 it would perpetrate the mischief. Any employer can easily avoid his statutory liability and deny the beneficial piece of social security legislation to the employees	 by closing down the business before recovery. That certainly is not the indentment of the Act. It is equally fallacious to conclude that because the employees had gone away there is no liability to contribute. It has to be carefully remembered that the liability to contribute arose from the date of commencement of the establishment and is a continuing liability till the closure. The very object of establishing a common fund under section 26 for the benefit of all the employees will again be thwarted if such a construction is put. [227D F] R.M. Lakshmanamurthy vs The Employees ' State Insurance Corporation	 Bangalore	 	 relied on. 221 2. The proceeding for the recovery is in respect of the dues of contribution which arose prior to the closure on 31.3.88. Therefore	 it matters little when notice was issued calling upon the establishment to pay the contribution. Such a notice is only a reminder to the employer to discharge his statutory obligation. The appellant corporation is thus entitled to proceed with the recovery proceedings in accordance with law. [227H	 228A]