Long-serving temporary workers performing perennial, essential duties may be entitled to regularization.

Eastern Coalfields Ltd. challenged the Central Government Industrial Tribunal-cum-Labour Court’s award dated 9 June 1999 in Reference Case No. 22 of 1989, which directed the Company to regularise 51 workmen as its direct employees, preferably in the underground sector, within two months from the award’s enforceability.

The workmen had been engaged since approximately 1980 in construction of masonry dams, walls, isolation and ventilation stoppings, and other mining-related works at Mithani Colliery.

The Company contended that the workmen were engaged by independent contractors, that the works were neither perennial nor permanent, and that no contractor employed more than 20 persons; consequently, the Contract Labour (Regulation and Abolition) Act, 1970 was said not to apply.

It also argued that an earlier dispute concerning regularisation of the same workmen had not been referred by the Central Government in 1981, and that no new circumstance justified the subsequent reference of 7 June 1989.

The Union relied on evidence showing that the workmen’s names appeared in statutory employment and attendance records, that they had provident fund accounts and vocational training, and that the Company’s witness admitted their continued underground work.

The Tribunal held that the alleged contract labour system operated in prohibited work, that the contractors were non-existent in law or were themselves workmen, and that the continued engagement of the workmen amounted to unfair labour practice.

Whether the reference dated 7 June 1989 concerning regularisation of the workmen was legally maintainable, despite the earlier decision in 1981 not to refer a similar dispute concerning the same workmen?

Whether the workmen were genuinely contract labour engaged through independent contractors, or were in substance direct employees of Eastern Coalfields Ltd.?

Whether the Tribunal was justified in directing the Company to regularise the 51 workmen as direct employees?

The Court considered the Contract Labour (Regulation and Abolition) Act, 1970, particularly Sections 1(4) and 2(b) concerning its applicability, Section 10(1) concerning prohibition of contract labour, and Sections 7 and 12 concerning registration of the principal employer and licensing of contractors.

It also applied the Industrial Disputes Act, 1947, including Section 10 on industrial references and Item 10 of Part I of the Fifth Schedule, under which continued casualisation of workmen through a prohibited or sham contract labour arrangement may constitute an unfair labour practice.

Relying on Air India Statutory Corporation v. United Labour Union, (1997) 9 SCC 377, the Court treated abolition of contract labour as capable of severing the contractor–workman link and creating a direct relationship between the principal employer and the workmen.

The Court also relied on Jaggo v. Union of India, 2024 INSC 1034, for the principles that lengthy and uninterrupted service in essential functions, performance of duties comparable to regular employees, and long-term use of temporary or contractual labels are relevant in considering regularisation.

The Court accepted the Tribunal’s factual findings that the workmen had performed essential and perennial underground mining-related functions since 1980 and that the Company’s own evidence established their continued engagement in the colliery.

The Tribunal’s findings regarding the workmen’s employment records, provident fund accounts, training, bonus entries and underground duties supported the conclusion that the arrangement was not a genuine independent contract labour system.

Applying the principle in Air India, the Tribunal held that contract labour engaged in work prohibited under the 1988 notification could not be used to avoid a direct employment relationship, particularly where the alleged contractors lacked licences.

Although the Company disputed the applicability of the Contract Labour Act on the basis that the contractors employed fewer than 20 persons, the Court ultimately found no basis to interfere with the Tribunal’s assessment of the evidence and its conclusion that continued contractual engagement amounted to unfair labour practice.

The Court further noted that the reference’s maintainability had already been rejected by the Tribunal and that the Company’s challenge to that order had been dismissed by the High Court.

The writ application was accordingly dismissed; all connected applications were disposed of, and any interim order was vacated.