Town panchayats are not industrial establishments under Tamil Nadu’s Permanent Status Act.

K. Mariappan and V. Pechimuthu claimed to have worked from 5 February 2005 as a plumber and gate-valve opener, respectively, under the Seithur Selection Grade Town Panchayat.

They asserted that they had completed 480 days of continuous employment within a period of 24 months and applied for conferment of permanent status under the Tamil Nadu Industrial Establishments (Conferment of Permanent Status to Workmen) Act, 1981 (“1981 Act”).

The Assistant Commissioner of Labour, acting under the 1981 Act, allowed their applications and conferred permanent status by orders dated 12 October 2022.

The Executive Officer of the Town Panchayat challenged those orders in W.P. (MD) Nos. 12823 and 12824 of 2023.

The learned Single Judge held that the appellants had been engaged through the Bharathi Self-Help Group and that there was no direct employer–employee relationship with the Town Panchayat.

They were consequently treated as contract labourers, and the orders granting permanent status were quashed.

The appellants filed the present writ appeals.

Whether the appellants established a direct employer–employee relationship with the Town Panchayat and continuous employment for 480 days within a period of 24 months so as to claim permanent status under the 1981 Act.

Whether the Seithur Town Panchayat constituted an “industrial establishment” under Section 2(3) of the 1981 Act and whether the appellants were “workmen” entitled to invoke the Act.

Whether the Assistant Commissioner of Labour was justified in conferring permanent status despite the Town Panchayat’s denial of direct employment and the appellants’ alleged engagement through the Bharathi Self-Help Group.

The Court applied the Tamil Nadu Industrial Establishments (Conferment of Permanent Status to Workmen) Act, 1981, particularly the requirement that the claimant must be a workman employed in an industrial establishment and must satisfy the statutory service requirement of 480 days within 24 months.

The Court relied on the definition of “industrial establishment” under Section 2(3) of the 1981 Act and the concept of “workman” under Section 2(s) of the Industrial Disputes Act, 1947, holding that a person engaged through a contract for service, rather than under a direct contract of service, cannot claim statutory permanent status.

It followed the principle stated in Executive Officer, Eriyodu Town Panchayat v. Inspector of Labour, 2025 SCC OnLine Mad 3151, that a Town Panchayat is not an industrial establishment under the 1981 Act and that a contractor or person engaged through a contract for service is not a “workman” for purposes of the Act.

The Court also referred to Steel Authority of India Ltd. v. National Union Waterfront Workers, (2001) 7 SCC 1, and Superintending Engineer, Erode Electricity Distribution Circle, Tamil Nadu Electricity Board v. Inspector of Labour, 2022 SCC OnLine Mad 1003.

The Court found that the appellants had not produced reliable evidence establishing direct employment under the Town Panchayat for 480 days within a continuous period of 24 months.

Their bank statements showed intermittent payments from the Bharathi Self-Help Group, the Town Panchayat, and unidentified sources, and therefore did not prove the requisite continuity or direct employment.

The Court further held that the Town Panchayat, being a local self-government body, did not fall within the definition of an “industrial establishment” under Section 2(3) of the 1981 Act.

Since the appellants were supplied or engaged through the Bharathi Self-Help Group and the employer–employee relationship with the Town Panchayat was not established, they could not be treated as workmen employed under a contract of service.

The Assistant Commissioner of Labour therefore had no basis to confer permanent status, and the learned Single Judge correctly quashed the orders.

The decision in Sukhendu Bhattacharjee v. State of Assam, 2026 INSC 523, was held inapplicable because the appellants failed to establish the foundational employer–employee relationship.

It affirmed the learned Single Judge’s orders setting aside the Assistant Commissioner of Labour’s orders granting permanent status.

No order as to costs was made, and the connected civil miscellaneous petitions were closed.