HONOURABLE MR.JUSTICE HEMANT CHANDANGOUDAR W. P.No.20302 of 2023and W.M.P.No.19656 of 2023 Bhel Valaga Oppanda Thozhilalar Nala Sangam Rep. by its General Secretary M.Sekar

2025:MHC:2766
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on : 31.10.2025
Delivered on : 05.12.2025
CORAM:
THE HONOURABLE MR.JUSTICE HEMANT CHANDANGOUDAR
W. P.No.20302 of 2023and
W.M.P.No.19656 of 2023
Bhel Valaga Oppanda Thozhilalar Nala Sangam
Rep. by its General Secretary M.Sekar
S/o.Muniyandi
No.5, Dheen Complex, 1st Floor
Thiruvarambur
Trichy – 13. … Petitioner
vs.
1. The Executive Director Bharat Heavy Electricals Ltd., Trichy – 620 014.
2. The Special Officer
BHEL Complex Cooperative Labour Contract Society
No.24, Building BHEL
Trichy – 620 014. … Respondents
Writ Petition filed under Article 226 of the Constitution of India seeking a Writ of Certiorarified Mandamus, to call for the records of award in I.D.No.121 of 2015 on the file of the Central Government Industrial Tribunal cum Labour Court, Chennai dated 01.12.2022 and quash the same and further direct the 1st respondent to regularize the service of members of the petitioner’s Union from the date of service with all pensionary and
service benefits.
For Petitioner : Mr.R.Viduthalai Senior Counsel for Mr.D.Veerasekharan
For Respondents : Mr.A.V.Arun assisted by
Mr.M.Abinu Monisha, for R1
Mr.M.S.Palaniswamy, for R2
*****
O R D E R
The captioned Writ Petition (hereinafter referred to as “WP” for the sake of brevity, convenience, and clarity) has been filed seeking the issuance of a writ of certiorari to assail the award dated 01.12.2022 passed by the Central Government Industrial Tribunal-cum-Labour Court, Chennai (hereinafter referred to as “Labour Court” for the sake of brevity) in I.D. No.121 of 2015 (hereinafter referred to as the “impugned order”). By the said order, the Industrial Dispute referred to by the Central Government, Ministry of Labour and Employment regarding whether the demand of the petitioner-Union to absorb and regularize the members of BHEL Complex Cooperative Labourers is legal and justified came to be rejected.
2. Factual Background :
2.1. The petitioner claims to be a registered labour union established
to safeguard the welfare of all members of the second respondent. Initially, 1121 members were working under the first respondent. The first respondent, in order to reduce expenditure on its workforce, introduced a system of contract labour to carry out regular and permanent work, and accordingly established the second respondent. The petitioner contends that the second respondent is not a genuine entity but was created under a sham and nominal arrangement solely to deprive the workers of absorption, regular employment, and attendant financial benefits. The petitioner further claims that the control and management of the second respondent vest with the first respondent, and that the service conditions of the members of the petitioner-Union, who are working with the first respondent as regular employees, are also controlled and regulated by the first respondent.
2.2. An industrial dispute was raised before the Assistant Commissioner of Labour (Central), Puducherry. The Assistant
Commissioner initially sent a failure report under Section 12(4) of the Industrial Disputes Act, 1947 (hereinafter referred to as “the 1947 Act” for the sake of brevity). Consequently, the Central Government refused to refer the matter to the Labour Court for adjudication. The petitioner challenged the said refusal before this Court in W.P. No. 9271 of 2015, and the same was disposed of with a direction to the Central Government to refer the dispute. Accordingly, the Central Government made the reference.
2.3. The first respondent challenged the reference made by the Central Government before this Court in W.P. No. 34247 of 2015. The interim stay initially granted was later vacated, which was challenged before the Hon’ble Division Bench in W.A. No. 163 of 2016. The Hon’ble Division Bench directed the Labour Court to entertain the dispute on the preliminary issue of whether the order of reference made by the Central Government was maintainable and to decide the same in accordance with law. The said order was confirmed by the Hon’ble Supreme Court in the SLP filed by the first respondent.
2.4. Thereafter, the Labour Court passed an order on the preliminary issue. Aggrieved, the first respondent filed W.P. (MD) No. 2330 of 2017, which was allowed by this Court, directing the Labour Court to decide the preliminary issue as to whether the order of reference made by the Central Government was maintainable, after framing the two issues referred to in the previous paragraph and after affording adequate opportunity to both sides. The said order has attained finality.
2.5. Pursuant to the directions of this Court and based on the pleadings of the parties, the Labour Court framed the following three issues:
(i) Whether there exists any employer–employee relationship between the first respondent, Bharat Heavy Electricals Ltd. (BHEL), and the members of the second respondent, the BHEL Complex Co-operative Labour Contract Society?
(ii) Whether the demand of the first party Sangham for absorption and regularization of its members by the first respondent–BHEL is legal and justified?
(iii) To what relief are the members of the first party Sangham entitled?
2.6. To substantiate its claim that its members are employees of the first respondent and not of the contractor, the petitioner-Union examined two witnesses, namely WW1 and WW2, and produced documents marked as Exs. W1 to W41. The first respondent examined one witness, Sri K. Murali, as MW1, and produced documents marked as Exs. M1 to M22. The second respondent did not examine any witnesses but marked documents Exs. M1 to M17.
2.7. Upon appreciating the oral and documentary evidence on record, the Labour Court passed the impugned order holding that the petitioner failed to establish the existence of an employer–employee relationship between the members of the petitioner-Union and the first respondent. Consequently, it held that the members of the petitioner were not entitled to absorption or regularization of service. Aggrieved by the same, the captioned WP has been filed before this Court.
3. Submissions on behalf of the Petitioner :
3.1. Mr. R. Viduthalai, learned Senior Counsel appearing for the writ petitioner, submitted that the evidence on record clearly establishes that the second respondent Co-operative Society was formed at the instance of the first respondent, and that the first respondent had the power to control and regulate the activities of the said Society.
3.2. He further submitted that the service conditions of the members of the petitioner-Union, including the payment of wages, were regulated by the first respondent. This is evident from the identity cards issued to the members of the petitioner-Union, countersigned by the security officer of the first respondent, and from the enhancement of the age of superannuation from 58 to 60 years, on par with permanent employees of the first respondent, as per the order dated 29.03.2012 passed by the Assistant
Commissioner-cum-Labour Court.
3.3. It was further submitted that the Labour Court failed to consider that no evidence was produced by the first or second respondent to show the existence of any contract agreement to provide employees on a contract basis. Even assuming such an agreement existed, it was sham and bogus, intended to deprive the members of the petitioner-Union who were discharging duties identical to those of regular employees of the benefits extended to permanent employees.
4. Decisions Relied Upon by the Petitioner:
(i) Hussainbhai, Calicut v. The Alath Factory Thezhilali Union,
Kozhikode and Others, (1978) 4 SCC 257;
(ii) Steel Authority of India Ltd. and Others v. National Union
Waterfront Workers and Others, (2001) 7 SCC 1.
5. Submissions on behalf of the First Respondent :
5.1. Mr. A. V. Arun, learned counsel for the first respondent, submitted that the evidence on record clearly establishes that the second respondent had undertaken various contracts and delivered outsourced services to the first respondent, as evidenced by work orders such as Ex.M1 for various unskilled jobs. After obtaining such contracts, the second respondent obtained a licence from the competent authority (Ex.M10). He further submitted that when the second respondent failed to conduct elections in accordance with its bye-laws, an officer of the first respondent was appointed as Special Officer by the Government of Tamil Nadu. This appointment was made by the Government, not by the first respondent, and therefore does not establish that the first respondent had control over the second respondent.
5.2. He further submitted that the membership, employment, disciplinary action, payment of wages, and statutory contributions were all handled by the second respondent Society in accordance with its bye-laws. After successful execution of the contracts, bills submitted by the second respondent were verified and reimbursed, just as with other contractors.
5.3. The first respondent is registered as a principal employer under
Section 7 of the Contract Labour (Regulation and Abolition) Act, 1970 (hereinafter referred to as the “1970 Act”). The list of contractors shows that the second respondent is one of the contractors engaged by the first respondent.
5.4. The first respondent has only outsourced unskilled labour, and none of these activities have been abolished or prohibited by the Government under the 1970 Act. The petitioner failed to adduce any evidence to show that its members possess the requisite qualifications prescribed for permanent employees so as to claim absorption or regularization of service. Wages, allowances, bonus, and other payments to the members of the petitioner-Union were negotiated by the second respondent and not by the first respondent.
5.5. Monthly wages, provident fund, ESI, gratuity, and bonus were paid by the second respondent, which was admitted by WW1 and WW2 during cross-examination and is corroborated by Exs. M8, M9, M10, and M17.
5.6. During cross-examination, WW1 categorically admitted that he was suspended by the second respondent Society. Hence, there is no evidence to establish that any disciplinary action was initiated by the first respondent. The service conditions of the members are regulated by the byelaws of the Society, and the standing orders and service regulations of the first respondent are not applicable to them.
5.7. The members of the petitioner-Union had submitted petitions before the Deputy Labour Commissioner admitting that they were engaged by the second respondent and claimed “equal pay for equal work” on par with permanent employees of the first respondent (Exs. M1 to M3).
5.8. Therefore, in the absence of any evidence establishing an employer–employee relationship between the first respondent and the members of the petitioner-Union, the Labour Court rightly passed the impugned order, which does not warrant interference.
6. Decisions Relied Upon by the First Respondent :
(i) Bharat Heavy Electricals Ltd. v. Mahendra Prasad Jakhmola
and Others, (2019) 13 SCC 82;
(ii) International Airport Authority of India v. International Air
Cargo Workers’ Union and Another, AIR 2009 SC 3063;
(iii) General Manager (OSD), Bengal Nagpur Cotton Mills v.
Bharat Lal and Another, (2011) 1 SCC 635;
(iv) Steel Authority of India Ltd. v. Union of India and Others,
(2006) 12 SCC 233; and
(v) Ram Singh and Others v. Union Territory, Chandigarh and
Others, (2004) 1 SCC 126.
7. The learned counsel for the first respondent further argued that the petitioner failed to establish that the arrangement between the first and second respondents is sham and bogus or amounts to an unfair labour practice.
8. Mr. M. S. Palanisamy, learned counsel for the second respondent, reiterated the submissions made in the counter-affidavit filed by the second respondent and supported the case of the petitioner, contending that there exists an employer–employee relationship between the members of the petitioner-Union and the first respondent.
9. As a response the learned counsel for Respondent No.1 submitted that detailed objections is filed to the counter affidavit of Respondent No.2, and the Respondent No.2 having supported the case the Respondent No.1, now cannot appropriate and reprobate to contend that the skilled and semi skilled workers were provided.
10. After considering the arguments advanced by learned counsel on either side and on a perusal of the material on record, the key points that arise for consideration are as follows:
(i) Whether the arrangement between the first and second respondents to provide outsourced employees is sham and bogus and amounts to an unfair labour practice;
(ii) Whether there exists an employer–employee relationship between the first respondent and the members of the petitioner-Union; and
(iii) If so, whether the members of the petitioner-Union are entitled to absorption and regularization of service as permanent employees in the establishment of the first respondent.
11. Before delving into the points for consideration, it is appropriate
to reproduce the relevant provisions of the 1947 Act, the 1970 Act, and the decisions of the Hon’ble Supreme Court that bear upon the issues raised.
12. Section 2(s) of the Industrial Disputes Act, 1947 (hereinafter referred to as “the 1947 Act”) defines the term “workman” to mean any person employed in any industry to do manual, unskilled, skilled, technical, operational, clerical, or supervisory work for hire or reward. For a claim of regularization to be maintainable, the dispute must constitute an industrial dispute within the meaning of Section 2(k) of the 1947 Act, which in turn depends upon proving that the members of the petitioner- union are workmen employed in the concerned industry.
13. The Hon’ble Supreme Court, in Workmen of Nilgiri Cooperative Marketing Society Ltd. v. State of Tamil Nadu and Others, (2004) 3 SCC 514, laid down the principle that the onus of proving the existence of an employer–employee relationship lies upon the workman when the management denies such relationship.
14. In Bengal Nagpur Cotton Mills v. Bharat Lal and Another (cited supra), the Hon’ble Supreme Court reiterated that if the industrial adjudicator finds the contract between the principal employer and the contractor to be sham, nominal, or merely a camouflage devised to deny employment benefits to the workmen, and that in reality there exists direct employment, the adjudicator can grant relief by holding that the workmen are the direct employees of the principal employer. Two well-recognized tests to determine whether contract labourers are, in fact, direct employees of the principal employer are:
(i) whether the principal employer pays the salary
directly, instead of through the contractor; and
(ii) whether the principal employer exercises control and supervision over the work of the employees.
15. In Hussainbhai, Calicut v. The Alath Factory Thezhilali Union,
Kozhikode and Others, (1978) 4 SCC 257 (cited supra), the Hon’ble Supreme Court dealt with the question of whether workers who are apparently engaged through contractors or intermediaries would nevertheless be considered employees of the factory owner for the purposes of the 1947 Act. The Apex Court held that the presence of contractors is immaterial if, in substance, the management exercises economic and supervisory control over the workmen. It emphasized that courts must look beyond mere legal formalities, lift the corporate veil, and expose sham contractual arrangements that conceal the true nature of employment.
16. In the said decision, the following key principles were laid down:
(i) The real employer is the person for whose benefit and
under whose supervision the work is done, even if
intermediaries exist;
(ii) If the workers depend for their livelihood on the principal employer and their work forms an integral part of his business, the relevant relationship is that of employer and employee; and
(iii) When a group of workers produces goods or services for the business of another, and that other exercises economic control over their subsistence, skill, and continued employment, that other is the employer.
17. In simple terms, if a worker is hired through a contractor, but the principal employer controls the work, derives benefit from it, and the worker is economically dependent upon him, then such worker must be treated as the employee of the principal employer.
18. In Steel Authority of India Ltd. v. National Union Waterfront Workers and Others, (2001) 7 SCC 1 (cited supra), after analyzing earlier precedents, the Hon’ble Supreme Court held that where the contract is found to be sham, nominal, or a mere camouflage, the contract labour must be treated as working directly under the principal employer. Such cases do not relate to the abolition of contract labour per se but represent instances where the Court pierces the veil to declare the true nature of the relationship as one of direct employment. The Apex Court further ruled that where, in discharge of a statutory obligation (for example, maintaining a canteen in an establishment), the principal employer engages a contractor, the contract labour engaged would indeed be employees of the principal employer.
19. In Shripal and Another v. Nagar Nigam, 2025 SCC OnLine SC 221, the Hon’ble Supreme Court held that the employees’ contention denying the existence of a direct employer–employee relationship was wholly unsubstantiated. It was observed that no documentary evidence such as contractor licences, agreements, or payment records had been produced to establish that the workmen were engaged through a contractor. On the contrary, the evidence demonstrated that the workmen were directly paid and supervised by the Horticulture Department, thereby establishing direct control and supervision, which is the hallmark of an employer–employee relationship. The Apex Court further held that the absence of any evidence of contract exposed the alleged outsourcing arrangement as mala fide, and that the termination of such employees without following statutory safeguards was invalid.
20. In Jaggo v. Union of India, 2024 SCC OnLine SC 3826, the Hon’ble Supreme Court underscored the systematic exploitation of temporary and contractual employees in public institutions and identified the following forms of abuse:
(i) labelling permanent work as temporary to deny regular benefits;
(ii) arbitrary termination without notice or cause;
(iii) denial of promotional and career advancement opportunities;
(iv) using outsourcing as a device to evade regularization; and
(v) denial of basic statutory benefits.
The Apex Court further held that such practices undermine the dignity, security, and social welfare of the workforce, which are fundamental to labour jurisprudence in India.
21. In Bharat Heavy Electricals Ltd. v. Mahendra Prasad Jakhmola and Others, (2019) 13 SCC 82 (cited supra), the Hon’ble Supreme Court held that the relevant factors to be considered for determining the existence of an employer–employee relationship include, inter alia:
(i) who appoints the workers;
(ii) who pays the salary or remuneration;
(iii) who has the authority to dismiss;
(iv) who can take disciplinary action;
(v) whether there is continuity of service; and
(vi) the extent of control and supervision, i.e., whether complete control and supervision exist.
22. In International Airport Authority of India v. International Air Cargo Workers’ Union and Another, AIR 2009 SC 3063 (cited supra), it was held that when a contractor assigns or deputes workers to work under the principal employer, such workers may perform their duties under the supervision and control of the principal employer; however, that constitutes secondary control. The primary control remains with the contractor.
23. In Ram Singh and Others v. Union Territory, Chandigarh and Others, (2004) 1 SCC 126 (cited supra), the Hon’ble Supreme Court emphasized that in determining the relationship of employer and employee, “control” is indeed an important test but not the sole one. Other relevant factors include: who has the power to select and dismiss; who pays remuneration; who deducts insurance contributions; who organizes the work; who supplies tools and materials; and what mutual obligations exist between the parties.
24. In the case of Steel Authority supra, it was ruled that, in view of the accepted position taken by the Union and employees at different points of time, the workers engaged through contract labour had never pleaded that the agreement with the contractor was sham and bogus. Therefore, after a long lapse of time, it was held impermissible to raise such a dispute purportedly based on certain observations made in SAIL’s case.
25. In the backdrop of the legal principles established by the Hon’ble
Apex Court, and with reference to the provisions of the Industrial Disputes Act, 1947 (hereinafter referred to as “the Act of 1947”), the points raised for consideration, which are interlinked and collectively connected, are taken up for consideration and answered accordingly.
26. The first respondent, in the additional typed set of papers filed in August 2025, has produced a Certificate of Registration issued under subsection (1) of Section 9 of the Tamil Nadu Cooperative Societies Act, 1961. The said certificate evidences that the second respondent has been registered as a Cooperative Society on the basis of limited liability, and that the byelaws of the said Society are appended to the certificate. The bye-laws of the Society, produced along with the typed set, indicate that the Deputy Registrar, Tiruchirapalli, vide order dated 05.07.1978, appointed five persons as members of the interim committee of the second respondent Society for a period of three months from the date of registration to conduct the affairs of the Society. Out of the five persons appointed, one was the Deputy General Manager (P&A), another was the Deputy Manager (Finance), and another was the Senior Personnel Officer of the first respondent. These three officials of Respondent No.1 were appointed as Directors of the interim committee.
27. This document clearly suggests that the Society was established at the instance of the first respondent, who had power and control over the affairs of the second respondent Society. The objects of the Society, as set out in its bye-laws, include the promotion of the economic interests of the labourer-members of the Society and the securing of suitable and profitable employment for them by obtaining contracts from BHEL, Trichy, and other Government or public bodies. Therefore, the primary object of the Society was to secure employment for its members through contracts obtained from the first respondent as well as other Government or public bodies. However, no evidence has been produced by the first respondent to substantiate that the Society had procured any such employment or contracts from other
Government or public bodies.
28. The bye-laws further provide that when a member resigns his membership, he shall, by registered post, send a letter of resignation to the Secretary of the Society, and such resignation shall take effect from the date on which the letter is received by the Secretary. However, the bye-laws do not contain any provision for initiating disciplinary action against members of the Society who are employed in the establishment of BHEL or any other Government or public body. The bye-laws are silent in this regard.
29. Ex.W5, produced by the petitioner before the Labour Court, is a certificate dated 18.10.1990 issued by the Manager (Personnel), BHEL, wherein the first respondent nominated four executives to the Board of Directors of the second respondent Society, and the same was approved by the competent authority. This certificate clearly establishes that the first respondent had control over the affairs of the Society, including in the constitution of its Board of Directors.
30. A letter dated 21.05.2001 (Ex.W6) issued by the first respondent to the Registrar of Cooperative Societies, Chennai, reveals that a request was
made to appoint one Mr. G. Jesu, Manager (Personnel), BHEL,
Tiruchirapalli, as Special Officer, citing the precedent of appointing BHEL officers as Special Officers upon dissolution of the Board of Directors of the second respondent Society. Pursuant thereto, the Joint Registrar of Cooperative Societies, Tiruchirapalli Region, vide order dated 25.05.2001
(Ex.W7), in exercise of powers under Section 89(1)(i) of the Tamil Nadu
Cooperative Societies Act, 1983, appointed Mr. G. Jesu, Manager (Personnel), BHEL, as Special Officer at the request of the first respondent.
31. Therefore, the contention of the learned counsel for the first respondent that the Special Officer was appointed solely by the competent authority and that the first respondent had no role in the said appointment is without substance and factually incorrect. A similar order was also passed by the Joint Registrar of Cooperative Societies on 24.05.2005 (Ex.W8), appointing Mr. G. Jesu, Senior Manager, BHEL, as Special Officer with effect from 25.05.2005.
32. The above discussion clearly supports the case of the petitioner-Union that the second respondent Society was established at the instance of the first respondent and that the first respondent had substantial control over the affairs of the Society, including in the constitution of its Board of Management.
33. Ex.W9 is a note dated 04.05.2008 issued by the Senior Manager (HR), BHEL, which indicates that the premium towards LIC and gratuity payments for LCS workers were remitted by the management of BHEL.
Similar orders dated 18.06.2009, 24.11.2011, and 07.10.2015 were also passed by the Joint Registrar of Cooperative Societies, appointing officials and executives of BHEL as Special Officers of the second respondent Society for the periods specified therein until a new Board of Directors was constituted.
34. Ex.W13 contains instructions issued by the management of BHEL to utilize the services of an LCS worker, Mr. K. Rayar, for driving heavy vehicles of BHEL, since he held a valid heavy motor vehicle licence. His driving skills were assessed by the Transport/M&S Department of Respondent No.1 to ensure suitability, and approval was sought from the Chief Security Officer to grant permission accordingly.
35. Ex.W14 series consists of photographs of identity cards issued to LCS employees, describing the nature of their work at BHEL and indicating that they have rendered more than 20 years of service. Ex.W15 series comprises documents relating to the movement of BHEL materials by Mr.
V. Shanmugam, an LCS worker who is also the President of the petitionerUnion. Ex.W16 is a note issued by the Manager, BHEL, Trichy, dated 25.09.2003, which discloses that, since Society members were distributed throughout BHEL areas for administrative purposes, a uniform daily rate of ₹128 (inclusive of weightage payments) was adopted with effect from 25.08.2003, as shown in Annexure-I. The note further indicates that the weightage payments were to be revised every year on 1st April based on the members’ service details.
36. Ex.W17 is a communication dated 14.08.2010 issued by the Senior Deputy General Manager (Admin), revealing that the overtime work limit for LCS workers was increased from 16 hours to 24 hours per month (an additional 8 hours or 6 days), at the rate of ₹247.40 per day. It further states that this rate was to be taken into account while finalizing all job contracts awarded to the second respondent Society from 25.07.2010 to 31.03.2011.
37. Ex.W18 is an office order dated 01.04.2011 issued by BHEL, setting out the shift timings for the security personnel of the second respondent Society, directing them to perform duties in accordance with the schedule enumerated therein. The said documents clearly indicate that the LCS workers were under the control and administration of the first respondent. The LCS workers were also deployed in the dispatch section, and their overtime schedules were drawn by the Section In-Charge of Respondent No.1.
38. Ex.W19 is a holiday duty intimation issued by BHEL to LCS workers, along with permanent BHEL employees, directing them to attend holiday duty on 14.10.2013 and 16.10.2013. This establishes that the LCS workers regularly worked alongside permanent employees of BHEL within its establishment. Similarly, Ex.W20 is a shift roster that demonstrates that LCS employees worked alongside regular employees. Ex.W21, Ex.W22,
Ex.W23, and Ex.W24 are further intimations issued by BHEL, permitting LCS workers to attend holiday work on 24.09.2015. Ex.W25 clearly shows that LCS workers worked with Crane Operators, who were employees of BHEL. Ex.W26 and Ex.W28 are communications issued by BHEL fixing the shift schedules for LCS employees along with regular employees of BHEL.
39. The petitioner has produced additional documents, which were not produced before the Labour Court. These documents include appreciation letters issued by BHEL acknowledging the services of an LCS worker, a warning memo issued by BHEL to an LCS worker, and an accident report concerning one Mr. V. Ragupathy, who, while engaged in unloading duct walls from a trailer with the help of an EOT crane, sustained injuries to his head and neck when the duct walls slipped and fell on him.
40. Ex.W3 is a communication dated 29.03.2012 issued by the Assistant Labour Commissioner, Puducherry, which discloses that the BHEL Contract Workers’ Union had raised an industrial dispute seeking an increase in the retirement age from 58 years to 60 years for members of the Society. During the course of joint discussions, it was brought to notice that, in the case of the Ranipet Cooperative Society, the retirement age had already been increased from 58 to 60 years. Further, on perusal of the byelaws of the Society, it was observed that no prescribed age limit had been fixed either for entry or for retirement. Therefore, to avoid discrimination, a request was made to raise the age of superannuation from 58 years to 60 years.
41. Ex.M1 is the work order issued by the first respondent to the second respondent. Under the terms of the said work order, the second respondent was awarded an outsourcing contract to provide various services, including cleaning of the factory, loading and unloading, supplying water, snacks, tea, and coffee, upkeep and cleaning of offices and furniture, horticultural maintenance, and handling of tapals (official correspondence).
42. It is an admitted fact that these activities have not been prohibited or abolished by the Government under the Contract Labour (Regulation and Abolition) Act (CLRA Act).
43. The petitioner Union, however, has produced both oral and documentary evidence to substantiate its claim that the members of the Union were in fact skilled labourers.
44. During cross-examination, the President of the petitioner Union, Mr. V. Shanmugam, categorically admitted that contributions towards ESI and PF were deducted and remitted by the second respondent in respect of his salary. He also admitted that he was one of the signatories to the settlement deed entered into between DK Union and the petitioner Union, and that he himself had entered into a settlement with the second respondent on 07.11.2011.
45. He further conceded that no documentary evidence had been produced to show that recruitment of workers for the Society was carried out in consultation with the Personnel and Administrative Department of BHEL. He also admitted that, based on documents such as Ex.W5, Ex.W6, Ex.W9, Ex.W13, Ex.W16, and Ex.W17, he had stated in his proof affidavit that the first respondent exercised “persuasive control” over the second respondent. He also acknowledged that all these documents were internal records of the first respondent.
46. Furthermore, in the cross-examination conducted on behalf of the second respondent, Mr. Shanmugam admitted that he had been suspended by the second respondent vide order dated 02.11.1987, which had been issued by an official of the first respondent. He also admitted that no other unions had raised a dispute seeking absorption of their members by the first respondent and that his own salary slip (Ex.M10) was not issued by the first respondent.
47. One of the members of the petitioner Union, Mr. K. Rayar, filed a proof affidavit in which he stated that he had joined service on 01.04.1986 and had been continuously working since then. Initially, he was employed in the canteen and later worked in the Safety Department of the first respondent for about 14 years.
48. He further stated that, on the instructions of the first respondent, he obtained a heavy motor vehicle driving licence on 05.08.1987. Subsequently, he was transferred to the Central Movement Cell (CMC) of the Maintenance and Services Department to discharge duties as a driver.
49. The Manager of the said department issued an order dated 20.02.2002 (marked as Ex.W13), wherein it was stated that, due to a shortage of drivers, the CMC/M&S was compelled to carry out certain activities by utilizing the services of the LCS worker, Mr. K. Rayar, who possessed a valid heavy vehicle licence. The document further stated that his driving skills had been assessed by the Transport/M&S Department to ensure suitability and that approval of the Chief Security Officer was sought accordingly.
50. Mr. Rayar further stated that he was working as a driver in the said department alongside regular employees such as Mr. Annadurai, Mr. Saagul Ameed, and Mr. Balasubramaniam, all of whom were regular employees of BHEL. After their retirement, he remained the only driver presently working in BHEL.
51. He also deposed that while a regular driver at BHEL received a basic salary of approximately ₹45,000/-, he was being paid only ₹21,000/-, despite performing the same duties since 1998. During his service, BHEL had issued him an identity card/punching card for attendance, as well as provided uniform, safety shoes, PF, ESI, gratuity, and bonus benefits. Nevertheless, he was denied parity of wages with the regular employees.
52. The driving licence issued in his name was enclosed along with his proof affidavit. During cross-examination by the first respondent, Mr. Rayar admitted that Ex.W13 (the instruction issued by BHEL to utilize his services as a driver) was an internal communication not addressed directly to him but was transmitted to him under a covering letter from the Additional General Manager, Maintenance and Services. He also admitted that Ex.M16 was an application submitted by him to the Secretary of the second respondent, requesting consideration for appointment to the post of driver.
53. Mr. K. Murali, Additional General Manager of the first respondent organization, was examined as Management Witness No. 1 (M.W.1) and marked documents Ex.M1 to Ex.M22. During cross-examination, he admitted that he had not produced any written authorization empowering him to depose on behalf of the first respondent. He further admitted that, pursuant to a decision of the Central Government, the age of superannuation of all employees had been extended to 60 years, and that nearly 98 contractors were engaged by BHEL to supply manpower as per the nature of work.
54. He admitted that he was unaware whether a manufacturing company like BHEL required skilled labourers. He denied the suggestion that the first respondent had created the second respondent merely to circumvent the provisions of the Contract Labour (Regulation and Abolition) Act. He further denied that all members of the petitioner Union were performing skilled work. However, he admitted that the name of the first respondent appeared in all official papers under the column “Employer’s Name” and that the nature of work was described as “skilled worker.”
55. He volunteered that the employees engaged by the second respondent had themselves signed all documents connected with the manpower supply. He also admitted that, for security purposes, the members of the second respondent were issued entry passes, which were verified and signed by the Chief Security Officer of BHEL. The identity cards issued to them were valid up to 24.03.2023 and, in some cases, up to 24.06.2023.
56. He further admitted that he had no knowledge as to whether laboratory technicians were considered skilled workers. He stated that the duty rosters were initially prepared by the second respondent, but the subsequent assignments were reviewed and approved by the first respondent.
57. He also admitted that the Special Officer of the second respondent Society was always appointed from among the officers of the first respondent. He conceded that gratuity to LCS workers was not paid by the first respondent, though a proposal to that effect was raised in Ex.W9, an internal communication of BHEL.
58. He further admitted that housekeeping activities and the movement of vehicles within the premises were controlled by the first respondent. He also admitted that, though the first respondent generally did not employ LCS workers to drive vehicles within the campus, exceptions were made in special circumstances.
59. He also acknowledged that documents such as Ex.W29, Ex.W32, Ex.W33, and Ex.W34 were appreciation letters issued by the first respondent to members of the petitioner Union. However, he denied the suggestion that members of the petitioner Union were directly recruited by the first respondent.
60. Upon an overall appreciation of the oral and documentary evidence, the following facts emerge:
(i) The second respondent Society was established at the instance of the first respondent, as evidenced by the fact that the interim committee consisted of officials belonging to the first respondent, a fact not in dispute. In the absence of a duly constituted Board of Management, a Special Officer, drawn from the officials of the first respondent, was appointed to administer the Society.
(ii) This clearly demonstrates that the first respondent exercised effective control and supervision over the affairs of the second respondent Society. The Society has been in existence since 1978, and from its inception, the members of the Society have been working within the establishment of the first respondent, albeit under the guise of outsourced labour.
(iii) The evidence further establishes that although wages were disbursed by the second respondent, such payment was made from the funds received from the first respondent. The quantum of wages was also regulated by BHEL, and the allocation of work to the LCS workers was determined not by the second respondent but by officials of BHEL.
(iv) It is, therefore, evident that the arrangement between the first and second respondents, whereby workers were ostensibly supplied on contract, was nothing but a sham, bogus, and camouflage arrangement, intended to deny the members of the petitioner Union the legitimate benefits available to regular employees of BHEL.
(v) Ordinarily, contract labour is engaged only for temporary, intermittent, or seasonal work and not for perennial or permanent activities of the establishment. In the present case, however, the members of the petitioner Union have been continuously employed alongside permanent employees, performing regular and perennial work of the first respondent establishment under its direct supervision and control.
(vi) It is thus clear that the first respondent, only to reduce its expenditure, created the second respondent Society and issued work orders to it, thereby outsourcing its own employees under the guise of a nominal contract. Such an arrangement is not genuine and is only a device to avoid statutory obligations towards the workmen. This practice amounts to an unfair labour practice, as the workmen continue to perform the same work under the control of the first respondent while being denied lawful service benefits.
61. The second respondent–Society filed a counter statement before the CGIT denying the allegations made in the counter statement filed by the petitioner–Union. The said counter statement was filed by the Administrator, who was an officer of the first respondent–Company. In these proceedings, the Co-operative Sub-Registrar, who is the Administrator of the second respondent–Society, has filed a counter affidavit stating that the entire administration of the Society has been controlled by the first respondent. Earlier, officers working under the first respondent–Management were appointed as Special Officers of the second respondent–Society, and they acted in a dual role as officers of the Company as well as Special Officers of the second respondent–Society. The second respondent has thus taken a conflicting stand; therefore, its counter affidavit has no relevance and is not considered for adjudication of the dispute in question.
62. In view of the foregoing discussion and the evidence on record, I am of the considered opinion that the members of the petitioner Union must be deemed to be the employees of the first respondent. Consequently, they are entitled to absorption and regularization of their services, along with all attendant benefits on par with the regular employees of the first respondent establishment. The labour court has misread the evidence and records, rendering its findings arbitrary and perverse, and the same warrants interference.
63. In order to balance the equities between the parties, I am of the considered view that it would not be appropriate to saddle the management with undue financial burden. Accordingly, only those members of the petitioner-Union who were in employment as on the date of raising of the dispute and who have worked for more than 240 days in a calendar year from the date of their initial appointment shall be entitled to be treated as permanent employees along with continuity of service on par with regular workmen. However, they shall be entitled to arrears of wages and other attendant monetary benefits only from the date of raising of the dispute.
64. Accordingly, the captioned Writ Petition is allowed, and the impugned award dated 01.12.2022 passed in I.D. No. 121 of 2015 on the file of the Central Government Industrial Tribunal-cum-Labour Court, Chennai, is hereby set aside. The first respondent is directed to treat the members of the petitioner-Union who were in employment as on the date of raising of the dispute and who have worked for more than 240 days in a calendar year from the date of their initial appointment as permanent employees and to extend to them all benefits on par with regular employees, including continuity of service and other attendant benefits, with effect from the date of their initial appointment. However, the arrears of wages and other attendant monetary benefits shall be payable only from the date of raising of the dispute. The respondent is granted four months’ time to implement this order. Consequently, the connected miscellaneous petition stands closed.
There shall be no order as to costs.
05.12.2025
Index : Yes
Neutral Citation : Yes Speaking / Non-speaking
mk
To
1. The Executive Director Bharat Heavy Electricals Ltd., Trichy – 620 014.
2. The Special Officer
BHEL Complex Cooperative Labour Contract Society No.24, Building BHEL Trichy – 620 014. 
HEMANT CHANDANGOUDAR, J.,
mk
W.P.No.20302 of 2023
05.12.2025