Home » Between The Lines » Supreme Court: Workers who are engaged in the performance of work which is perennial or permanent in nature would not be classified as contractual workers

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The Supreme Court, vide its judgement dated March 12, 2024, in the case of Mahanadi Coalfields Limited v. Brajrajnagar Coal Mines Workers’ Union [Civil Appeal No(s). 4092-4093/2024], has held that the workers who are engaged in the performance of work which is perennial or permanent in nature would not be classified as contractual workers.


Mahanadi Coalfields Limited (“Appellant”), a subsidiary of Coal India Limited, floated a tender for the transportation of crushed coal and selected a successful contractor for performance of the National Coal Wage Agreement-IV (“Agreement”) for the period of 1984-94. The contractor engaged 32 workmen for the execution of the Agreement. The Brajrajnagar Coal Mines Workers’ Union (“Respondent”) sought permanent status for the workmen engaged by the contractor and reliance was placed on clauses 11.5.1 and 11.5.2 of the Agreement, wherein it was agreed that contract labour should not be engaged by the employer with respect to those jobs which are permanent and perennial in nature. The Agreement also provided that such permanent and perennial jobs should be executed through regular employees. Following the representation of the Respondent, a notice was sent to the Appellant by the Assistant Labour Commissioner for conciliation. The conciliation process eventually culminated in a settlement dated April 5, 1997, under Rule 58 (Memorandum of settlement) of the Industrial Disputes (Central) Rules, 1957, wherein regularisation for 19 workers took place as their nature of work was held to be permanent and perennial in nature since they were engaged in bunker for operating chutes. 13 workers remained unregularized as the nature of their work was considered as purely casual which was not prohibited under Contract Labour (Regulation & Abolition) Act, 1970.

In view of the fact that the settlement is limited to only 19 workmen, the entire dispute was referred by the Central Government to the Industrial Tribunal, Rourkela, Odisha (“Industrial Tribunal”), under Sections 10 (Reference of disputes to Boards, Courts, or Tribunals) and (2A)(1)(d) (Dismissal, etc., of an individual workman to be deemed to be an industrial dispute) of the Industrial Disputes Act, 1947 (“Industrial Disputes Act”). The industrial dispute was allowed by the Industrial Tribunal, order dated May 23, 2002 which directed the regularization of the remaining 13 workmen and held that the work of removing spillages in the railway siding, below the bunker and operation of chutes in the bunker are regular and perennial in nature.

Aggrieved by the judgement of the Industrial Tribunal, the Appellant filed a writ petition before the Orissa High Court. Orissa High Court dismissed the writ petition and upheld the decision of the Industrial Tribunal by taking into consideration the nature of work performed by the workers. Additionally, the Orissa High Court also dismissed the review petition filed by the management. Therefore, being aggrieved by the order of the Orissa High Court, the Appellant filed the present appeal before the Supreme Court.


Whether the workers working in a perennial or permanent nature of work would be treated as contractual workers.


Contentions of the Appellant:

It was contended by the Appellant that the award passed by the Industrial Tribunal is bad in law and the settlement was binding on the parties due to Section 18(1) (Persons on whom settlements and awards are binding) read with Section 36 (Representation of parties) of the Industrial Disputes Act and it also continues to be binding on the parties by virtue of Section 19(2) (Period of operation of settlements and awards) of the Industrial Disputes Act, since the said settlement was never terminated.

The Appellant submitted that the nature of works being performed by the workers was verified before reaching to the settlement. It was found that 19 workers were performing perennial and permanent work and the work of the remaining 13 workers was ‘casual’ in nature.

It was contended by the Appellant that the only provision under which regularization could be claimed would be Section 25F (Conditions precedent to retrenchment of workmen) of the Industrial Disputes Act, which would have no application in the present case since the workmen worked under the supervision of a contractor and not the Appellant.

It was also contended by the Appellant that the Industrial Tribunal had wrongly directed the Appellant to disburse back-wages to the 13 workers as it is contrary to the settled principle which states that the grant of back-wages can never be automatic or a natural consequence of regularization. The Appellant relied on the judgement in the case of J.K. Synthetics Limited v. K.P. Agrawal and Another [(2007) 2 SCC 433] to support its contention that the workers who are seeking regularization and back-wages had an onus to prove that they were not gainfully employed.

Contentions of the Respondent:

It was contended by the Respondent that all 32 workers were engaged in works which were similar in nature and the workers were arbitrarily deprived of regularization, wherein certain workers from the bunker and the plant were left out of the settlement without any reason. Additionally, it was also argued that the work which was performed by the workers in the railway siding was perennial and regular in nature and similar to the work performed in the bunker.

The Respondent also relied on the evidence of the personal manager and the project officer in the Appellant company who admitted that the removal of spilled coal from the railway siding, the bunker and the coal handling plant was regular and perennial in nature. Therefore, the 13 workers who were not regularised also actively participated in tasks deemed regular and perennial.

The Respondent submitted that since there was no resolution of the claim of regularization of similarly placed workers, they have the right to pursue the remedy under the Industrial Disputes Act. It is submitted that Rule 58 of the Industrial Disputes (Central) Rules, 1957, under which the settlement occurred, nowhere posed a legal obstruction to the remedy.

The Respondent also submitted that the 13 workmen who were not regularised suffered without any fault of theirs and therefore an order of regularisation must naturally lead to grant of consequential back-wages.

Observations of the Supreme Court

The Supreme Court observed that the regularised employees and the remaining workers stand on the same footing, and the non-regularised workers were wrongly not made part of the settlement. Further, it was observed by the Supreme Court that there existed no grounds for the artificial distinction between the 19 workers who were regularized and the 13 workers who were left out. The Supreme Court noted that out of the 19 workers who were regularized, 16 worked in the bunker, and 3 worked in the coal handling plant. However, 3 workers from the same bunker and 3 workers from the same coal handling plant were not regularised. The Appellant failed to establish any distinction between the two sets of workers. Therefore, the Industrial Tribunal was justified in holding that the nature of the duties performed by the remaining 13 workmen is also perennial and regular in nature.

It was observed by the Supreme Court that even if a settlement was arrived at with respect to some of the workmen, the Industrial Tribunal was tasked to examine the entire reference and give independent findings on the dispute. Hence, the Industrial Tribunal was justified in giving its award on the reference made by the Central Government. This answers the objection raised by the Appellant about the jurisdiction of the Industrial Tribunal.

It was also observed by the Supreme Court that in the present case, the denial of regularisation of the 13 workers was wrongful and the workmen had no fault in it. The Supreme Court upheld the order of the Industrial Tribunal for regularizing the workmen and observed that said workmen are entitled to back-wages with a modification to the order of the Industrial Tribunal and confining the calculation of the back-wages from May 23, 2002, that is, the date of the order of the Industrial Tribunal as the Supreme Court took into consideration the public interest as well the litigation between the parties which has been pending since a long period of time, thereby causing an adverse impact on the Appellant as well as the workmen.

Decision of the Supreme Court

The Supreme Court, while dismissing the appeals, upheld the decision of the Industrial Tribunal and regularised the remaining 13 workers. The Supreme Court also ordered that there would be no order restricting the wages of the said workers. Further, the Supreme Court ordered the calculation of backwages for the workers from May 23, 2002, that is, from the date of the order of the Industrial Tribunal.

VA View:

The Supreme Court has rightly held that the workers who perform any work which
is permanent or perennial in nature would not be considered as a contract worker and therefore, ordered the regularization of the said workers.

The decision of the Supreme Court has provided relief to the workers who are arbitrarily considered as contractual labourers in spite of being engaged in work of permanent or perennial nature. The observation of the Supreme Court emphasizes that such workers should not be deprived of the opportunity of job regularization. By way of this judgment, the Supreme Court has protected and uplifted the spirit of the labour legislations which are regarded as welfare legislations, by ensuring that the workers are not discriminated and deprived of their statutory rights.

For any query, please write to Mr. Bomi Daruwala at [email protected]