2025 Supreme(Jhk) 2334

IN THE HIGH COURT OF JHARKHAND AT RANCHI
SANJAY PRASAD, J.
Damodar Valley Corporation through its Chairman - Petitioner
Versus
Their Workmen represented by DVC Staff Association, Dhanbad Unit – Respondent
W.P.(L) No. 4791 of 2006
Decided On : 22-08-2025

When a management utilizes a contract labor system as a mere camouflage to exercise direct control and supervision over workers performing perennial duties, the court may pierce the corporate veil to recognize a direct employer-employee relationship, mandating the regularization of long-serving casual workers to ensure constitutional fairness.

Headnote:(A) Industrial Disputes Act, 1947 - Industrial adjudication - Regularization of casual laborers - Writ jurisdiction of High Court under Article 226 - Scope of - Where findings of fact are arrived at by the Tribunal based on material evidence, a writ court exercising supervisory jurisdiction cannot interfere with such findings as if it were an appellate court unless the decision is perverse or illegal. (Paras 87-91)

(B) Contract Labor - Sham/Camouflage contact - Where no valid agreement with contractors exists and the management exercises direct control, supervision, and payment of wages, the system of engaging workers as 'job contract laborers' is a mere camouflage to deprive workers of their legitimate status and dues - Such arrangements cannot be used to defeat the right to regularization. (Paras 16, 17, 21, 22)

(C) Regularization of Service - Long-serving employees who have rendered service for over two decades without interruption are entitled to regularization in the permanent cadre of the lowest category - Denial of benefits to such long-standing workers while engaging them in perennial nature of employment constitutes exploitation and an arbitrary exercise of power. (Paras 99, 100, 107-110)

Facts of the case:
The dispute involves a group of laborers engaged in colony maintenance, plantation, and beautification work for several decades. Management challenged the Tribunal’s award of regularization, arguing that the workers were employed through various job contractors on a temporary, seasonal basis, and thus no direct employer-employee relationship existed. The workmen contended that the 'contract system' was a facade, noting that their work was perennial, their attendance was maintained by officials, and their wages were paid directly by the establishment. The Tribunal concluded that the contract system was a total sham and recognized the direct employer-employee relationship.

Findings of Court:
The court found no perversity in the Tribunal’s findings. The evidence demonstrated that management failed to identify any specific contractor or produce a valid written agreement. Given the continuous, nature-of-work performance and direct supervision by staff officials, the management’s attempt to characterize the workers as 'contractual' was rejected as an exploitative device. The continuous employment of these workers over two decades warranted their regularization into the lowest regular cadre with parity in pay.

Issues: Whether the industrial tribunal reached an erroneous conclusion regarding the employer-employee relationship by ignoring the existence of independent contractors, and whether the direction for regularization and payment of equal wages was legally sustainable for employees engaged initially on a temporary basis.

Ratio Decidendi: The finding of an employer-employee relationship based on the actual exercise of control and supervision is a factual determination within the exclusive domain of the Tribunal. When a contract labor system is identified as a camouflage to bypass statutory obligations, the court must prioritize the reality of the work relationship over the label assigned by the management. Employees who have rendered service for decades in a perennial role have a legitimate right to be regularized to prevent arbitrary and exploitative treatment.

Result: Writ petition dismissed; Industrial Tribunal award upheld.

Table of Content
1. determination of employer-employee relationship in disputed job-contract systems. (Para 1 , 2 , 3 , 5 , 7)
2. procedural compliance and evidence assessment in industrial disputes. (Para 4 , 9 , 10 , 11 , 12 , 13 , 14 , 15)
3. evidentiary validation of perennial employment relationships. (Para 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50 , 51 , 52 , 53 , 54 , 55 , 56 , 57 , 58 , 59 , 60 , 61 , 62 , 63 , 64 , 65 , 66 , 67 , 68 , 69 , 70 , 71 , 72 , 73 , 74 , 75 , 76 , 77 , 78 , 79 , 80 , 81 , 82 , 83 , 84 , 85 , 86 , 87 , 88)
4. supervisory writ jurisdiction for affirming tribunal findings. (Para 89 , 90 , 91 , 92 , 93 , 94 , 95 , 96 , 97 , 98 , 99 , 100 , 101 , 102 , 103 , 104 , 105)
5. finalization of regularization orders for long-term contract workers. (Para 106 , 107 , 108 , 109 , 110 , 111 , 112 , 113)

JUDGMENT :

This writ petition has been filed on behalf of the Management Company for issuance of appropriate writ in the nature of Certiorari for quashing the order of the Reference made by the Government vide notification No. 3/D1-18029/96-L.E. & T.-934, and to set aside the Award dated 29.04.2006 passed by the learned Presiding Officer, learned Industrial Tribunal, Ranchi in Ref. Case No.9/96.

2. In brief, the case of the Management of Damodar Valley Corporation (for short Management- D.V.C.), as stated in its written statement, is that there was no material before the State Government and the State Government without applying its mind and without being satisfied, referred the dispute for adjudication and the reference has been made on misrepresentation of facts and misconception, hence the reference is bad in law.

It is further stated that there is no employer-employee relationship between the parties. It is further case of the management that the concerned workers are not casual workers employed directly by the D.V.C. rather they are workers of Contractors and they work on the job contract system under the control and supervision of one Gang Leader. They choose the Gang Leader from amongst themselves and their work is measured and entered in the Measurement Book. The payment is received by the Gang Leader and he distributes the money to his companion workers who are employed by the Gang Leader. The system includes award of work through verbal negotiations with the party leaders to complete the job as per technical estimate and on completion of work, measurement is taken and complete payment is made as per scheduled rate against each item of work done. It is further stated that they are engaged at Panchet under land scaping and colony beautification through job contract system. The work of land scaping and colony beautification is of seasonal nature and the job is awarded to Gang Leader, who is the real contractor on mutually agreed terms verbally and payment is made to the party leader through Hand Receipt on the basis of work done duly measured and recorded in the measurement book. These job contractors are not on the roll of D.V.C. and they are not casual labourers engaged by D.V.C. It is also stated and asserted that the persons named in the Reference accept this position that they are working on job contract basis. It is well settled principle that the contract labour cannot claim regularization when they are paid their wages through contractor and they cannot raise industrial dispute either before or after abolition of contract labour. It is further stated that D.V.C. has got registration under the Contract Labour (Regulation and Abolition) Act (hereinafter referred to as 'Contract Labour Act) and the Director, Soil Conservation Department at Hazaribagh is the registered Principal Employer as per Contract Labour Act and the Gang Leader/contractor is employing less than 20 workers, so the licence is not required. It is also stated that even if there is no registration and the lice

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