Are workmen employees of the contractor alone where the labour contract under the Contract Labour (Regulation and Abolition) Act, 1970 is genuine and neither sham nor nominal?

(Judgment of this Court was delivered by C.V.KARTHIKEYAN, J.) These Writ Appeals have been filed by both the petitioners and by the respondents in a batch of Writ Petitions, wherein, a common order was passed by a learned Single Judge of this Court on 20.08.2025.

There are totally 135 Writ Appeals out of which, 73 have been filed by the workmen/petitioners in the Writ Petitions and 62 have been filed by the management/respondent in the Writ Petitions.

The workmen had raised an Industrial Dispute under Section 2-A of the Industrial Disputes Act, 1947, before the Labour Court at Tiruchirappalli. The respondent/management and the contractor, whom the management claimed, had engaged the workmen, were also impleaded as respondents.

It was the contention of the workmen that they were the employees of the management and not of the contractors. The management, however, had taken a contrary stand and contended that the workmen had been engaged only by the contractor under specific contract entered into between the management and the contractor. The management claimed that there was no privity of employer-employee relationship between them and the workmen.

The Labour Court had returned an award on 22.10.2012 holding that the workmen were employees of the contractor and not of the management. The workmen challenged the said award by filing separate Writ Petitions.

The learned Single Judge by a common order, dated 20.08.2025, confirmed that finding of the Labour Court and held that the workmen were not direct employees under the management and that the contract labour system incorporated by the management was legitimate and not sham and nominal. The learned Single Judge, however, further held that the workmen were employees of the management under other Statutes and therefore, directed the management and the contractor to jointly pay a sum of Rs,5,00,000/- to each workman over and above the compensation determined by the Labour Court. Aggrieved by the finding that the workman were not direct employees of the management and that they had been employed only by the contractor, the workmen have filed 73 separate Writ Appeals. The management was also aggrieved with that part of the common order which held that the workmen were employees under the management under other Statutes and were also further aggrieved by the further direction to jointly pay along with the contractor a sum of Rs.5,00,000/- to each one of the workmen. They have filed 62 Writ Appeals with respect to the 73 workmen.

Arguments have been heard in extension advanced by Mr.A.L.Somayaji, learned Senior Counsel and Mr.Krishna Srinivasan, learned Senior Counsel for the management, Mr.Balan Haridas, learned Counsel for the workmen, Mr.M.P.Senthil, learned Government Pleader for the official respondents and Mr.M.E.Ilango, learned Counsel for the contractor.

M/s.Tractor and Farm Equipment Limited (hereinafter referred to as TAFE) is a company involved in the manufacture of tractors and farming equipment used for agriculture. They had a manufacturing unit among other places at Kalladipatti in Dindigul District. Till about June 1998, they had a contractual agreement with M/s.George Oaks Limited, Madurai for engaging labours for assembling the tractors. Thereafter, from 01.06.1998, they commenced manufacturing activity at Kalladipatti plant.

The erstwhile contractor, M/s.George Oaks Limited, Madurai, sought continuation of their agreement to supply labourers. It should also be noted that both TAFE and the contractor had obtained registration certificate under the Contract Labour (Regulation and Abolition) Act, 1970, permitting them to engage labourers through a contract. Quite apart from M/s.George Oaks Limited, Madurai, other former contractors also approached TAFE stating that they would also provide labourers. The contractors were responsible for payment of wages, provident fund and other statutory dues.

Contending that the workmen were also engaged in the manufacturing activity at Kalladipatti plant and that they were not just involved in assembly line work, but also actually in the manufacturing activities and further claiming that they were directly employed by TAFE at Kalladipatti Plant, the workmen raised an Industrial Dispute under Section 2-A of the Industrial Disputes Act, 1947.

The Labour Court, as stated above, in its award did not recognize the status of the workman as direct employees of TAFE, but rather held that they were employed by the contractors. It was held that they were entitled for compensation only from their respective employers/contractors. The Industrial Dispute was dismissed against TAFE. This award was put to test before a learned Single Judge by the workmen by filing a series of Writ Petitions.

The learned Single Judge in his common order took up for consideration the only issue, namely, whether the Writ Petitioners were workmen of TAFE or workmen under the contractors under various legislations. The learned Single Judge had also noted that the Writ Petitioners have been orally terminated by the contractors owing to which, they had raised a dispute before the Labour Court. The learned Single Judge noted that there was no dispute that both TAFE and the contractors were registered under the Contract Labour (Regulation and Abolition) Act, 1970 and that no notification had been issued by the Government prohibiting TAFE from engaging contract labourers. The leaned Single Judge thereafter came to a definite conclusion as follows:

This would effectively mean that the learned Single Judge had acknowledged the existence of a valid contract between TAFE and contractors and that the said contract was only to engage workmen as labourers.

In paragraph No.11, it had been however held as follows:

In paragraph No.17, the learned Single Judge further examined whether the contract between TAFE and the contractors was sham and nominal and returned a finding that they were not sham and nominal. In paragraph No.17, the learned Single Judge had observed and held as follows:

In paragraph No.19, after extracting the relevant portion of the award of the Labour Court, it was held as follows:

The learned Single Judge then examined the dictum of the Hon'ble Supreme Court in Steel Authority of India Ltd., & Others vs. National Union Water front workers & others, reported in, (2001) 7 SCC 1 and held that there was no notification issued under Section 10(1) of the Contract Labour (Regulation and Abolition) Act, 1970.

The leaned Single Judge also examined the dictum of the Hon'ble Supreme Court in Gujarat Electricity Board vs. Hind Mazdoor Sabha & Others, reported in (1995) 5 SCC 27 and again came to a conclusion that there was no material to hold that the contract between TAFE and the contractors were sham and nominal. It was held in paragraph No.23 of the common order of the learned Single Judge, which is as follows:

A similar conclusion had been reached on examining the dictum laid down in D.C.Dewan Mohideed Sahib & Sons vs. The Industrial Tribunal, Madras, reported in (1964) 2 LLJ 663 and Secretary, HSEB vs. Suresh & Others, reported in (1999) 3 SCC 601.

Thus, the learned Single Judge had come to a definite conclusion that the contract between TAFE and the contractors were lawful and certainly not sham and nominal. The only conclusion, which should follow was that the workmen were employees of the contractor and not of TAFE.

However, the learned Single Judge then placed reliance on earlier common order passed by him, in an unconnected W.P.(MD)Nos.4018 of 2017, etc. batch, dated 09.07.2025 and extracted a portion from therein, wherein, it had been held that under the Tamil Nadu Industrial Establishment (Conferment of Permanent Status to Workmen) Act, 1981, it was clear like cloudless sky that to avail the benefit under the said Act, it was immaterial to consider whether a workman was a contract workman or non contract workman of the company and it would suffice, if it is found that he had worked for a period of 480 days out of 24 months either directly or indirectly through contractors with the company and if that condition is satisfied, the workman should be declared as a permanent workman under the company.

With respect to the workmen, in the instant cases, it was held that they had worked for more than seven years, which was more than the minimum period as prescribed under the Tamil Nadu Industrial Establishment (Conferment of Permanent Status to Workmen) Act, 1981 and though they had not claimed permanency before the Labour Court, but only had sought a declaration that they were employees of TAFE, the learned Single Judge still held that the workmen were entitled to avail the legal entitlements under the Tamil Nadu Industrial Establishment (Conferment of Permanent Status to Workmen) Act, 1981. Thereafter, in paragraph Nos.36, 37 and 38, the learned Single Judge had held as follows:

The workmen have now filed Writ Appeals now under consideration on the ground that the learned Single Judge should have held that they are workmen engaged directly under TAFE. The management/TAFE, for good measure, have also filed Writ Appeals contending that the workmen were not entitled to any benefit from them, but could rather avail any benefit only through the contractors.

Mr.A.L.Somayaji, learned Senior Counsel for the appellant/management pointed out the finding of the learned Single Judge that the contract between the management/TAFE and the contractors were not sham and nominal and that both the management/TAFE and the contractors were registered under the Contract Labour (Regulation and Abolition) Act, 1970 and that no notification had been issued under Section 10(1) of the Act by the Government prohibiting engagement of contract labourers. The learned Senior Counsel argued that in the teeth of such definite findings by the learned Single Judge, the only further conclusion that should have been reached was that the workmen were employed by the contractors alone and not directly by the management/TAFE.

The learned Senior Counsel stated that the learned Single Judge had unfortunately steered off the main course and had suo motu examined the provisions of the Tamil Nadu Industrial Establishment (Conferment of Permanent Status to Workmen) Act, 1981, without any arguments advanced on those lines either on behalf of the workmen or on behalf of the management, to hold that the workmen were however entitled to be declared as permanent workmen under the management/TAFE. The learned Senior Counsel was emphatic in his submission that the basis on which this conclusion was reached was not on the facts of this particular case, but on the basis of an earlier order of the very same learned Single Judge in another unrelated batch of Writ Petitions.

It was further argued by the learned Senior Counsel that the learned Single Judge had not expressed any opinion that he would be relying on the said order and therefore, no opportunity was available to determine the fact of that particular case and to advance arguments as to how the facts in that batch of Writ Petitions were distinguishable from the facts of the Writ Petitions herein.

The learned Senior Counsel placed reliance on the judgment of the Hon'ble Supreme Court reported in (2014) 9 SCC 407 in the case of Balwant Rai Saluja and another vs AIR India Limited and others, and laid particular stress on the observation in paragraph No.65, which is as follows:

In the instant case, the learned Senior Counsel pointed out that the contract between the management/TAFE and the contractors have been held as lawful. He therefore, contended that the contractors had engaged the workmen under the said contract. It was the contractor alone who had responsibility to pay salary and other statutory dues and who had authority to take disciplinary action including dismissal and had authority to exercise control and supervision of the workmen. The learned Senior Counsel argued that the Management/TAFE had no say whatsoever in the aforementioned aspects.

The learned Senior Counsel also placed reliance on the judgment of the Hon'ble Supreme Court reported in (2004) 3 SCC 514 in the case of Workmen of Nilgiri Cooperative Marketing Society Limited -vs.- State of Tamil Nadu and others, and placed specific reference to paragraph Nos.47 and 50, which were as follows:

The learned Senior Counsel pointed out that the burden was entirely on the workmen to prove that they were directly employed by the management/TAFE. The Labour Court had rendered a finding that such burden had not been discharged. The learned Single Judge had also affirmed that particular finding. The learned Senior Counsel therefore argued stated that the further finding of the learned Single Judge that the workmen, irrespective of whether they were employed directly or indirectly, should be granted permanent status and therefore, should be considered as employees of management/TAFE, is a finding which should be set aside by this Court, as not even being the case of the workmen before the Labour Court.

The learned Senior Counsel placed stress on the fact that the Government had never issued any notification under Section 10(1) of the Tamil Nadu Industrial Establishment (Conferment of Permanent Status to Workmen) Act, 1981 and pointed out that in the absence of any such notification, a finding could never be given that the workmen were directly employed by the management/TAFE.

Mr.Krishna Srinivasan, learned Senior Counsel supplemented the arguments of Mr.A.L.Somayaji and further pointed out that in the order of the learned Single Judge, after rendering a definite finding about the genunity of the contract between the management/TAFE and the contractors, the learned Single Judge had however proceeded to examine whether the workmen could be granted permanent status, when such relief was never even claimed before the Labour Court. The learned Senior Counsel argued that a relief which was never sought had been granted by the learned Single Judge and the fact that the learned Single Judge was inclined to do so, was not even during the arguments.

The learned Senior Counsel placed reliance on the judgment of the Hon'ble Supreme Court reported in (2023) 1 SCC 463, in the case of Kirloskar Brothers Limited -vs.- Ramcharan and others, wherein, the Hon'ble Supreme Court had held as follows:

The learned Senior Counsel pointed out that even in the instant case, the learned Single Judge having come to a definite conclusion that the contract was not sham and not nominal had however traversed further and had come to a conclusion that the workmen are entitled to be considered as workmen under the management/TAFE and should be considered as permanent workmen. The learned Senior Counsel stated that this finding of the learned Single Judge runs directly contrary to the law laid down by the Hon'ble Supreme Court.

Both Mr.A.L.Somayaji and Mr.Krishna Srnivasan, learned Senior Counsels in one voice stated that the finding of the learned Single Judge in that regard, namely, that the workmen were either directly or indirectly employed by the management/TAFE and that therefore, both the management/TAFE and the contractors were jointly liable to pay compensation of Rs.5,00,000/- over and above the compensation rendered by the Labour Court should be set aside and to that extent, the Writ Appeals filed by the management/TAFE should be allowed.

Mr.Balan Haridas, learned Counsel for the workmen however denied and disputed the said contentions. The learned Counsel took the Court through the facts of the case. He pointed out that the workmen were engaged even when the management was only assembling tractors and later, when they moved to manufacturing unit at Kalladipatti, Dindigul District, their services were continued to be utilised and they were directly involved in the manufacturing activity. The learned Counsel pointed out that this circumstance is a strong factor to hold that the workmen were directly employed by the management/TAFE and not through the contractors.

In this connection, the learned Counsel placed reliance on the judgment of the Hon'ble Supreme Court reported in (2011) 6 SCC 584 in the case of Devinder Singh -vs.- Muncipal Council, Sanaur, wherein, the definition of “workman” under Section 2(s) of the Industrial Disputes Act, 1947, had been taken up for discussion and it was held as follows: 12. Section 2(s) contains an exhaustive definition of the term “workman”. The definition takes within its ambit any person including an apprentice employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward and it is immaterial that the terms of employment are not reduced into writing. The definition also includes a person, who has been dismissed, discharged or retrenched in connection with an industrial dispute or as a consequence of such dispute or whose dismissal, discharge or retrenchment has led to that dispute. ............”

The learned Counsel further argued that M/s.George Oaks Limited was a group company of Amalgamations of which TAFE was also a part and pointed out that therefore, the line between M/s.George Oaks Limited and TAFE was blurred and for all practical purposes, the workmen were only employed by TAFE and not by M/s.George Oaks Limited. He pointed out even earlier, the workmen were doing the same nature of work of assembling tractors and after the manufacturing unit commenced at Kalladipatti plant, the main work of manufacturing was only done by the same workmen. The learned Counsel argued that therefore, the workmen had integrated into the system. He also pointed out that these were the only workmen engaged in the manufacturing activity and there were no other permanent workmen employed directly by TAFE.

In this connection, the learned Counsel pointed out the order passed in I.A.No.282 of 2012 filed before the Labour Court calling upon the management/TAFE to produce documents including the attendance and wage registers of direct workmen who were claimed to be in permanent workmen, registers of adult workers, half yearly return in Form-21 maintained and sent to the Inspectors of Factories under the Tamil Nadu Factories Rules, 1998, the annual return in Form-22 maintained and sent to the Inspectors of Factories under the Tamil Nadu Factories Rules, 1998, the register of contractors in Form XII, the form forwarded to the Inspector of Tamil Nadu Contract Labour Rules, 1998 and to the authority under the Tamil Nadu Contract Labour Rules, the register of workmen under the Tamil Nadu Industrial Establishment (Conferment of Permanent Status to Workmen) Act, 1981 and the half yearly returns sent by the management to the authority under the said enactment.

The learned Counsel pointed out that though this application in I.A.No.282 of 2012 was allowed by the Labour Court, the management/TAFE did not produce any of the records and it was therefore, argued that adverse inference should be drawn against the management/TAFE, that the said records had not been produced only because if they had been produced, they would speak adverse to the management/TAFE.

The learned Counsel further pointed out that the provident fund was actually paid only by the management/TAFE and not by the contractors. In this connection, he placed reliance on the reply received under the Right to Information Act, that the establishment, namely, TAFE had remitted the dues upto September 2004. The learned Counsel pointed out that the management/TAFE had indulged in unfair labour practice to deny the lawful benefits to the workmen.

The learned Counsel placed reliance on the judgment of the Hon'ble Supreme Court reported in (2004) 1 SCC 126 in the case of Ram Singh and others -vs.- Union Territory, Chandigarh and others, wherein, it had been held as follows:

The learned Counsel pointed out that this Court should take a pragmatic view of the Integration Test should hold that the workmen had been integrated into the main manufacturing activity of the management/TAFE and that therefore, they were workmen directly engaged by TAFE and not by anybody else.

The learned Counsel further placed reliance on the judgment of the Hon'ble Supreme Court reported in (2018) 9 SCC 464 in the case of Food Corporation of India -vs.- General Secretary, Food Corporation of India Employees Union and others, with specific reference to paragraph No.19, which was as follows: 19. In our opinion, the very fact that the appellant FCI failed to adduce any evidence to prove their case, the Industrial Tribunal was justified in drawing adverse inference against them. Indeed, nothing prevented the appellant from adducing evidence to prove the real state of affairs prevailing in their set up relating to these workers. It was, however, not done by FCI for the reasons best known to them. It was not the case of the appellant FCI that they were not afforded any opportunity to adduce evidence and nor any attempt was made by the appellant to adduce any evidence in the writ petitions or in the intra-court appeals and lastly even in these appeals to prove their case.”

In the instant case, the learned Counsel pointed out that the management/TAFE had failed to adduce any evidence and as a matter of fact, failed to produce documents which were directed to be produced to prove that there were other permanent workmen and therefore, argued that the only inference should be drawn was that the workmen were direct employees of the management/TAFE.

The learned Counsel further placed reliance on the judgment of the Hon'ble Supreme Court reported in (2025) 4 SCC 321 in the case of Maharashtra State Road Transport Corporation -vs.- Mahadeo Krishna Naik, relating to suppression of material evidence before the Court and argued that when there is suppression, it should be held that the suppression was deliberate to avoid presenting the correct facts before the Court. Though this judgment related to a criminal appeal, the learned Counsel placed reliance on the above dictum by pointing out that the management/TAFE had not produced the records though directed to do so by the Labour Court while allowing the interlocutory application filed seeking production of records.

The learned Counsel further placed reliance on the judgment of the Hon'ble Supreme Court reported in (2022) 20 SCC 505 in the case of Oil and Natural Gas Corporation Limited -vs.- President, Oil Field Employees Association and others, wherein, it had been held as follows:

The learned Counsel contended that even in the instant case, the workmen were directly employed only by the management/TAFE and therefore, they should be entitled for pay on par with other workmen of TAFE.

The learned Counsel further placed reliance on the judgment of the Hon'ble Supreme Court, which was also cited by the learned Single Judge, namely, Steel Authority of India Ltd., & Others vs. National Union Water front workers & others, reported in, (2001) 7 SCC 1, wherein, it is held as follow:

It must however be pointed out that a notification under Section 10(1) of the Tamil Nadu Industrial Establishment (Conferment of Permanent Status to Workmen) Act, 1981 can only be issued only by the Government and it is an admitted fact that no such notification had been issued and this that had also been confirmed by the learned Single Judge. We would therefore immediately state that this judgment is not applicable to the facts of this case.

The learned Counsel also placed reliance on the very same proposition of the judgment of the Hon'ble Supreme Court reported in (1995) 5 SCC 27 in the case of Gujarat Electricity Board vs. Hind Mazdoor Sabha & Others, which had also been cited by the learned Single Judge. It was held by the learned Single Judge that the dictum laid therein would not be applicable to the facts of the case. The judgment it related to a finding whether the labour contracts were genuine or not. In the instant case, the learned Single Judge had come to a very definite conclusion that the labour contracts were genuine. We therefore hold that the reliance on this particular judgment is misplaced.

The learned Counsel finally urged that this Court should hold that the workmen were directly employed by the management/TAFE and not under the contractors.

We have given our careful consideration to the arguments advanced and perused the materials records.

These Writ Appeals have been filed by both the workmen and also by the management questioning separate findings in the common order dated 20.08.2025 of the learned Single Judge in a string of Writ Petitions.

The workmen have filed 73 appeals and the management/TAFE has filed 62 appeals with respect to 73 workmen.

TAFE is engaged in manufacture of tractors used for agriculture purposes and farm equipment. They have manufacturing units at various places within the State. They had an Unit assembling tractors at Kalladipatti in Dindigul District. Till May 1998, they engaged workmen through their contractor, M/s.George Oaks Limited. On and from 01.06.1998, they commenced manufacturing tractors at the said plant.

It is the case of the management that the erstwhile contractor, M/s.George Oaks Limited and other contractors sought extension of the contract to provide labourers for the manufacturing unit. The workmen herein were engaged in the manufacturing activity.

The issue is whether they were directly engaged by TAFE or whether they were contract labourers under the contractor.

Both TAFE and the contractor had registered themselves under the Contract Labour (Regulation and Abolition) Act, 1970. They were, thus, permitted to engage contract labourers and to supply contract labourers to the company. This assertion is not in dispute.

The entire issue arose out of an Industrial Dispute raised by the workmen under Section 2-A of the Industrial Disputes Act, 1947 before the Labour Court, Tiruchirappalli claiming that they were engaged in the same manufacturing activity even in Kalladipatti Plant at Dindigul and that they should therefore, be considered as direct employees of TAFE and not of the contractors.

It is pertinent to point out that they never claimed the status of permanent workmen.

The examination of the issue whether the workmen were direct employees of TAFE or had been engaged by the contractor would involve first determining whether TAFE and the contractors were registered under the Contract Labour (Regulation and Abolition) Act, 1970 and whether the agreement between the two of them were genuine or sham and nominal. A finding had been rendered by both the Labour Court and by the learned Single Judge that this contract between TAFE and the contractors were genuine and not sham and nominal.

This finding is challenged by the workmen in the present appeal by pointing out that during the proceedings before the Labour Court, they had filed an application in I.A.No.282 of 2012 calling upon the management/TAFE to produce a series of documents relating to employment of permanent workmen and the forms submitted to the various authorities. They had sought the following documents:

This application was allowed by the Labour Court. But the documents were not produced by the management/TAFE on the ground that they were not available. It had been urged before the Labour Court and also before the learned Single Judge that this stand of the management/TAFE should be deprecated and an adverse inference should be drawn that the documents had not been produced only because if produced, they would speak adverse to the case of the management/TAFE.

It is to be surmised that arguments were focussed on the presumption to be drawn under Section 114(g) of the Indian Evidence Act, 1977. However, before such a presumption is to be drawn, the Court should render a finding that the documents are relevant and that the documents if produced, would establish that the workmen were engaged directly by the management/TAFE and that therefore, such records are required.

Further, a notice under Order XII Rule 8 CPC should have been issued to produce the documents. None of such procedure had been followed. In the order in the Interlocutory Application, the Labour Court had not rendered any finding that the documents were required for proper adjudication of the issues under consideration. A docket order alone was passed that the interlocutory application stood allowed. No particular finding was given by the Labour Court. We are of the firm opinion that in the absence of any finding by the Labour Court on the requirement of the documents, no inference can be drawn that the said documents, if produced would establish the case of the workmen that they were directly employed by the management/TAFE.

Even a careful perusal of the cross examination of the witnesses for the management would show that there was a specific assertion by the witness that the workmen were employees of the contractors and not of management/TAFE and this assertion had not been suggested to be false.

A further argument was advanced on behalf of the workmen that they were direct workmen is based on the concept of integration. Mr.Balan Haridas, learned Counsel for the workmen placed strong reliance on this particular aspect and pointed out that the workmen were engaged by the contractor, M/s.George Oaks Limited even prior to the commencement of the manufacturing unit at Kalladipatti in Dindigul District. They were at that point of time engaged in assembling the tractors.

It is the case of the learned Counsel that when the manufacturing unit was established, the same workmen were engaged in the manufacturing activity. He pointed out that there were no other workmen employed by TAFE and it was under those circumstances, he had also placed reliance on the non production of the documents, as sought for. He also elaborately argued that since the workmen continued to work in the manufacturing unit and since they were involved in core manufacturing activity, they became integrated with TAFE and that therefore, they must be considered to be employees or workmen under TAFE.

In this connection, the learned Counsel had placed reliance on the judgment of the Hon'ble Supreme Court reported in (2004) 1 SCC 126 (Ram Singh and others) referred supra, and more particularly, to paragraph No.15, which had been extracted above. It had been held that the test of control alone is not the only test to determine whether a workman was directly employed or employed in contract, but integration test is also one of the legal tests. In this connection, he further pointed out that the provident fund for the workmen had been paid only by TAFE and this is evidenced in a reply under the Right to Information Act.

The learned Counsel further pointed out the judgment of the Hon'ble Supreme Court reported in (2018) 9 SCC 464 (Food Corporation of India) referred supra, and more particularly, to paragraph No.19 extracted above. The fact that Food Corporation of India had not let in adequate evidence was frowned upon by the Hon'ble Supreme Court.

Placing his arguments on these grounds, Mr.Balan Haridas stated that the Court should come to a conclusion that the workmen were directly employed by TAFE.

We have considered the arguments advanced. It must be however pointed out that the burden of establishing this fact is on the workmen, as pointed by the Hon'ble Supreme Court in the judgment relied on by Mr.A.L.Somayaji, reported in (2004) 3 SCC 514, (Workmen of Nilgiri Cooperative Marketing Society Limited) referred supra, wherein, in paragraphs Nos.47 and 50, which had also been extracted above, it had been held that the burden of proof of a plea of existence of a relationship of employer and employee was on the person who sets up such plea. It had also been held that it is purely a question of fact and the High Court while exercising its power of judicial review shall not interfere thereon, unless the finding is manifestly or obviously perverse or erroneous.

The leaned Senior Counsel in this regard had also placed reliance on the judgment of the Hon'ble Supreme Court reported in (2014) 9 SCC 407, referred supra, wherein, in paragraph 52 extracted above, it had been stated that the Court must apply its test of administrative control.

It had also been held by the Hon'ble Supreme Court in (2023) 1 SCC 463 (Balwant Rai Saluja and another), referred supra, that once it had been found that the contract between the management and the contractor was not found to be sham and nominal, then the only conclusion which should be reached was that the workmen were employees of the contractor and of none other.

In the instant case, it is an admitted fact that the workmen were employed by M/s.George Oaks Limited prior to the establishment of the manufacturing unit at Kalladipatti. They continue to work after establishment of the manufacturing unit. They have however not produced any evidence to prove that their employment under the contractor had been terminated and they had been appointed afresh in the manufacturing unit by TAFE. The burden was entirely on them to produce necessary evidence in this regard. They had to produce necessary evidence establishing direct nexus between them and TAFE. Unfortunately, they have failed to discharge such burden.

We hold that mere reliance on the failure of TAFE to produce documents, as directed in the interlocutory application, would not advance the case of the workmen. Even the procedure to be followed to draw inference against TAFE had not been followed. A notice to produce documents had not been issued. The Labour Court had not rendered a finding that these documents are required to determine the issue of fact. It was merely a docket entry allowing the said application. There is no evidence to establish direct relationship of employer-employee between the workmen and the management.

We hold that in these Writ Appeals, we should not sit in judicial review over concurrent findings of fact by both the Labour Court and by the learned Single Judge.

The learned Single Judge, after holding that the contract between the management and the contractor was neither sham nor nominal and was actually genuine and further holding that the workmen were employees under the contractors, proceeded to examine whether the workmen can be declared as permanent workmen. This relief was never sought by the workmen before the Labour Court. They never claim the status of permanency. They only claimed that they were employees of TAFE. We hold that the learned Single Judge had misdirected himself and had ventured far away from the issue on hand. He had probably been swayed by his own earlier findings in a judgment in an unrelated matter wherein the facts and even the cause title had not been disclosed or reflected in the order. There is no justification in placing reliance on an unknown order and passing an order in the instant case. The facts of the earlier Writ Petition are not known. The facts have not been disclosed. The learned Senior Counsels/Counsels have not been given any opportunity to putforth their arguments on that particular issue and finding rendered by the learned Single Judge. We hold that the learned Single Judge had deviated far away without any valid reason to hold that the workmen deserve to be granted the status of permanent workmen and therefore, they were employees of TAFE. This was never the case of the workmen themselves.

The dispute raised before the Labour Court was that they were workmen under TAFE and not under the contractor. This was the dispute which had to be resolved. While determining this issue, when the management put up a defence that there was a contract between them and the contractor, it has to be examined whether such contract was genuine or sham and nominal. It had been consistently held by both the Labour Court and by the learned Single Judge that it was genuine and it was neither sham nor nominal. Once that fact had been established, then it automatically follows that the workmen were employed only by the contractors and not by the management. We hold that the learned Single judge had taken upon himself the specious task of presenting a case on behalf of the workmen nor which was neither sought by the workmen nor called to be addressed. A dispute whether the workmen were permanent or not was never raised. It is also to be noted that no notification has been issued as required under Section 10(1) of Contract Labour (Regulation and Abolition) Act, 1970.

We hold that the further discussions regarding the provisions under the Tamil Nadu Industrial Establishment (Conferment of Permanent Status to Workmen) Act, 1981, were wholly irrelevant to the facts of the case. Even before us, the learned Counsel for the workmen had not advanced this line of argument. He concentrated only on establishing that the workmen were directly employed by TAFE and by none else. It is for this reason that he argued on the principle of integration.

We hold that no grounds have been made to establish that the workman had been employed directly by TAFE. We hold that the workmen had been employed by the contractor and by none else and particularly, not by TAFE. We uphold the consistent finding of the Labour Court and of the learned Single Judge that the contract between TAFE and the contractor was genuine and neither sham nor nominal. We hold that there was never employer-employee relationship between TAFE and the workmen. We therefore dismiss the Writ Appeals filed by the Workmen.

We set aside the findings of the learned Single Judge that the workmen were permanent and that the workmen were therefore employed by TAFE and that therefore, the management and the contractors were jointly liable to pay a sum of Rs.5,00,000/- to each one of the employees. We therefore allow the Writ Appeals filed by the management.

In result, 1)The Writ Appeals in W.A.(MD)Nos. 2864 to 2867, 2942 to 2973, 2979 to 2992, 2995 to 3000, 3002 to 3015 and 3017 of 2025 filed by the management are allowed. 2)The Writ Appeals in W.A.(MD)Nos.853 and 1103 to 1165 of 2026 filed by the workmen are dismissed. 3)There shall be no order as to costs. 4)Consequently, connected miscellaneous petitions are closed. [C.V.K., J.] & [R.S.V., J.] 11.09.2026