Regularization Issue Must Be Resolved by Industrial Tribunal: Karnataka High Court puts recruitment on hold for a month, calls for review of contract workers’ status

In a significant ruling, the Karnataka High Court has partially allowed a writ petition by contract workers of BEML Ltd., directing that the recruitment notification for Group-C positions be put on hold for one month. The court emphasized that the issue of regularizing contract workers should be adjudicated by an industrial tribunal rather than the court. This decision underscores the judiciary’s stance on the procedural rigor required in employment regularization disputes.

The writ petition was filed by multiple trade unions representing the contract workers of BEML Ltd., challenging a recruitment notification for Group-C positions. The petitioners argued that many contract workers, who had been performing similar duties as permanent employees for extended periods, were excluded from the recruitment process. They sought regularization of their employment, citing unfair treatment and the arbitrary nature of the recruitment notification.

The court underscored that issues related to the regularization of contract workers fall within the purview of industrial tribunals. Justice K.S. Hemalekha, delivering the judgment, stated, “The appropriate remedy for the petitioners is to approach the industrial tribunal for declaring that the contract labour system under which they were employed was a camouflage and that they are direct employees of BEML Ltd.”

The court critically examined the fairness of the recruitment notification that excluded long-serving contract workers. “If the contract workers are qualified and have been performing satisfactorily, there are concerns of fairness in not offering them the opportunity to apply for these positions,” noted Justice Hemalekha. The court directed a review of the contract workers’ eligibility for regularization and mandated that the recruitment process be conducted in a fair and transparent manner.

Justice Hemalekha referred to the principles laid down in previous Supreme Court judgments, notably in the cases of Steel Authority of India Ltd. V. Union of India and Secretary, State of Karnataka and others v. Umadevi and Others. The court reiterated that the Contract Labour (Regulation and Abolition) Act, 1970, provides a complete code for addressing such disputes and that the determination of employer-employee relationships is a factual question best resolved by industrial adjudicators.

Justice Hemalekha remarked, “The CLRA Act is a complete code by itself, and the question about the relationship of the employer and the employee depends upon a large number of factors. An industrial adjudicator would have jurisdiction to determine this issue.” She further emphasized, “The recruitment process for Group-C positions must be reviewed to ensure it is conducted in a fair and transparent manner, keeping in mind the rights of the contract workers.”

The Karnataka High Court’s decision to refer the regularization issue to an industrial tribunal while putting the recruitment notification on hold highlights the judiciary’s commitment to ensuring fairness in employment practices. By directing a review of the contract workers’ status, the court has set a precedent for addressing similar disputes in the future. This ruling is expected to impact how companies manage their contract labor and handle recruitment processes, reinforcing the importance of adhering to statutory regulations and fair practices.

Date of Decision: June 21, 2024