Gujarat High Court
Tbea Energy India Pvt. Ltd vs Gujarat Engineering And General Kamdar ... on 16 October, 2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 10400 of 2025
FOR APPROVAL AND SIGNATURE:
HONOURABLE MRS. JUSTICE M. K. THAKKER
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Approved for Reporting Yes No
✔
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TBEA ENERGY INDIA PVT. LTD.
Versus
GUJARAT ENGINEERING AND GENERAL KAMDAR UNION
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Appearance:
SENIOR ADVOCATE MR.K.M.PATEL assisted by MR.VARUN
K.PATEL(3802) for the Petitioner(s) No. 1
MR PRABHAKAR UPADYAY(1060) for the Respondent(s) No. 1
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CORAM:HONOURABLE MRS. JUSTICE M. K. THAKKER
Date : 16/10/2025
ORAL JUDGMENT
1. Rule returnable forthwith. Learned advocate
Mr.Prabhakar Upadhyay waives service of notice of Rule
on behalf of respondent.
2. The present petition is filed under Articles 226 and 227
of the Constitution of India challenging the order passed
by the learned Industrial Tribunal, Vadodara in
Reference IT No.231 of 2021 dated 28.02.2025 directing
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the present petitioner to consider 37 workmen working
on fixed term contract as permanent with effect from
01.03.2025 and to pay them all legal benefits payable as
a permanent workman.
3. The brief facts arising for consideration in the present
petition are as follows:
3.1. The petitioner is a company engaged in the
manufacturing and marketing of transformers. Due to
fluctuations in the volume of work orders and workload,
in addition to employing permanent workmen, the
petitioner company engaged certain employees on a
fixed term contract (FTC) basis. Initially, 37 workmen
were appointed as trainees, and upon completion of the
training period, they were appointed on fixed term
contracts for a period of two years. These contracts
were subsequently renewed from time to time. A dispute
was raised on behalf of the said 37 fixed term
employees, challenging the legality of their
appointments under fixed term contract (FTC) and
seeking a declaration that they be treated as permanent
employees from the date of their initial appointments.
The Commissioner of Labour, Gandhinagar, referred the
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dispute to the Industrial Tribunal on 26.07.2021, which
was registered as Reference (IT) No. 231 of 2021.
During the pendency of the said reference, four of the
fixed term contract (FTC) workmen resigned from
service, and one additional workman was relieved upon
the expiry of his fixed term contract (FTC) on
30.04.2020. The latter raised a separate industrial
dispute seeking reinstatement, which was registered as
Reference (LCV) No. 442 of 2020. In that matter, the
learned Labour Court passed an award directing
reinstatement with 20% back wages. The said award
was challenged by the petitioner by filing Special Civil
Application No. 13250 of 2023, which is currently
pending adjudication before this Court. Interim relief
was granted at the stage of issuance of notice. In the
present reference, the Industrial Tribunal, by the
impugned award, has directed that the concerned
employees be granted the benefit of permanency with
effect from 01.03.2025. The present petition has been
filed challenging the said award.
4. Heard learned senior advocate Mr.K.M.Patel for the
petitioner and learned advocate Mr.Prabhakar Upadhyay
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for the respondent.
5. Learned Senior Advocate Mr. Patel submits that
employment on a fixed term contract (FTC) basis is
expressly recognized and statutorily incorporated within
the Model Standing Orders applicable to the State of
Gujarat through the Bombay Industrial Employment
(Standing Orders) Rules, 1959 as amended by the
Gujarat Amendment Rules, 2006. By way of the said
amendment, Clause (dd) was introduced into Standing
Order 3(2)(1), classifying "fixed term employment" as a
distinct category of workmen. Further, Clause 3(2)(g)
was amended to define the term "fixed term
employment" in detail which is reproduced herein
below:-
"(g) A fixed term employment' workman is workman who has
engaged on the basis of contract of employment for a fixed
period. However, his working hours, wages, allowance and other
benefits shall not be less than that of a permanent workman. He
shall also be eligible for all statutory benefits available to a
permanent workman proportionately according to the period of
employment does not extend to the qualifying period of
employment required in the statue"
5.1. It is further submitted that the Central Government
has also amended the Industrial Employment (Standing
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Orders) Rules, 1946 through the Industrial Employment
(Standing Orders) Central (Amendment) Rules, 2018,
aligning them with the amendments carried out by the
State of Gujarat. In view of the above, learned senior
advocate Mr. Patel contends that the appointment of
workmen on fixed term contract (FTC) basis is valid,
legal, and within the employer's managerial prerogative,
and thus not open to interference by the Industrial
Tribunal. The appointments were made keeping in mind
the fluctuating workload and operational requirements
of the petitioner company. It is further submitted that
the view taken by the learned Tribunal that the
appointment of the workmen on fixed term contract
(FTC) basis was without justifiable reasons is erroneous
and unsustainable. The Tribunal lacked jurisdiction to
assess or interfere with the employer's decision
regarding the classification and appointment of fixed
term contract (FTC) employees, especially when such
classification is recognized under the applicable
statutory framework.
5.2. Moreover, learned senior advocate Mr. Patel submits
that the finding of the Tribunal that the petitioner
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committed an unfair labour practice under Item 10 of
Part I of the Fifth Schedule to the Industrial Disputes
Act, 1947, is misconceived. Item 10 pertains to acts such
as the continued employment of workers as casuals,
temporaries, or badlis with the intent to deprive them of
permanent status. However, fixed term contract (FTC)
workmen are not covered under this item. Hence,
invoking Item 10 in the context of FTC employees is
legally untenable. It is further argued that the provisions
relating to unfair labour practices as found in Sections
2(r)(a), 25T, and 25U read with the Fifth Schedule were
introduced through the Industrial Disputes (Amendment)
Act, 1982, effective from 21.08.1984. However, the
classification of fixed term contract (FTC) employees
was incorporated subsequently through amendments to
the standing orders, and therefore, Clause 10 of the
Fifth Schedule has no applicability in the case of FTC
appointments. Even otherwise, it is submitted that the
essential preconditions for invoking Item 10 are not
satisfied.
5.3. The workmen have been receiving wages, allowances,
including Dearness Allowance, and other service
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benefits on par with permanent employees. The
amended Standing Orders explicitly mandate that fixed
term contract (FTC) employees shall not be paid less
than their permanent counterparts. There is no evidence
or pleading from the workmen to establish that they
were denied any benefit available to permanent
employees. Accordingly, the contention that the
petitioner employer appointed fixed term contract (FTC)
workmen with the object of depriving them of the
privileges and benefits of permanent workmen is without
merit. The comparative table filed along with the written
statement clearly reflects parity in wages and benefits
between fixed term contract (FTC) and permanent
workmen. Learned senior advocate Mr. Patel further
submits that the mere fact that the workmen have
completed 240 days of work in each calendar year does
not by itself confer a right to permanency. The "240
days" criteria is relevant only for purposes of protection
under Section 25F of the Industrial Disputes Act, and
not for determining permanency. The Tribunal, while
recording that the appointments were made under a
recognized classification, erred in holding that fixed
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term contract (FTC) appointments are permissible only
for work which is seasonal, project-based, or of a
temporary nature. It is submitted that the fixed term
contract (FTC) appointments in the present case were
made in respect of regular work, considering
fluctuations in workload and business demands, and
such appointments are legally permissible under the
amended Standing Orders.
5.4. The Tribunal also committed an error in relying upon
the decisions in Umrala Gram Panchayat versus The
Secretary, Municipal Employees Union & Ors
reported in 2015 12 SCC 775 and Jaggo V/s. Union of
India reported in 2024 SCC Online SC 3826, as those
cases did not pertain to appointments made under fixed
term contract (FTC) classification duly recognized under
the applicable Standing Orders. In support of the
submissions, learned Senior Advocate Mr. Patel relied
upon the judgment of the Apex Court in Shankar
Chakravarti v. Britannia Biscuit Co. Ltd. reported in
1979 (3) SCC 371, wherein the Court held that the
burden to prove an allegation rests with the party
making such allegation. The test, as laid down, is
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whether the case would fail in the absence of evidence
by the party alleging the fact. Therefore, in the absence
of any specific pleadings or evidence demonstrating
exploitation or commission of an unfair labour practice,
the learned Tribunal erred in granting the reliefs in the
impugned award. In light of the above, learned senior
advocate Mr. Patel respectfully submits that the petition
deserves to be allowed, and the impugned award passed
by the Tribunal is liable to be quashed and set aside.
6. Per contra, learned Advocate Mr. Upadhyay, appearing
for the respondent workmen, submits that the petitioner
company had issued letters of engagement on a Fixed
Term Contract (FTC) basis in favour of the concerned
workmen, whose names are listed in the schedule
annexed to the reference. These workmen were
appointed to the post of Technician and have been
discharging their duties in the Production Department of
the petitioner company. It is submitted that the
concerned workmen have been rendering uninterrupted
service for a substantial period of time. The nature of
the work performed by them is permanent and
perennial, and is directly connected to the core
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manufacturing activities of the petitioner company. It is
not the case of the petitioner that the appointments
were made to complete a specific project or time-bound
assignment. Learned advocate Mr. Upadhyay further
submits that the repeated issuance of fixed term
contracts by the petitioner company, despite the
continuous and ongoing nature of the work, amounts to
an unfair labour practice as defined under the provisions
of the Industrial Disputes Act, 1947. The said mode of
appointment is adopted solely with a view to deny the
concerned workmen the legal status and benefits of
permanent employment, despite the fact that they are
performing work that is permanent in nature. It is
contended that no oral or documentary evidence was
adduced by the petitioner company to substantiate the
averments made in its written statement. Although the
appointments were ostensibly made on a fixed term
basis, many of the workmen continued in service beyond
the term of their original contracts without any formal
extension orders. During cross-examination, when
suggestions were put to the concerned workmen
regarding the non-extension of their employment, they
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denied the same. However, the petitioner failed to
produce any evidence to establish that the appointments
were, in fact, made and continued under valid fixed term
contract (FTC) arrangements renewed from time to
time. In this background, it is submitted that the learned
Industrial Tribunal has committed no error in granting
the relief of permanency to the concerned workmen, as
the facts clearly establish the existence of unfair labour
practices and the denial of legitimate rights. Hence the
petition is prayed to be dismissed.
7. Having considered the arguments advanced by the
learned advocates for the respective parties and upon
perusal of the record, it emerges that the Union has
raised an industrial dispute by filing a reference seeking
a declaration that the appointments of the concerned
workmen on a Fixed Term Contract (FTC) basis are
illegal. The Union has further prayed for a declaration
that the said workmen are required to be treated as
permanent employees of the petitioner Company and to
be extended all consequential service benefits, such as
annual increments, leave encashment, casual leave,
medical leave, national holiday leave, canteen facilities,
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uniforms, safety shoes, etc. It is noted from the record
that the initial appointments were made for the post of
ITI Trainee from different dates, for a period of one year.
Upon completion of the training period, the employees
were appointed as Trainees for a further period of two
years. These appointments were subsequently extended
from time to time and except for five employees namely,
Patel Rahul Ghanshyambhai, Patel Subhashkumar
Santosh, Trilok Kumar, Sanjay Vijayraj Yadav, and Bagul
Yogesh Pravinbhai all are working as on date.
8. The moot question for determination before this Court is
that whether the continued appointment of the workmen
on a Fixed Term Contract basis amounts to an illegal
and unconstitutional act or constitutes an unfair labour
practice under the Industrial Disputes Act, 1947? If so,
whether the concerned workmen are entitled to be
treated as permanent employees of the petitioner
Company?
8.1. In order to answer this question, reference is required
to be made to the definition of unfair labour practice as
provided under Section 2(ra) of the Industrial Disputes
Act, 1947. The said provision defines as under:-
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"[(ra) "unfair labour practice" means any of the practices
specified in the Fifth Schedule."
8.2. On referring Item No. 10 of the Fifth Schedule, it
specifies that
"To employ workmen as badlis, casuals or temporaries and to continue
them as such for years, with the object of depriving them of the status
and privileges of permanent workmen."
9. Admittedly, the term "Fixed Term Contract" (FTC)
workman is not included within the scope of Item 10. It
is pertinent to note that Section 2(r)(a) and related
provisions namely, Sections 25(T) and 25(U) were
introduced by the Industrial Disputes (Amendment) Act,
1982 (Act No. 46 of 1982), which came into effect from
21.08.1984. These provisions empower the workmen or
their unions to seek adjudication in cases involving
unfair labour practices and also prescribe penalties for
the same. Subsequent to these amendments, the
Bombay Industrial Employment (Standing Orders) Rules,
1959 were amended by the Gujarat Government in the
year 2006, wherein Rule 2(g) was inserted, defining
Fixed Term Employment which referred above. As per
the said Rule, a "Fixed Term Employment" workman is
one who is engaged on the basis of a contract of
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employment for a fixed period. However, the Rule
expressly provides that such workman shall not be
denied parity with permanent workmen in terms of
Working hours, Wages, Allowances and other service
benefits. It further stipulates that fixed term contract
(FTC) workmen shall be eligible for statutory benefits
available to permanent workmen, proportionately
according to the duration of their service, even if their
period of employment falls short of the qualifying period
under the applicable statute. Therefore, in terms of the
legal framework governing fixed term contract (FTC)
employment, such workers are to be treated at par with
permanent employees in all respects, except for the
nature of the contract duration.
10. From the written statement filed before the learned
Industrial Tribunal, it emerges that the petitioner
company has extended to fixed term contract (FTC)
workmen all benefits that are otherwise available to
permanent employees. A comparative chart which is a
part of the written statement is reproduced below for
reference :-
Terms & Conditions of Technician(Permanent) Technician (Fixed Term
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Employment, Benefits &
Contract)
Welfare Facilities
Earning/Privilege Leave
(PL)
Group Medical Insurance 3 Lac Sum Insured 3 Lac Sum Insured
Group Personal Accident Same benefits Same benefits
Workmen Compensation
Same benefits Same benefits
Insurance
Canteen Benefits Applicable Applicable
Transport Facilities Applicable Applicable
Uniform, Safety Shoes Applicable Applicable
DA Applicable As per DA Applicable As per Baroda
Variable Dearness
Baroda Textile Mills Textile Mills Consumer Price
Allowance (VDA)
Consumer Price Index Index
As Per the Production As Per the Production
Production Incentive incentive Scheme incentive Scheme Applicable
Applicable to Technician to Technician
Technician Grade T1, T2, T3, T4, T5, T6, T8 T1, T2, T3, T4, T5, T6, T8
11. It is contended by the petitioner that they are engaged
in the manufacturing of transformers, and due to
fluctuations in work orders and available workload, a
total of 234 employees were appointed on a Fixed Term
Contract (FTC) basis for specific periods, which were
extended from time to time as per the operational
requirements. Out of these, 37 workmen raised an
industrial dispute, which came to be adjudicated by the
learned Industrial Tribunal. It is not in dispute that some
of the employees were relieved upon the expiry of their
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respective fixed term contract (FTC), and the legality of
such actions has been challenged in pending
proceedings. Notably, one such reference resulted in an
award in favour of the concerned employee, which has
been challenged by the petitioner before this Court by
way of Special Civil Application No. 13250 of 2023.
11.1. The learned Tribunal, while passing the impugned
award, placed reliance upon the decisions of the Apex
Court in Jaggo V/s. Union of India reported in 2024
SCC Online SC 3826 and Umrala Gram Panchayat
versus The Secretary, Municipal Employees Union
& Ors reported in 2015 12 SCC 775. However, the said
decisions pertain to cases involving temporary
employees who had raised disputes alleging exploitation
and unfair labour practices. Upon referring to the
comparative chart of benefits referred hereinabove, this
Court is of the considered view that no conclusion can
be drawn to suggest that the concerned FTC workmen
have been subjected to exploitation or that the petitioner
has engaged in any unfair labour practice as
contemplated under the Industrial Disputes Act, 1947.
It is true that the FTC employees engaged from the year
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2016 onwards have continued in service up to the
present. However, the mere fact of long or continued
service does not, by itself, create any inherent or vested
right to regularization, particularly when it is
established that there is no evidence of exploitation, The
concerned workmen have not been deprived of any
benefits or pay scales available to permanent employees
as well as all statutory and service-related benefits
including wages, allowances, and working conditions
have been extended to fixed term contract (FTC)
employees in parity with regular workmen.
11.2. It is also not the case that the workmen were unaware
of the nature of their appointments. On the contrary, the
record indicates that they accepted employment with
full knowledge and consent, being fully aware that the
appointments were on a fixed term basis. The petitioner,
in turn, extended the term of such contracts in response
to fluctuating business requirements and market
conditions. In such a scenario, it cannot be said that the
petitioner has engaged in any form of unfair labour
practice, nor can it be alleged that the respondents were
exploited. The continuation of service beyond the
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originally stipulated tenure, in the absence of any legal
right to regularization, cannot by itself confer upon the
workmen any claim for permanent status. Furthermore,
it is a well-settled principle that fixed term appointments
do not, by their nature, create a right to absorption or
permanency, even if the employee has rendered
continuous service over an extended period.
12. The judgment of Mahanadi Coalfields Ltd. Versus
Brajrajnagar Coal Mines Workers' Union reported in
2024 (3) SCALE 649, relied upon by the learned
advocate Mr. Upadhyay, in the case, upon careful
perusal, reveals that the issue before the Apex Court
pertained to a claim for regularization based on a
settlement dated 05.04.1997. In that context, the Apex
Court held that the remaining workers, who were
similarly situated as those already regularized, were
entitled to the relief of permanency, particularly as the
nature of duties performed by all such workmen was
perennial in nature and there was no distinction in the
work performed by the two sets of employees. However,
in the present case, although the nature of duties
performed by the concerned fixed term contract (FTC)
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workmen may be perennial, the facts remain
distinguishable. The workmen in question accepted
employment on a Fixed Term Contract basis, with full
knowledge of the terms of their engagement, and have
been receiving wages and service benefits equivalent to
those of regular employees. In the opinion of this Court,
therefore, the aforesaid judgment has no applicability to
the facts of the present case and does not support the
claim for permanency made by the fixed term contract
(FTC) workmen herein.
13. In the considered opinion of this Court, the
determination of the strength of the labour force falls
squarely within the prerogative of the management. The
number of workmen required to efficiently carry out
operations in an industrial undertaking must be left to
the discretion of the employer, as part of his inherent
managerial rights to organize and conduct business in
the manner deemed most suitable. Provided that such
managerial decisions are taken in good faith and are not
tainted by mala fides or unfair labour practices, it is not
within the jurisdiction or competence of the Tribunal to
question the propriety of such decisions. Where it is
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demonstrated that the management's action is bona fide
and not actuated by any improper motive, and that it is
financially unsustainable for the employer to bear the
existing labour costs indefinitely, the discretion to
determine the organizational structure, including the
employment of fixed term contract (FTC) employees,
must rest with the management. The Tribunal is
empowered to interfere only where it is conclusively
established that the decision of the management is
vitiated by bad faith, discrimination, victimization, or
other unfair labour practices. In the absence of such
findings, the interference by the learned Tribunal with
the management's decision to engage Fixed Term
Employees was unwarranted and constitutes an error of
law.
14. In view of the foregoing discussion and findings, this
Court is of the considered opinion that the learned
Tribunal has committed an error in granting the benefit
of permanency to the Fixed Term Contract (FTC)
workmen. Accordingly, the impugned award dated
28.02.2025 passed in Reference (IT) No. 231 of 2021 is
hereby quashed and set aside.
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15. Resultantly, this petition is allowed.
16. Rule is made absolute.
(M. K. THAKKER,J)
NIVYA A. NAIR
