In a significant labour law ruling, the Gujarat High Court has set aside an Industrial Tribunal order that had directed TBEA Energy India Pvt. Ltd. to grant permanent status to 37 workers employed on fixed-term contracts. Justice M.K. Thakker observed that the Tribunal’s finding that the company indulged in unfair labour practices was “unsustainable in law,” emphasizing that managerial discretion in workforce structure cannot be interfered with unless tainted by mala fide intent.
Background
TBEA Energy, engaged in the manufacturing of transformers at its Vadodara unit, had appointed a group of 37 technicians on Fixed Term Contracts (FTC) after a period of training. Over time, these contracts were renewed according to workload demands. However, the Gujarat Engineering and General Kamdar Union moved the Industrial Tribunal in 2021, claiming that the workers were performing perennial tasks and should be deemed permanent from their initial appointments.
The Tribunal, siding with the union, ordered on February 28, 2025, that all 37 workers be made permanent with effect from March 1, 2025. Aggrieved, the company approached the High Court, contending that FTC employment was legally permissible under the state’s Standing Orders and consistent with central amendments.
Court’s Observations
During the hearing, Senior Advocate K.M. Patel argued that FTC appointments were explicitly recognized under the Gujarat Amendment Rules of 2006 and the 2018 central amendments to the Industrial Employment (Standing Orders) Rules. “These contracts are lawful and were introduced to meet fluctuating business demands,” he submitted, asserting that the workers were paid at par with permanent staff and received all statutory benefits.
Counsel for the workers, Advocate Prabhakar Upadhyay, countered that the company’s repeated renewal of contracts over several years reflected a clear attempt to deny the workers their rightful status. He argued that “the nature of their work was permanent and integral to production, not temporary or project-based.”
Justice Thakker, however, found merit in the employer’s stand. The court noted that the workers had knowingly accepted FTC terms and that parity in pay and benefits between FTC and permanent staff was evident. “The mere continuation of employment for years under a fixed-term arrangement does not, by itself, confer a right to permanency,” the bench observed.
Further, the Court clarified that Item 10 of the Fifth Schedule to the Industrial Disputes Act which prohibits prolonged employment of casual or temporary workers to deny them permanent status does not extend to fixed-term contracts, a distinct legal category recognized through subsequent amendments.
“The management’s decision regarding the strength and classification of its workforce lies within its managerial prerogative. Unless such decisions are shown to be tainted by bad faith or discrimination, the Tribunal cannot substitute its judgment,” the judge remarked during oral pronouncement.
Decision
Concluding that the Industrial Tribunal had “exceeded its jurisdiction,” Justice Thakker quashed and set aside the award dated February 28, 2025, in Reference (IT) No. 231 of 2021. The petition by TBEA Energy India Pvt. Ltd. was allowed, and the rule made absolute.
With this order, the High Court reaffirmed that lawful fixed-term employment, when accompanied by parity in wages and benefits, does not amount to exploitation or unfair labour practice.
Case: TBEA Energy India Pvt. Ltd. vs. Gujarat Engineering and General Kamdar Union
Case Type & No.: R/Special Civil Application No. 10400 of 2025
Date of Judgment: 16 October 2025
