Karnataka High Court on inclusion of contract labour in computing the strength of workmen

In the case of Workmen of Karnataka Malladi Biotics Ltd. v. Karnataka Malladi Biotics Ltd, (2026 SCC OnLine Kar 4017) (Karnataka High Court, 03^rd June, 2026), the Division Bench addressed whether contract labourers and security guards should be counted as “workmen” for the purposes of Section 25K of the Industrial Disputes Act, 1947. The ruling reversed earlier findings and held that the establishment employed over 100 workmen, thereby attracting Chapter V-B.

Background of the Dispute

The respondent-establishment laid off and subsequently retrenched 84 workmen in 2009. The affected workmen challenged the action, contending that the establishment’s total workforce crossed the 100-worker threshold prescribed under Chapter V-B (Sections 25M and 25N) of the Industrial Disputes Act, 1947.

Findings of the Industrial Tribunal and Single Judge

The Industrial Tribunal and the learned Single Judge dismissed the workmen’s claims. They held that the respondent employed only 92 “regular” workmen and excluded certain categories from the computation under Section 25K.

Specifically, the lower forums reasoned as follows:

• 17 security guards were excluded on the ground that they did not fall within the definition of “workmen” under Section 2(s).
• 28 contract labourers were similarly excluded from the computation under Section 25K.
• With these exclusions, the total fell below the 100-worker threshold required for attracting Chapter V-B (Sections 25M and 25N).

Division Bench Ruling on Workman Status

The Division Bench reversed these findings. It held that Section 2(s) does not condition workman status upon permanency of employment.

The Bench established the following key principles:

• Any person engaged for hire or reward under the supervision and control of the employer qualifies as a workman.
• This status applies regardless of whether the tenure is contractual or casual.
• Security guards and contract labourers therefore ought to have been included in the computation under Section 25K.

Adverse Inference for Withholding Evidence

Additionally, the Bench invoked Section 114, Illustration (g) of the Indian Evidence Act, 1872. It drew an adverse inference against the management for wilfully withholding muster rolls and attendance registers despite a Tribunal direction.

The Court held that the withheld evidence would have been unfavourable to the management, further supporting the conclusion that the workforce exceeded the statutory threshold.

Outcome: Chapter V-B Held Applicable

Consequently, the establishment was found to have employed over 100 workmen, attracting Chapter V-B of the Industrial Disputes Act, 1947. The lay-off and retrenchment of the 84 workmen were therefore subject to the prior-permission requirements under Sections 25M and 25N.

Last Updated on 27 July, 2026