State-controlled intermediary arrangements cannot defeat regularization, minimum pay-scale rights, or lawful salary protection.

Employees sponsored through UPNL were treated as serving the State where the arrangement operated as an intermediary camouflage and the State exercised real disciplinary and financial control. On that footing, phased regularization was held permissible, notwithstanding reliance on Uma Devi, because the State had itself framed regularization measures and the nominal contractual form could not defeat equality-based relief. Employees performing comparable duties were also held entitled to at least the minimum applicable pay-scale with dearness allowance and arrears, as denial of such wages was arbitrary. Salary deductions towards GST and Service Tax were held impermissible because no authority of law supported them.

---

---

Issues: (i) Whether employees sponsored through UPNL were entitled to regularization in a phased manner; (ii) Whether such employees were entitled to minimum of pay-scale with dearness allowance; (iii) Whether GST and Service Tax could be deducted from their salary.

Issue (i): Whether employees sponsored through UPNL were entitled to regularization in a phased manner.

Analysis: The arrangement through UPNL was examined against the terms of its objects, the extent of State control, the source of funding, and the nature of deployment. The Court found that UPNL was used as an intermediary, that the State Government exercised disciplinary and financial control, and that the real employer was the State. The reliance on the principle in Uma Devi was held not to defeat relief where the State had itself framed regularization measures and the arrangement was found to be a camouflage. The Court also treated the contractual set-up as inconsistent with the statutory framework governing contract labour and the equality guarantees under Articles 14 and 16.

Conclusion: The employees sponsored through UPNL were held entitled to regularization in a phased manner.

Issue (ii): Whether such employees were entitled to minimum of pay-scale with dearness allowance.

Analysis: The Court held that employees doing similar work as regular employees could not be denied at least the minimum of the applicable pay-scale merely because they were routed through UPNL. The denial of dearness allowance and the payment of only a fixed honorarium were found to be arbitrary and unreasonable, especially when the workers were performing comparable duties under the control of the State.

Conclusion: The employees were held entitled to minimum of pay-scale with dearness allowance and arrears.

Issue (iii): Whether GST and Service Tax could be deducted from their salary.

Analysis: The Court treated salary as property and held that no deduction could be made from salary without authority of law. In the absence of legal sanction for such deductions from the wages paid to the employees, the levy of GST and Service Tax on the salary amount was not sustainable.

Conclusion: Deduction of GST and Service Tax from the salary was held impermissible.

Final Conclusion: The writ petition was allowed with directions for phased regularization, payment of minimum pay-scale with dearness allowance and arrears, and cessation of unlawful deductions from salary.

Ratio Decidendi: Where the State uses an intermediary arrangement as a camouflage and exercises real employer control over the workforce, the workers may be treated as serving the principal employer and cannot be denied equality-based wage protection and lawful employment benefits merely because of the nominal contractual form.

---