ESP think tank
It is risky to issue appreciation letter to a contractual staff and if at all his performance is extraordinary, you can recommend for regularisation of his services on Company's rolls.
Repercussions cannot be expected at this moment. Circumstances may become worst when thing go wrong. Hence, no one even issue service certificate also.
the contract staff is engaged through a contractor and this system is regulated under Contract Labour [Regulation and Abolition ] Act. Any contractual staff is performing on behalf of the Contractor,good or bad performance is that of the Contractor.Better if we are not carried away by such things. Still if you feel like issuing an appreciation letter,then it would be best to issue appreciation letter to Contractor citing instance/s of that particular person.
I am sure in this way there is no possibility of any legal complication.