Dear Tilak Bhardwaj,
Mere guess about legality of a term cannot be sufficient to prove that as illegal unless any provision in law speaks about that as illegal. CTC cannot be said illegal unless it is declared so legally by some court's decision or otherwise by making provision in law by the Government of India/ States. However, if you have the knowledge about any section declaring CTC as illegal, you may better quote that for the guidance of the members here.
Also, if you are working as HR Executive, you could better have apprised the members what term of offer your company adopts to convey to the candidates about offer of salary, while offering appointment to the candidates.
In fact, CTC denotes total liability of the company that it has to bear with on account of all the dues, including the dues of PF and ESI, etc., of a worker/employee. It does not denote that the employer shuns his responsibility to contribute in those funds, nor the PF & ESI law prohibits in doing so out of the CTC. The term CTC, does not in any way mean carry home salary of the employee.
However, if the employee has objection to the term CTC, he can feel free to negotiate with the company on the issue at the time of recruitment to convince the recruiters or can decide not to accept the job offer on such terms. But once CTC is accepted by an employee that becomes the part of the contract of employment. So far I have not come across any case where any employee has challenged the CTC in the court of law to get that declared illegal after accepting CTC.
However, if you feel that CTC is illegal, you can take the lead to challenge that in the court of law to get a legal verdict on that.