I fully agree with Mr. Manjunth said. Contract Labour are allowed to be employed only the jobs that are seasonal nature. if you are using contract labour in the regular production jobs that are perennial (continual) nature, then the law prohibits you to engage. That is why it is called Contract Labour (Regulation and ABOLITION), Act. The Act per se, the has been enacted to prohibit employers engaging contract labour in the production jobs.
Secondly, there is another point that supreme court held. In order to claim permanency, there must be an employer-employer relation. To establish this, whether you are exercising direct supervison and control on the employees of contract workmen.
In your case it looks like your officers (or supervisors) are the ones give directions to these "contract workers" to perform certain functions. This means, you have exercised your supervision and control over them and therefore employer-employee relation established between your organization and them. Thus, the contract will be labelled "sham" contract. Then you will be bound to taken them in your rolls.
If they have not worked for 240 days, then you have little hope to wind up the entire contract by issuing a letter to the contractor. Restrategize the entire process and launch accordingly. This needs a thorough R&D and Management's intervention.
And there is no question of your liking or disliking of forming an union (by the workers); it is their right. Any effort put in by management to prevent forming an union, will be viewed seriously by the authorities and it has got its own ramifications; be careful about it.
Balaji