Dear Parthagam,
Generally it is on discretion of the management, if you want to regularize the contract labour on roll or not. You have not mentioned whether they are being deployed through any contractor or they are working directly in your company on contract basis.
In first case they can't claim to be permanent, bcoz they are contractor's employees. But make sure the terms must be mentioned in the Agreement "Every personnel of 'contractor' shall continue to be an employee of 'contractor' and none of the personnel of 'contractor' shall have any claim or right of whatsoever nature against PE". Moreover the contractor should have issued Appointment letter in r/o the employment etc.
In the second case (directly working on contract basis), if the service period is contineous from long back (w/out any break) and they are getting remuneration as per permanent employee. In such case they can claim to be permanent employee.
You have to deeply check the involved docs and consult the same with any lawyer.
Hope this will help you to handle the case, senior members can put more focus on the issue.