Introduction
In the pursuit of addressing rising unemployment rates, Haryana implemented the Haryana State Employment of Local Candidates Act, 2020, which came into effect on January 15, 2022. The legislation mandated a significant 75% reservation for local candidates in private sector jobs. However, this move faced legal scrutiny, resulting in a legal battle that unfolded in the Punjab and Haryana High Court, with subsequent involvement from the Supreme Court.
On similar lines, the Karnataka State Cabinet recently approved the Karnataka State Employment of Local Candidates in the Industries, Factories and Other Establishments Bill, 2024, aiming to provide 50% reservation for locals in management roles and 75% in non-management positions across industries, factories, and other establishments. However, this bill contemplated by the legislature has caused uproar amongst stakeholders.
This exploration delves into the intricacies of the Haryana case, encompassing its timeline, legal complexities, arguments presented, the pivotal judgments that emerged, and the lessons for other states like Karnataka, Andhra Pradesh and Jharkhand contemplating similar laws.
CASE OVERVIEW
Timeline
The Haryana State Employment of Local Candidates Act, 2020, was implemented on January 15, 2022. However, on February 3, 2022, the Punjab and Haryana High Court issued an interim order staying the law’s implementation without providing explicit reasons. This prompted the State of Haryana to file a special leave petition with the Supreme Court, contesting the High Court’s stay order. On February 17, 2022, the Supreme Court set aside the stay and directed an expedited decision on the Writ Petition, leading to the final judgment delivered on November 17, 2023.
Legal Issues
The central legal issue revolved around the constitutional validity of the 75% reservation for local candidates in private sector jobs, as mandated by the Haryana State Employment of Local Candidates Act, 2020. Additionally, the legality and justification of the High Court’s interim stay order were under scrutiny.
Arguments: Arguments in Punjab and Haryana High Court
Petitioner’s Perspective
The Faridabad Industries Association challenged the constitutionality of the Act, contending that it infringed upon businesses’ rights to hire individuals from outside the state. The petitioner argued that the law negatively affected over 48,000 registered companies in Haryana.
State of Haryana’s Defence
In defence of the law, the State of Haryana asserted that it was a necessary measure to address unemployment (which was > 30% at the time) and prioritize local residents in the job market.
Legal Analysis
Article 14: The Right to Equality
At the core of the constitutional challenge was the Right to Equality under Article 14. The Court recognized the state’s right to compensatory action, departing from merit-based selection to achieve real equality. Domicile-based reservation, aiming to boost employment for residents and address regional disparities, was deemed a legitimate objective. The Court heavily relied on the precedent of D.P Joshi vs. State of Maharashtra (1955), asserting that Article 15(1) and (2) cannot invalidate residence requirements discriminating based on place of birth, not residence.
Article 19(1)(g) and Reasonable Restrictions
The constitutional analysis extended to Article 19(1)(g), with the Court citing Bannari Amman Sugars Ltd. vs. Commercial Tax Officer. It emphasized that reasonableness is determined objectively, considering the interests of the general public. The Court acknowledged the state’s spending on incentives and the reasonableness of directing businesses to benefit its residents.
Supreme Court’s Directive: An Emphasis on Expedited Decision
The Supreme Court’s directive on February 17, 2022, urging an expeditious decision, underscores the case’s national significance. This intervention set the tone for an in-depth exploration of constitutional nuances at the High Court level.
Unity in Diversity: Recognizing Legitimate Objectives
The Court, cognizant of India’s unity in diversity, acknowledged that not all forms of discrimination violate the constitutional concept of equality. Domicile-based reservation, aimed at promoting equality by reducing crimes, ensuring public health, and combating poverty, was viewed as a legitimate objective. The Court stressed that the classification, based on residence, was reasonable, considering the concerns within the state’s purview.
High Court’s Landmark Pronouncement: Unravelling Unreasonable Restrictions
The pivotal judgment delivered by the Punjab and Haryana High Court conclusively held the Haryana State Employment of Local Candidates Act, 2020 unconstitutional. The Court, invoking the precedent of Maneka Gandhi v. Union of India (1978), and Minerva Mills Ltd. v. Union of India (1980), declared that the Act imposed unreasonable restrictions on the right to move freely, reside, and carry on trade, business, industry, or service.
The court further cited Justice H.R. Khanna’s observations in Kesavananda Bharti, emphasizing the importance of preventing legislation that could lead to regional disintegration or undermine the foundational principles of the Constitution. The court observed that any absolute power given to the legislature, allowing it to create laws violating Articles 14 and 19 without judicial review, would compromise the basic structure of the Constitution.
Ultimately, the court concluded that the restrictions imposed by the statute are unreasonable and violate the Doctrine of Basic Structure, asserting that the legislation goes beyond the permissible limits outlined in Articles 19(5) and 19(6). It held that the State’s control over private employers, as stipulated in the statute, is excessive and infringes upon fundamental rights protected by the Constitution.
The legal saga surrounding the Haryana State Employment of Local Candidates Act, 2020, provides a nuanced exploration of the delicate balance between state powers and individual rights within the constitutional framework. The High Court’s verdict, delivered on November 17, 2023, underscores the imperative for reasonableness in legislative actions, establishing significant precedents for constitutional jurisprudence in India.
Lessons for Other States: Crafting Legislation with Constitutional Foresight
Other states have either already enacted laws relating to domicile-based reservations or are contemplating similar laws.
- In January 2023, the Chief Minister of Karnataka said that the state government plans to provide 80% reservation to Kannadigas in jobs after introducing a bill on comprehensive development of Kannada.
- In July 2024, the Chief Minister of Karnataka said that the government has approved a bill mandating reservation for Kannadigas in private companies, as a move to boost employment for locals.
- Andhra Pradesh’s Employment of Local Candidates in the Industries / Factories Act, 2019 provides for reservation of 75% of posts in existing and upcoming factories, industries, joint ventures, and public-private partnership projects for local candidates, with no wage cap.
- The Jharkhand State Employment of Local Candidates in Private Sector Act, 2021 mandates 75% job reservation in the private sector for local candidates.
This landmark case offers valuable lessons for other states. While the aim to address local unemployment is commendable, constitutional principles must guide legislative initiatives. The Court emphasized that domicile-based reservations, when crafted with legitimate objectives, can withstand constitutional scrutiny. However, an undue intrusion into the private sector’s hiring practices without a demonstrable public interest may be deemed unconstitutional.
States should carefully consider the nuances of Articles 14 and 19(1)(g) when formulating employment-related legislation. Balancing the interests of local residents with the broader principles of equality and freedom of trade is crucial. Legislators must ensure that any restrictions imposed on private employers align with constitutional principles and do not unduly infringe on individual rights.
In conclusion, the Haryana quota saga serves as a beacon for constitutional prudence, urging states to tread carefully when delving into matters of private employment. Crafting legislation with constitutional foresight ensures a harmonious balance between state interests and individual rights, fostering a legal framework that stands the test of constitutional scrutiny.
-Sumanth Nagaraj,
Advocate & Senior Associate
