Navigating Constitutional Challenges: A Deep Dive into the Legality of Haryana’s Local Employment Act

Posted On - 5 December, 2023 • By - King Stubb & Kasiva

Introduction

In a bid to address the surging unemployment rates, Haryana implemented the Haryana State Employment of Local Candidates Act, 2020,[1] effective January 15, 2022. This legislation, designed to allocate 75% of private sector jobs to Haryana residents, faced legal scrutiny, resulting in a legal dispute in the Punjab and Haryana High Court and subsequent involvement of the Supreme Court. This in-depth examination explores the case intricacies, including the timeline, legal complexities, arguments presented, and the resulting judgments.

Case Overview

The Punjab and Haryana High Court received a petition (CWP No.24967/2021) from the Faridabad Industries Association & ANR., challenging the constitutionality of the Haryana State Employment of Local Candidates Act, 2020. Enacted on January 15, 2022, the law mandated a 75% reservation for local candidates in private sector jobs. On February 3, 2022, the High Court issued an interim order halting the law’s implementation without providing explicit reasons. In response, the State of Haryana filed a special leave petition (Petition(s) for Special Leave to Appeal (C) No(s).1917/2022) with the Supreme Court, contesting the High Court’s stay order.

On February 17, 2022, the Supreme Court set aside the High Court’s stay and directed an expedited decision on the Writ Petition. Emphasizing the lack of sufficient reasons for the stay, the Supreme Court sent the case back to the High Court, instructing a prompt resolution not later than four weeks from February 17, 2022. The State of Haryana was barred from taking coercive measures against employers during this interim period. The legal battle unfolded under the case name IMT Industrial Association v. State of Haryana,[2] with the final judgment delivered on November 17, 2023.

Timeline

  • January 15, 2022: Haryana State Employment of Local Candidates Act, 2020 comes into effect.
  • February 3, 2022: Punjab and Haryana High Court issues an interim order staying the implementation of the Act.
  • February 17, 2022: Supreme Court sets aside the High Court’s stay order and directs an expedited decision on the Writ Petition.[3]
  • February 22, 2022: Parties directed to be present before the High Court to schedule the hearing.
  • November 17, 2023: Final Judgment.
  1. Constitutionality of Domicile-Based Reservation: The central issue revolves around the constitutional validity of the Haryana State Employment of Local Candidates Act, 2020, specifically the provision enforcing a 75% reservation for local candidates in private sector jobs.
  2. The legality of High Court’s Stay Order: Scrutiny is placed on the legality and justification of the Punjab and Haryana High Court’s interim order, which stayed the implementation of the Act without explicit reasons.

Arguments: Arguments in Punjab and Haryana High Court

  • Petitioner (Faridabad Industries Association & ANR.): Argued that the law was unconstitutional as it impinged upon businesses’ rights to hire individuals from outside the state, negatively affecting over 48,000 registered companies in Haryana.
  • Respondent (State of Haryana): Defended the law, asserting it was a necessary measure to address unemployment and prioritize local residents in the job market.

Arguments in Supreme Court

  • State of Haryana: The Solicitor General contended that the High Court’s stay order contradicted established legal principles, stressing that legislation should not be stayed unless prima facie unconstitutional or manifestly illegal.
  • Faridabad Industries Association: Senior counsel Dushyant Dave defended the High Court’s order, claiming the legislation was unconstitutional and, if the Supreme Court set aside the order, the High Court should be directed to decide the matter conclusively.

The constitutional debate centers on the interpretation of Article 16(2), with the Court’s precedent in Govt. of A.P. vs. P.B. Vijayakumar (1995)[4] serving as a linchpin. The petitioners challenged the Act under Article 15, contending that domicile-based reservation violates the grounds of ‘place of birth’ and ‘place of residence.’

Article 14

The Right to Equality is at the heart of the constitutional challenge. The Court recognized the state’s right to compensatory action, departing from merit-based selection to achieve real equality. The domicile-based reservation’s objective, aiming to boost employment for residents and address regional disparities, was deemed legitimate. The Court heavily relied on the precedent of D.P Joshi vs. State of Maharashtra (1955),[5] 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 canvas extended to Article 19(1)(g), with the Court citing Bannari Amman Sugars Ltd. vs. Commercial Tax Officer (2005).[6] 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

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

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.

Supreme Court’s Precedents

Invoking the precedent of Kesavananda Bharati v. State of Kerala (1973),[7] Maneka Gandhi v. Union of India (1978),[8] and Minerva Mills Ltd. v. Union of India (1980), the High Court bolstered its reasoning. These landmark judgments laid the foundation for declaring the Act’s restrictions on the right to move freely, reside, and carry on trade, business, industry, or service as unreasonably restrictive.

High Court’s Landmark Pronouncement

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 Kesavananda Bharati v. State of Kerala (1973), Maneka Gandhi v. Union of India (1978), and Minerva Mills Ltd. v. Union of India (1980),[9] declared that the Act imposed unreasonable restrictions on the right to move freely, reside, and carry on trade, business, industry, or service.

Conclusion

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.

FAQs

Can the State Legally Intervene in Private Employment Matters?

The constitutionality of state intervention in private employment hinges on the delicate balance between the state’s authority and individual rights. The legal analysis considers constitutional provisions, including Articles 14, 15, 16, and 19, to determine the extent to which the state can legislate and regulate private sector employment.

How Did the High Court’s Stay Order Impact the Legal Proceedings?

The Punjab and Haryana High Court’s interim order staying the implementation of the Haryana State Employment of Local Candidates Act, 2020, created a legal impasse. The Supreme Court, in setting aside the stay, emphasized the need for an expedited decision on the constitutional validity of the law, directing the parties to appear before the High Court for further proceedings.

u003cstrongu003eWhat Are the Broader Constitutional Implications of Domicile-Based Reservations?u003c/strongu003e

The legal debate extends beyond the specific case, raising questions about the broader constitutional implications of domicile-based reservations. Issues of equality, affirmative action, and the state’s role in private employment come to the forefront, with potential ramifications on similar legislation across different states. The ongoing legal discourse aims to provide clarity on these complex constitutional considerations.

[1] Haryana State Employment of Local Candidates Act, 2020 (Act No. 3 of 2021)

[2] IMT Industrial Association v. State of Haryana, CWP No.24967/2021 (Punjab and Haryana High Court, 2023)

[3] https://main.sci.gov.in/supremecourt/2022/3725/3725_2022_5_6_33574_Order_17-Feb-2022.pdf

[4] Govt. of A.P. vs. P.B. Vijayakumar, (1995) 6 SCC 688

[5] D.P. Joshi vs. State of Maharashtra, (1955) 1 SCR 672

[6] Bannari Amman Sugars Ltd. vs. Commercial Tax Officer, (2005) 6 SCC 481

[7] Kesavananda Bharati v. State of Kerala, (1973) 4 SCC 225 

[8] Maneka Gandhi v. Union of India, (1978) 1 SCC 248

[9] Minerva Mills Ltd. v. Union of India, (1980) 3 SCC 625

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