Analysis of The Haryana State Employment of Local Candidates Act, 2020 - by S K Gupta , Advocate , Supreme Court
Analysis of The Haryana State Employment of Local Candidates Act, 2020
ARTICLE ON THE HARYANA STATE EMPLOYMENT OF LOCAL CANDIDATES ACT,2020 AND ITS VALIDITY UNDER THE PROVISIONS OF THE CONSTITUTION OF INDIA
Completely analyzed
By
S K Gupta , Advocate , Supreme Court
Applicability :
The Haryana State Employment of Local Candidates Act, 2020 (in short the ‘Act, 2020’) which shall be applicable to all private companies, societies, trusts, and partnership firms (hereinafter referred ‘establishment”) in the State of Haryana which employ more than 10 people in their establishments, will have to reserve 75% of their future jobs employment for those local employees who are being offered a salary of 30,000 or less with effect from January 15, 2022.
Exemption Clause:
Under Section 5 of the Act, 2020 is having exemption clause by which employers are allowed to claim exemption from reserving jobs if “local candidates of the desired skill, qualification or proficiency are not available.” A ‘Designated Officer’, notified by the State Government, may either accept or reject this claim of exemption of the concerned employer. Practically, it is very difficult to get exemption from the State Government because this Act, 2020 is legislated due to political reasons.
Penal Clause:
Under Section 12 of the Act, 2020 if the employer fails to follow the said reservation target for local candidates in their establishments, then such employer may be charged with a fine of up to 2 lakh rupees.
What is the Position for similar provisions in other States?
Notwithstanding as stated, some other states have also enacted similar laws to provide reservation for their local citizens in the private establishments. These states include Maharashtra (up to 80% quota), Karnataka (75%), Andhra Pradesh (75%), and Madhya Pradesh (70%), and recently Jharkhand (75%) in line with the State of Haryana has also passed. However, many of these states’ laws have been challenged in the respective High Court(s) but in most of the states, these have not been implemented because the
industries/establishments have been reluctant to follow such provisions due to productivity, their hiring standards,and Industrial Relations thereof. It is worthwhile to mention that the Andhra Pradesh High Court — while hearing a petition against “The Andhra Pradesh Employment Of Local Candidates in the Industries/Factories Act, 2019” , observed that it may be unconstitutional, and asked the government to show why it should not be struck down?.The matter is presently sub-judice and the High Court’s verdict is awaited.
Social, and Legal Reasons
After reading the provisions of the Act, 2020, and the way it was passed by the State of Haryana, to my mind, the Act, 2020 is not having full support of the provisions of Indian Constitution. Therefore , the Act,2020 can be challenged because the Act,2020 was passed to achieve political mileage , not for an easy-doing-business concept to increase industrialization as well as employment in the State of Haryana . If the Act, 2020 is going to be implemented from 15th January 2022, the employers of the State of Haryana may think of shifting their units /establishments to other States. Moreover, new industry /establishment may not come in future in the State of Haryana.
Why should this Act, 2020 be challenged before the High Court?
To my mind, passing Act, 2020, is an example of the ‘Excessive misuse of Legislative Power by not following the provisions of the Indian Constitution”. Thus, the Act, 2020 is prima-facie, unconstitutional in view of Articles 14, 15, 16 , and 19 which form part of a scheme of the Constitutional Right to Equality. Article 15 and 16 are incidents of guarantees of Equality, and give effect to Article 14. However, initially, Articles 15(4) and 16(4) were considered exceptions to Articles 15(1) and 16(1). Therefore, the Act, 2020 can be challenged before the High Court on the following grounds:
Article 14. Equality before law: The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India Prohibition of discrimination on grounds of religion, race, caste, sex or place of birth
The said Article is clearly in two parts – while it commands the State not to deny to any person ‘equality before law’, it also commands the State not to deny the ‘equal protection of the laws’. Equality before law prohibits discrimination. It is a negative concept. The concept of ‘equal protection of the laws’ requires the State to give special treatment to persons in different situations in order to establish equality amongst all. It is positive in character.
Therefore, the necessary corollary to this would be that equals would be treated equally,
To protect the right to equality under Article 14 of the Constitution, the Supreme Court developed the Classification Doctrine. As observed in the case of Anwar Ali Sarkar's case ([1952] S.C.R. 284), for any classification to be reasonable, it must be (a) based on an intelligible differentia and (b) the act must have a rational nexus to the objective sought to be achieved. We have previously dealt with the issue of rational nexus – as the first and second prongs of the Doctrine of Proportionality. Therefore, we shall limit our discussion in this section to ‘intelligible differentia.’
With respect to the contours of an ‘intelligible differentia’, in Deepak Sibal v. Punjab University, [1989] 2 SCC 145 M.M. Dutt, J speaking for the Court has held thus: "In order to consider the question as to the reasonableness of the classification, it is necessary to take into account the objective for such classification. If the objective be illogical, unfair and unjust, necessarily the classification will have to be held as unreasonable. In the present case, the Act creates a class that is not founded upon an intelligible differentia as Haryanvi and non-Haryanvi workers seeking low-wage employment are similarly placed, and there is no rational ground to provide preferential treatment to the former over the latter. Therefore, in the absence of an intelligible differentia to underpin the classification created by the Act, it is in violation of the right to equality under Article 14 of the Constitution.
Article 15
15. Prohibition of discrimination on grounds of religion, race, caste, sex or place of birth
(1) The State shall not discriminate against any citizen on grounds only of religion, race, caste, sex, and place of birth or any of them
(2) No citizen shall, on grounds only of religion, race, caste, sex, place of birth or any of them, be subject to any disability, liability, restriction or condition with regard to
(a) access to shops, public restaurants, hotels and palaces of public entertainment; or
(b) the use of wells, tanks, bathing ghats, roads and places of public resort maintained wholly or partly out of State funds or dedicated to the use of the general public
(3) Nothing in this article shall prevent the State from making any special provision for women and children
(4) Nothing in this article or in clause ( 2 ) of Article 29 shall prevent the State from making any special provision for the advancement of any socially and educationally backward classes of citizens or for the Scheduled Castes and the Scheduled Tribes
The Article 15 secures the citizens from every sort of discrimination by the State, on the grounds of religion, race, caste, sex or place of birth or any of them. However, this Article does not prevent the State from making any special provisions for women or children. Further, it also allows the State to extend special provisions for socially and economically backward classes for their advancement. It applies to the Scheduled Castes (SC) and Scheduled
Tribes (ST) as well. Article 15 assures equality of opportunity in matters of public employment across India, and prevents the State from any sort of discrimination on the grounds of religion, race, caste, sex, descent, and place of birth, residence or any of them.
Article 16
16. Equality of opportunity in matters of public employment
(1) There shall be equality of opportunity for all citizens in matters relating to employment or appointment to any office under the State
(2) No citizen shall, on grounds only of religion, race, caste, sex, descent, place of birth, residence or any of them, be ineligible for, or discriminated against in respect or, any employment or office under the State
(3) Nothing in this article shall prevent Parliament from making any law prescribing, in regard to a class or classes of employment or appointment to an office under the Government of, or any local or other authority within, a State or Union territory, any requirement as to residence within that State or Union territory prior to such employment or appointment
(4) Nothing in this article shall prevent the State from making any provision for the reservation of appointments or posts in favor of any backward class of citizens which, in the opinion of the State, is not adequately represented in the services under the State
(5) Nothing in this article shall affect the operation of any law which provides that the incumbent of an office in connection with the affairs of any religious or denominational institution or any member of the governing body thereof shall be a person professing a particular religion or belonging to a particular denomination
Article 16(2) and (3) of the constitution which prohibits discrimination in employment on the grounds of place of residence. Article 16(1) lies down that the state cannot discriminate against any citizen in the matters of employment. Likewise, Article 16(2) too makes it clear that “no citizen shall, on grounds only of religion, race, caste, sex, descent, place of birth, residence or any of them, be ineligible for, or discriminated against in respect or, any employment or office under the State”. However, clause 3 of Article 16 allows Parliament to make any law with residence qualifications necessary for government jobs, thus introducing the domicile-based preferential treatment. Article 16(4) also allows the state to reserve employment for any backward class of citizens, which in the opinion of the state, is not adequately represented in services. This opens the door for the reservations of Other Backward Classes (OBCs). Article 16(4A) was incorporated, permitting reservation in promotions but restricting the same to Scheduled Caste (SC) and Scheduled Tribes (ST) , not for local domicile of the State. The Act, 2020, violated Article 16(2) and (3) of the constitution which prohibits discrimination in employment on the grounds of place of residence.
This view, that Articles 15(4) and 16(4) were exceptions to Articles 15(1) and 16(1), was again reiterated in Triloki Nath v. State of Jammu and Kashmir, AIR 1969 SC 1, and in State of A.P. v. U.S.V. Balram, (1972) 1 SCC 660. The majority of a 7-Judge Bench of the Hon’ble Supreme Court, in State of Kerala v. N.M. Thomas, (1976) 2 SCC 310, introduced a change in the concept of equality. It held that Articles 14, 15, and 16 are all equality rights, and that the scheme of equality sought to achieve real equality. It was held that Articles 15(4) and Article 16(4) are not exceptions to Articles 15(1) and 16(1) respectively.
A 9-Judge Bench of the Hon’ble Supreme Court settled this issue in Indra Sawhney v. Union of India, 1992 (Supp) 3 SCC 217, where the majority upheld the principle laid down in Thomas’ case that Articles 15(4) and 16(4) were not exceptions to Articles 15(1) and 16(1), but were an emphatic
statement of equality.
Therefore, equality across the country, as guaranteed in the Constitution of India, not only conceives of providing formal equality but also to provide for real, and absolute equality. Articles 14 and 15(1) enable and contemplate classification to achieve the Constitutional Objective of real equality. Articles 15(4) and 16(4) flow out of Articles 15(1) and 16(1) respectively, and can never be considered as exceptions to Article 15(1) and Article 16(1).
Hence , the Employers of the State of the Haryana are having very tenable grounds for quashing the Act,2020.
Article 19(1) (g) to practice any profession, or to carry on any occupation, trade or business
Article 19(1) (g) of the Constitution of India gives guarantee to every citizen of India , the right to practice any profession and carry on any occupation, trade or business across India but by way of the Act,2020, this fundamental right of the Indian citizen is diluted. In matter of Sukhnandan Saran Dinesh Kumar v. Union of India (1982 (2) SCC 150), the Supreme Court explained what is challengeable under Article 19(1) (g). The court observed that if it is shown that a restriction on a trade directly and proximately interferes with the freedom of trade, it becomes challengeable under Article 19(1) (g). The act passes this test. Section 4 of the Act makes it mandatory for an ‘employer’ to hire 75% local candidates for posts where the monthly salary is not more than Rs.30, 000 per month. Furthermore, Section 5(2) (iii) of the Act, 2020 provides a “Designated Officer” with the power to compel employers to train candidates in the relevant skills, if local candidates with desired qualifications are unavailable. Both these obligations severely limit the autonomy of the employer in hiring the candidates they find most suitable and, in turn, directly interfere with the freedom to trade, and select the competent employees across the country to run their business effectively. Moreover, for getting exemption under Section 5(2) (iii) of the Act, 2020 will be very difficult, and having political interference, and moreover, it will be time taking to get exemption to select the employees from other States.
Reasonable Restrictions on the Right: What is ‘in the interest of the general public’
The freedom guaranteed under Article 19(1)(g), however, is not absolute. Under Article 19(6), a restriction must be a reasonable restriction in the general interest of the public for it to be constitutional. A policy analysis of whether the impugned Act is in the ‘interest of the general public’ is beyond the scope of this article. The term public interest is broad [‘public interest’
often replaces ‘in the interest of general public’- although it is the latter that finds mention in the text of Article 19(6)]. On multiple occasions, the Supreme Court has observed that public interest is a capacious concept. In matter of Municipal Corporation of the City of Ahmedabad & Ors. v. Jan Mohammed Usmanbhai & Anr. [(1986) 3 SCC 20], the Court observed that the “expression ‘in the interest of general public’ is of wide import comprehending public order, public health, public security, morals, economic welfare of the community and the objects mentioned in part IV of the Constitution.” The definition, if at all it can be considered as one, is illustrative and ambiguous.
For example, while the Act may be for the economic welfare of employees domiciled in the state of Haryana, it is to the obvious detriment of migrants who do not have a domicile in Haryana as well as the private employers. With such competing interests at stake, it is the reasonableness of the Act that determines its constitutionality. For, there is always the possibility for an Act to be in public interest and yet cast a restriction so excessive that it falls outside the realm of constitutionality. It is in this backdrop that the article shall now test the validity of the Act against the anvil of ‘reasonableness’.
The Act and its tendency to promote Bureaucratic Red-Tapism for taking exemption u/s 5 of the Act,2020, and inspection of the establishment thereof.
The Act,2020 violates several fundamental rights, but also the provisions of the Act,2020 have excessive bureaucratic intervention in the private sphere. As discussed earlier in this article, Section 5 of the Act allows a Designated Officer to accept or reject the employers’ claim to hire local candidates based on an enquiry as “he deems fit”. The absence of any rules or guidelines on how this enquiry is to be conducted leaves room for the exercise of wide discretionary power and corruption thereof. This is problematic for the employers to get exemption due to various political reasons. Therefore, on this similar problem, the Supreme Court held in matter of State of Rajasthan v. Nathmal and Mithamal, [1954] SCR 982; Narendra Kumar v. Union of India, [1960] 2 SCR 375; Panipat Co-operative Sugar Mills v. Union of India, [1973] 1 SCC 129; Anakapalle Co-operative Agricultural & Industrial Society Ltd. v. Union of India, [1973] 3 SCC 435 that a law affecting a fundamental right may be held bad on the ground of uncertainty and vagueness.
Under Section 8, an ‘Authorized Officer’ has been empowered to enter the premises of an enterprise to inspect whether the provisions of the Act are being complied with. The actions of Authorized Officers have limited scope of review as the Act presumes the officers to have acted in good faith. Red-
Tapism of this kind is a hindrance to the prosperity of businesses in the long run. Corporations/ establishments have already signified their intention of relocating their businesses to jurisdictions which favour an “ease of doing business”. Therefore, the Act,2020 by dis-incentivizing investors, forcing businesses to relocate, diminishing an overall business friendly image of the state, and compelling companies to recruit from a limited pool of candidates, disproportionally and arbitrarily restricts the fundamental right to free trade,
Therefore, the provisions of the Act,2020 are not in furtherance of public interest at large.
It is also interesting to note that the four new labour codes finalized by the Ministry of Labour and Employment , and some provisions have been notified to implement wherein protection of migration of inter-state workers , Gig workers and unorganized Labour have been increased by inserting social welfare provisions.For instance, the Occupational Safety, Health and Working Conditions Code,2020 , and Social Security Code,2020 have widened the definition of migrant workers to include not just those workers who are recruited by contractors, but also the workers who move from one state to another state for getting employment. Therefore, the Act,2020 by outsourcing
workers from other states, is not in consonance with the Parliament’s policy of the present Government. The such legislations of this kind are damaging to the spirit of collaborative federalism in India and must not be allowed to prevail for regionalism across the country.
CONCLUSION
There are several compelling arguments against the Act,2020‘s validity based on Article 14 , 15 , 16 , and 19 which are elaborately mentioned above. It is pertinent to recall that the Supreme Court held in the case of Maneka Gandhi v. Union of India , [1978] 2 SCR 621; that fundamental rights do not exist in compartmentalized isolation, rather, they form an inextricable link with each other. It was made unequivocal that Articles 14 and 19 are not mutually exclusive and must be read together. The Act goes on to violate multiple aspects of these fundamental rights and hence the state legislature must urgently rethink its decision to implement it.
It has been held in a body of judgments of the Supreme Court that directions cannot be issued to the state to give reservation to any class of citizens. Starting 1963, several rulings have emphasized that Articles 15(4) and 16(4) are enabling provisions and do not confer any right on SC/STs, OBCs or any other group of citizens to demand reservation as a matter of right, and thus, no such directive can be issued to the state.
In the matter of MR Balaji Vs State of Mysore, 1963, a five-judge bench had underscored: “It is necessary to emphasize that Article 15(4) like Article
16(4) is an enabling provision, it does not impose an obligation, but merely leaves it to the discretion of the appropriate government to take suitable action, if necessary.” This judgment quashed the order of the state of Mysore, providing as much as 75% reservation in educational institutions to all communities except Brahmins. It also held that caste cannot be the sole and dominant test for determining social backwardness and the reservation made under Article 15(4) should be reasonable and less than 50%
Mukesh Kumar & Anr Vs State of Uttarakhand, 2020, Civil Appeal No. 1226 of 2020 can also be read while drafting writ petition
Most Important Judgments.
State governments have no such power to pass laws directly on domicile-based reservation, some important judgments are as under :
In matter of Dr.Pradeep Jain vs. Union of India , [(1984) 3 SCC 654], the top court dealt specifically with the issue of domicile-based reservation, noting that to regard an individual from one state as an outsider in another state “would be to deny him his constitutional rights and to derecognise the essential unity and integrity of the country by treating it as if it were a mere conglomeration of independent States.”
“It would appear that residential requirement would be unconstitutional as a condition of eligibility for employment or appointment to an office under the State which also covers an office under any local or other authority within the State or any corporation, such as a public sector corporation, which is an instrumentality or agency of the State,” it further held.
The court, in this judgment, also discussed the “sons of the soil” concept while regretting that the Supreme Court initially allowed “sons of the soil” demands to develop claiming special treatment on the basis of residence in the concerned State, because recognizing and conceding such demands had a populist appeal. “The result is that ‘sons of the soil’ claims, though not altogether illegitimate if confined within reasonable bounds, are breaking asunder the unity and integrity of the nation by fostering and strengthening narrow parochial loyalties based on language and residence within a state.”
In Nidamarti Maheshkumar Vs State of Maharashtra, 1986, when region-wise classification for admissions to medical colleges was sought to be defended on the ground that Vidharbha and Marathwada regions are backward as compared to Pune and Bombay regions, the apex court declined to accept such contention, saying it is not possible to categorise the regions within the
jurisdiction of the various universities as backward or advanced as if they were exclusive categories.
In Sunanda Reddy Vs State of Andhra Pradesh, 1995, the Supreme Court affirmed the observation in Pradeep Jain to strike down a state government policy that gave 5% extra weightage to candidates who had studied with Telugu as the medium of instruction.
VERY IMPORTANT JUDGMENTs
In matter of Govind A. Mane Vs. State of Maharashtra, (2000 (4) SCC 200, the top court quashed the state government’s decision to distribute seats district-wise for admission to B.Ed course, saying that such allocation based on residence would be violative of Article 14 (equality) of the Constitution when it fails to put forth any material to show the nexus between such distribution and the object sought to be achieved.
Similarly, in matter Kailash Chand Sharma Vs State of Rajasthan, 2002, Appeal (civil) 4417 of 2002 , Supreme Court, the court held that “measures taken by the State on considerations of localism are not sanctioned by the constitutional mandate of equality”. ”Attempts to prefer candidates of a local area in the State were nipped in the bud by this Court since long past. We would like to reiterate that residence by itself be it be within a State, region, district or lesser area within a district cannot be a ground to accord preferential treatment or reservation, save as provided in Article 16(3),” highlighted this judgment. In the judgment , Govind A. Mane Vs. State of Maharashtra, (2000 (4) SCC 200 was also discussed. Therefore, while drafting the writ petition or placing arguments , the above full text of judgment should be read properly.
In reserving jobs for “local candidates,” Haryana's new law, on the face of it, falls foul of the principles evolved by the Supreme Court in the catena of judgments that have developed over the last 70-odd years. This will be the prime legal hurdle that the State Government shall face once the law is challenged in a constitutional court because provisions of law cannot be legislated for getting political mileage.
Suggestions,and criticisms are solicited on my email:skpfdelhi@gmail.com
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