Why HC has struck down Haryana’s private sector quota

GS Paper II

News Excerpt:

The Punjab and Haryana High Court recently quashed a law passed by the Haryana government in 2020 that provided 75% reservation in private jobs to state residents.

Key Points:

  • According to the high court, a government cannot discriminate against individuals simply because they do not belong to that state.
  • The Haryana State Employment of Local Candidates Act 2020 violated Part III of the Indian Constitution, which contains fundamental rights, by a bench of Justices G S Sandhawalia and Harpreet Kaur Jeewan.
    • In its ruling, the court said the law would be ineffective “from the date it came into force”.
  • In November 2019, the Andhra Pradesh Assembly enacted the Andhra Pradesh Employment of Local Applicants in Industries/Factories Bill 2019, which reserved three-fourths of jobs for local applicants within three years of the Act's implementation.
    • The Andhra Pradesh High Court challenged the law, which said it "might be unconstitutional." The challenge, however, has yet to be heard on the merits.

About the Law:

  • The Haryana Assembly enacted a bill in November 2020 that reserved 75% of jobs in the private sector that paid less than Rs 30,000 (initially Rs 50,000) per month for Haryana residents. 
    • The Bill received assent by the governor on March 2, 2021, and came into effect on January 15, 2022.
  • The Act covered all corporations, organisations, trusts, limited liability partnership firms, partnership firms, and significant individual employers. 
  • Any person or entity that employs 10 or more individuals on salary, wages, or other remuneration for manufacturing or delivering any service and any entity that the government may notify were covered.
  • However, the Act did not apply to national or state governments or organisations owned by them.
  • According to the law, a candidate "domiciled in the State of Haryana," known as a "local candidate," might take advantage of the reservation after registering on an authorised internet portal. Employers were obligated to conduct all recruitments through this platform. 
  • Employers could apply for an exemption under the Act, but doing so required a lengthy procedure and the belief of government-appointed officers that the employer's exemption request was valid.

Arguments in favour and against the act:

  • The Faridabad Industries Association and other Haryana-based associations filed a lawsuit, claiming that Haryana was attempting to create reservations in the private sector by instituting a "sons of the soil" policy, which violated employers' constitutional rights.
  • Petitioners’ Argument:
    • The petitioners argued that jobs in the private sector are solely based on skills and an analytical mindset and that employees have a fundamental right to work in any part of India. 
    • They argued, "The act of the respondent or government forcing the employers to employ local candidates in the private sector vide this impugned Act is the violation of the federal structure framed by the Constitution of India, whereby the government cannot act contrary to the public interest and cannot benefit one class".
  • Haryana Government argument:
    • According to the Haryana government, it was permissible to make these reservations following Article 16(4) of the Constitution, which states that the State may "make any provision for the reservation of appointments or posts in favour of any backward class of citizens which, in the opinion of the State, is not adequately represented in the services under the State" and does not preclude the right to equality in public employment.

High Court’s judgement:

  • The court noted that Section 6 — which required employers to submit quarterly reports with details of local candidates employed and appointed — and Section 8 of the Act amounted to "Inspector Raj", with the State placing the burden of hiring new employees on private firms and allowing authorised inspectors to request documentation or verification to make sure the law was being followed.
  • Also, under Section 20 of the Act, the court said that the bar on legal proceedings against any authorised or designated officer acting in “good faith” tied the employer’s hands.
  • The court stated that the state’s action amounted to exercising “absolute control over a private employer,” which is “forbidden for public employment.” 
  • According to the court, the restrictions were “gross to the extent that a person’s right to carry on occupation, trade, or business” under Article 19(1)(g) of the Constitution was being impaired.


Hence, as per the High Court ruling, the current private sector quota provided by the state government to their residents is a violation of the Fundamental Rights of private company owners and outsiders.

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