Sarthak Bhardwaj and Rupam Jha

The Haryana Government’s recent decision to reserve 75% of jobs in the private sector has raised many eyebrows and questions regarding its constitutional permissibility. This piece argues for its unconstitutionality on the grounds of the violation of Articles 19(1)(g) and Article 14.

Introduction

The Haryana government’s recent decision to reserve 75% percent jobs in the private sector for local candidates has attracted fierce opposition and criticism. One of India’s leading political commentators, Pratap Bhanu Mehta, has called The Haryana State Employment of Local Candidates Act, 2021 (‘the Act’) “constitutionally dubious, economically myopic, socially divisive and politically cynical.” After it attained the Governor’s assent on 2nd March, 2021, the Act’s implementation has raised many eyebrows. It is against this backdrop that the article attempts to test the Act’s validity on the touchstone of our Constitution. 

The first part of the article summarizes the Act and attempts to place the debate around its validity in a larger context, with similar reservations being planned or implemented across the country. In the next part, the article argues that the Act violates multiple fundamental rights ranging from free trade to equality. In the third and final part, the article concludes by highlighting the way forward. 

The Scheme Of The Act

The two primary objectives that the Act purportedly seeks to achieve are: firstly, providing reservation to candidates domiciled in Haryana in the private sector;  secondly, equipping local candidates with relevant skills to help them obtain localised employment. Section 4 provides that these jobs will be limited to positions where the monthly salary is not more than fifty-thousand rupees. Under Section 5 of the Act, 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’ may either accept or reject this claim. Finally, under Section 12 of the Act, if the employer fails to reserve the said number of jobs for local candidates, they may be charged with a fine of upto 2 lakh rupees. 

It is pertinent to note that this Act is not the first attempt to provide domiciliary reservations in private jobs. Andhra Pradesh has a legislation with provisions similar to the Act in question and Karnataka is contemplating reserving all private blue-collar jobs for local candidates. Jharkhand, too, is all set to reserve 75% jobs in the private sector for local candidates. On the other hand, Madhya Pradesh is preparing to reserve all government jobs for state residents. Evidently, the Act, rather than being an anomaly, signifies a growing trend of preferential treatment being meted out to local candidates by state governments. A stringent enquiry of the efficacy of such legislations and their adherence to constitutional principles is therefore warranted. 

The Constitutionality of the Act vis-á-vis Article 19(1)(g)

Article 19(1)(g) of the Constitution guarantees to every citizen the right to practice any profession and carry on any occupation, trade or business. In Sukhnandan Saran Dinesh Kumar v. Union of India, 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.50, 000. Furthermore, Section 5(2)(iii) of the Act 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. 

• 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 Municipal Corporation of the City of Ahmedabad v Jan Mohammed Usman Bhai, 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 Test of Reasonableness vis-á-vis the Doctrine of Proportionality

The approach towards ‘reasonableness’ is best summarized by the Supreme Court in Chintaman Rao v State of Madhya Pradesh. According to Chintaman, a legislation that either arbitrarily or excessively invades the right cannot be reasonable. The court added that unless the legislation balances the freedom guaranteed in Article 19(1)(g) and the social control permitted by Article 19(6), the restriction imposed by it is not reasonable. As has been observed in Modern Dental College v. State of Madhya Pradesh, this balancing of the right to carry on an occupation or trade with the restrictions imposed by the impugned legislation is part of the Doctrine of Proportionality.

The application of the Doctrine of Proportionality is not limited to the violation of Article 21, and has been applied by the Court in cases dealing with violations of Article 19(1)(g) and 19(6) as well. As per the Court in Modern Dental College, the Doctrine of Proportionality has four prongs:

A limitation of a constitutional right will be constitutionally permissible if: (i) it is designated for a proper purpose; (ii) the measures undertaken to effectuate such a limitation are rationally connected to the fulfilment of that purpose; (iii) the measures undertaken are necessary in that there are no alternative measures that may similarly achieve that same purpose with a lesser degree of limitation; and finally (iv) there needs to be a proper relation (‘proportionality stricto sensu’ or ‘balancing’) between the importance of achieving the proper purpose and the social importance of preventing the limitation on the constitutional right.

The first prong of the proportionality test requires that the purpose of the legislation should be proper, while the second test envisions a close connection between the said purpose and the statutory provisions applied to achieve it. In this section, we will consider these two prongs together. The purpose of the Act, according to its Statement of Objects and Reasons, is to improve the deteriorating socio-economic and environmental conditions in Haryana. It posits that a purported influx of migrant workers, “competing for low-paid jobs places a significant impact on local infrastructure and housing and leads to proliferation of slums. This has led to environmental and health issues which has been acutely felt in the urban areas of Haryana affecting quality of living…”. Thus, the primary purpose of the Act, understood from its Statements of Objects and Reasons, is to ultimately ameliorate the environmental and health conditions by reducing competition amongst workers for low-wage jobs and thereby preventing a further spread of slums in Haryana. However, the Act presents no empirical data, nor does it cite any official study to prove that low-wage migrant workers, which the Act intends to keep outside the state, are the root-cause of the worsening environmental conditions or that the number of migrant workers is so substantial so as to cause a cumbersome burden on public infrastructure. Hence, the purpose of the Act cannot be said to be proper. 

Secondly, the Statement of Objects states that by the implementation of the Act, the State will also encourage private employers to boost local employment. It is worded in a manner that indicates that ‘boosting local employment’ as an objective is subservient to, or, rather, a positive consequence of, the primary objective of eliminating threats to the environment and the health of the general public by discouraging migration from other states. However, assuming that boosting local employment is the main objective of the Act, and that this purpose is rationally connected to the provisions of the Act (as the first two prongs of the doctrine of proportionality demand) the Act still does not satisfy the other prongs of the doctrine of proportionality namely, necessity and balancing. 

With respect to the third test of necessity, as held by the Supreme Court in Modern Dental, the limitations imposed on a citizens’ fundamental rights by a legislation should apply the least restrictive method and that if a less limiting alternative exists, which equally furthers the law’s purpose, it should be chosen. The Act, by placing an excessive restriction of reserving 75% private jobs for local candidates, is neither the most suitable nor the least restrictive method available at the hands of the state legislature. Other ways — like increasing the annual health budget, investing more in public infrastructure and education, training the youth in employable skills, incentivizing businesses to set up industries in the state — might harmonize the desired goal better with the citizens’ fundamental rights.

Finally, the fourth test assesses whether the benefits gained by the public and the harm caused to the constitutional rights through the restriction imposed by the law to obtain the proper purpose have been balanced. As the Act chooses to ignore the lesser restrictive methods available, it causes an avoidable damage to constitutional rights. It is unable to adequately balance the restrictive provisions of the Act with the citizens’ fundamental rights and fails to satisfy the third and the fourth tests of the Doctrine of Proportionality. Therefore, the Act violates Article 19(1)(g) of the Constitution, as it is unable to meet the test of reasonableness under Article 19(6).

The Constitutionality of the Act vis-á-vis Article 14

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, 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, the Supreme Court noted that the classification between two categories need not be mathematically precise. However, if there is no difference between the persons or things grouped, the classification cannot be categorized as reasonable. This difference between the two categories must be real: it must not be artificial, arbitrary, or evasive (See here). 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. 

The Act and its tendency to promote Bureaucratic Red-Tapism

Not only does the Act violate several fundamental rights, but also the provisions of the Act have the potential to usher in an era of 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  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 by the Designated Officer. This is problematic as the Supreme Court held in Narendra Kumar v Union of India 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 have already signified their intention of relocating their businesses to jurisdictions which favour an ease of doing business. Therefore, the Act 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 and is therefore not in furtherance of public interest. 

It is also interesting to note that the four new labour codes finalized by the Ministry of Labour and Employment envision increased migration of inter-state workers and seek to facilitate their movement. For instance, the Occupational Safety, Health and Working Conditions Code, 2020 has 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 on their own volition. Therefore, the Act, by ousting workers from other states, is not in consonance with the Parliament’s policy. Legislations of this kind are damaging to the spirit of collaborative federalism in India and must not be allowed to prevail.

Conclusion

If called to assess the validity of the Act, the judiciary shall find itself treading upon an unfamiliar terrain as the constitutionality of domicile based reservation in private jobs has hitherto remained unchallenged. However, it is worth mentioning 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. While this judgement shall certainly act as a guiding precedent for future legislations to follow, there are several compelling arguments against the The Haryana State Employment of Local Candidates Act, 2021‘s validity. It is pertinent to recall that the Supreme Court held in the case of Maneka Gandhi v Union of India 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. 

Sarthak is a third-year B.A. LL.B. (Hons.) student at the VIPS, IP University.

Rupam is a third year B.A. LL.B. (Hons.) student at the Symbiosis Law School, Pune.