Haryana HC strikes down Act restricting employment of non-residents in private sector in the state

"We do not see any reason how the state can force a private employer to employ a local candidate as it would lead to a large-scale similar state enactments providing similar protection for their residents and putting up artificial walls throughout the country, which the framers of the Constitution had never envisaged," the Bench ruled.

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ON Friday, a division Bench of the Punjab and Haryana High Court struck down the Haryana State Employment of Local Candidates Act, 2020 which provided for 75 percent employment to local candidates in the private sector in Haryana.

Justices G.S. Sandhawalia and Harpreet Kaur Jeewan held that the state government could not discriminate against individuals on account of the fact that they do not belong to the state, and have negative discrimination against other citizens of the country.

The Bench declared the 2020 Act ineffective from the date it came into force, that is January 15, 2022.

The Bench held that it was beyond the legislative competence of the state government to bring in the 2020 Act and to restrict private employers from recruiting from the open market for the category of employees who were receiving less than ₹30,000 per month.

The Bench accepted the argument of the petitioners that the underlying object of the legislation was to create an artificial gap and discrimination against some citizens of India.

It also noted that the stated purpose of the 2020 Act was that a large number of migrants were taking up jobs of local candidates, which apparently were paid comparatively lower and the amount had been reduced from ₹50,000 per month to ₹30,000 per month.

It was under such circumstances the 75 percent reservation was put in place. The Bench found this exercise directly encroaching upon the power of the Union government since inter-state migration is in the Union List of the Seventh Schedule, and only the Parliament has power to legislate on it.

The Bench also found the very enactment of the 2020 Act against constitutional morality.

It held: "The state, thus, was acting with a telescopic vision and the statute, as such, is liable to fall foul of the principles laid down by the constitutional judgments of the Supreme Court and the Constitution itself.

"The concept of constitutional morality has been openly violated by introducing a secondary status to a set of citizens not belonging to the state of Haryana and curtailing their fundamental rights to earn their livelihood.

"The exploitation of the prohibition to private employment by way of a legislative command while keeping states out of the said restrictions and putting the employer under the domain of criminalisation on account of the violation of the same can be termed as unconstitutional."

The Bench added that the state government directed private individuals to do what it was itself barred from doing by the Constitution and as such a brazen act of impunity could not be allowed by constitutional courts.

Illustrating with an example, the Bench said the private employer being a builder raising a multi-storeyed complex, could not be asked not to employ a person who is skilled in the work of installation of woodwork who might come from a particular area of the country, i.e., Kashmir; where this skill has been enhanced. Similarly, labour from another part of the country, say Punjab, might be better at setting up the steel frames and buildings and labour from yet another part, say Uttar Pradesh and Bihar, might be more proficient in executing the civil work.

"It is not for the state as such to direct the private employer who it has to employ keeping in view the principles of laissez faire that 'the lesser it governs, the better itself'.

"Once there is a bar under the Constitution of India, we do not see any reason how the state can force a private employer to employ a local candidate as it would lead to a large-scale similar state enactments providing similar protection for their residents and putting up artificial walls throughout the country, which the framers of the Constitution had never envisaged," the Bench ruled.

The Bench also found the 2020 Act put unreasonable restrictions regarding the right to move freely throughout the territory of India or to reside and settle in any part or the territory of India under Article 19(1)(d) and 19(1)(e) of the Constitution.

The Bench also held the 2020 Act to be violative of the freedom to practise any profession, or to carry on any occupation, trade or business under Article 19(1)(g).

The Bench opined that under the 2020 Act, the private employer had been put under the anvil of the State as to whom to employ and the penalties which were liable to be imposed on contravention of the law on account of any violations apart from leading to criminal prosecution by the filing of a complaint.

These aspects, the Bench opined, could not be considered as reasonable restrictions on rights under Articles 19(1)(d), 19(1)(e) and 19(1)(g).

Read the Order here.