Apex Court Lifts the Stay Order on Law Enforcing 75% Reservation in Haryana

The State government of Haryana had officially notified the Haryana State Employment of Local Candidates Act, 2020 (“Act”) and its subsequent rules, the Haryana State Employment of Local Candidates Rules, 2021 (“Rules”) on January 15, 2022, wherein 75% (seventy-five per cent) reservation has been imposed in the employment of local candidates (domiciled in Haryana) who are earning INR 30,000/- (Indian Rupees Thirty Thousand) or less. The Act covers under its ambit all the private companies, societies, partnership firms, trusts, any person employing 10 (ten) or more persons in the State of Haryana or any other entity which may be notified by the Haryana State government from time to time. However, the said move of the Haryana government was not welcomed by various local industrial associations and trade unions on the grounds of the constitutional validity of the Act alongside the violation of fundamental rights of the workers. To this end, the writ petition was filed before the Punjab and Haryana High Court (“High Court”). The main point of contention in the said petition was regarding the violation of the constitutional right of the private employer to trade and an employee’s right to seek employment. On the basis of the arguments presented before the High Court, an order of interim stay was imposed on the applicability of the Act. However, the matter has also been taken up by the Haryana government before the Supreme Court of India. We have, herein below, discussed the observations provided by the High Court and the Supreme Court respectively in the said matter.

Key Development

On the basis of the petition filed before the High Court, the matter was taken up for hearing on February 03, 2022 wherein the High Court subsequently granted relief in the form of an interim stay to the petitioners citing the reason that the said petition involves a substantial question of law, that is, “Whether any State can restrict employment (even in the private sector) on the basis of domicile”. The High Court stated that in order to examine the constitutional validity of the Act and its subsequent rules, it is imperative to address the said question of law in the petition. As a result, the implementation of the Act and its subsequent Rules have been put to stay by the High Court and the said petition is now listed for regular hearing on April 18, 2022.

Simultaneously, Haryana Government also filed the petition before the Supreme Court stating that the impugned order passed by the High Court was in contradiction with the law set by the Supreme Court on staying of legislation. On the basis of the contention argued before the Supreme Court, the said matter was taken up for hearing on February 17, 2022 before the division bench comprising of Justice Nageswara Rao and Justice Narasimha. It was further argued that a presumption of legality is held in favour of the legislation till the time it is not either prima facie unconstitutional or manifestly illegal. Thus, on the basis of the arguments presented before the Supreme Court, it was opined by the bench that while issuing the order, the High Court did not provide sufficient and valid reasons for imposing an interim stay on the applicability of the Act.

Therefore, the impugned order dated February 03, 2022, was set aside by the Supreme Court due to insufficient reasoning and further, the High Court was directed to expeditiously deal with the writ petition and issue appropriate ruling within 4 (four) weeks. The Supreme Court also directed that till the time the said issue is addressed by the High Court; the Haryana government was directed not to take any coercive actions against the employers due to non-compliance with the provisions of the Act.

Conclusion

In view of the foregoing, it will be interesting to note any further developments in the said matter as currently, it cannot be ascertained in what manner and basis the High Court shall decide the substantial question of law. Further, a continuous watch must be kept on the order that will be passed by the High Court to note any amendment in the Act for the purpose of its implementation.