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No Coercive Steps Against Employers Under Haryana Law Providing 75% Job Quota For Locals Till HC Decides Validity : Supreme Court

Sohini Chowdhury
17 Feb 2022 5:56 AM GMT
No Coercive Steps Against Employers Under Haryana Law Providing 75% Job Quota For Locals Till HC Decides Validity : Supreme Court
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The Supreme Court on Thursday day set aside the interim order of the Punjab and Haryana High Court which stayed the operation of the Haryana law(The Haryana State Employment of Local Candidates Act 2020) which provided 75% reservation for local people in private sector jobs having a monthly salary of less than Rs 30,000.Noting that the High Court has not recorded any reasons for its stay...

The Supreme Court on Thursday day set aside the interim order of the Punjab and Haryana High Court which stayed the operation of the Haryana law(The Haryana State Employment of Local Candidates Act 2020) which provided 75% reservation for local people in private sector jobs having a monthly salary of less than Rs 30,000.

Noting that the High Court has not recorded any reasons for its stay order, the Supreme Court set it aside and requested the High Court to finally decide the matter within four weeks. The Supreme Court further ordered that there should be no coercive steps against employers under the Act in the meantime and directed that the parties should not seek adjournments.

In the above terms, a bench comprising Justice L Nageswara Rao and PS Narasimha disposed of the special leave petition filed by the State of Haryana against the High Court's order.
"...we do not intend to deal with the merits of the matter as we propose to request the High Court to decide the writ petitions as expeditiously as possible, at any rate within 4 weeks.  The parties are directed to seek no adjournments and present before the court next week for fixing the schedule of the hearing.

In the meanwhile, the State of Haryana is directed not to take any coercive steps against the employers. The impugned order dated 03.02.2022 is set aside as the HC has not given sufficient reasons for staying", the bench dictated in the open court.

Solicitor General of India Tushar Mehta, appearing for the State of Haryana, submitted that the High Court's order should be interfered on the grounds that it has not recorded any reasons and it has stayed the ongoing implementation of a statute, ignoring the presumption of constitutionality of a legislation.

"There is a presumption of legality of statute. There should be some patent illegality for staying it. The Court can't stay legislation with a single line order", the bench orally observed.

Senior Advocate Dushyant Dave, appearing for the employers association, raised objections to the setting aside of the High Court's order. He submitted that the legislature has no constitutional power to enact a law providing reservation for domiciles as such a law will be void for violating Article of the Constitution.

"If there are prima facie substantial questions of law, then interim order must follow. The livelihood of employees are at stake. Also, the very existence of employers are also affected. If I need a fitter, can I be asked to wait till I find a fitter from Haryana.  Even a law firm in Gurgaon will be affected. They need to find juniors from Haryana", Dave urged.

Dave highlighted that as per settled precedents, there has to be some empirical study showing backwardness of a particular class before providing them reservation. Such a study is totally absent in this case.

Further, Dave asserted that the High Court has applied its mind to the situation and passed the order after taking note of these Constitutional infirmities. If the legislation is manifestly unconstitutional, it has to be stayed. Pointing out that the High Court has posted the matter for final hearing in April,  Dave suggested that the best course will be to prepone the hearing in the High Court while maintaining the interim order.

Senior Advocate Shyam Divan, appearing for another employers association, submitted that the law has a profound impact on the functioning of industries. Saying that the
"law is very drastic", he pleaded that the interim order be not vacated. He suggested that the best course will be to treat it as an ad-interim order and allow the State to raise its objections to it. At least there should be an order protecting the employers from coercive steps under the Act in the meanwhile.

"It really affects the whole idea of India as an economic unit. This affects the concept of India as a federation", Divan submitted.

The bench said that the petitioners might have a good case on merits but it was concerned with the manner in which the interim order was passed by the High Court.

"Courts are reluctant to pass interim orders staying legislations. Stay of legislation can only be when the Court is of the opinion that it is manifestly unjust or glaringly unconstitutional. No reasons are given by the High Court in support of the impugned order by which a legislation is stayed. Therefore, the impugned order is set aside", SC said in the order.

The stay on the law came from the High Court Bench of Justice Ajay Tewari and Justice Pankaj Jain on a Writ petition challenging the vires of the Haryana State Employment of Local Candidates Act 2020.

After hearing Tushar Mehta, Solicitor General of India on behalf of the State of Haryana, the High Court admitted the Writ Petitions and granted a stay on the operation of the Act.

The plea had been moved last month by the Faridabad Industries Association (FIA) before the Punjab and Haryana High Court. Admitting the plea, the Court also issued a notice to the state government
It may be noted that the Haryana State Employment of Local Candidates Act 2020, which was notified on November 6, 2021, seeks to provide 75 percent reservation for local candidates in private sector jobs that offer a salary of less than Rs 30,000 a month. The Act is scheduled to come into effect on January 15, 2022.

The Law applies to all Companies, Societies, Trusts, Limited Liability Partnership Firms, Partnership Firms, and any person employing ten or more persons, but excludes the Central Government or the State Government, or any organization owned by them.

The plea before the Court

The petition has been filed by FIA, a premier industries association of North India, formed in 1952 by a group of enterprising industrialists. It challenges the Act for being unconstitutional and violating Articles 14, 15, and 19 of the Constitution of India. The petition also seeks a stay on the implementation of the Act until it is finally decided.

The plea claims that the Act is unconstitutional on account of being excessively vague, arbitrary, and inter alia granting overly broad discretion to the Authorised Officers appointed therein, and as such provides an independent ground for striking down the Act as unconstitutional.

Averring that the Act is applicable to all diverse nature of employment, is not based upon intelligible differentia and rational classification and hence, is ultra vires, the plea further adds thus:

"The Act purports to effectively provide for reservation in private employment and represents an unprecedented intrusion by the government into the fundamental rights of private employers to carry out their business and trade, as provided under Article 19 and the restrictions being places upon such a right are not reasonable but are arbitrary, capricious, excessive and uncalled for."

Importantly, the plea argues that the Law fails to take into account practical commercial concerns and avers that the domicile criteria provided in the Act goes on to violate the mandate of Article 16 (2) of the Constitution which provides that no citizen shall be ineligible for or discriminated against in respect of employment on the ground only of religion, race, caste, sex, descent, place of birth, residence or any of them.

In addition to the above, the plea states that the Act is contrary to the very idea of common citizenship for the Union of India and that it fails to uphold the federal structure of the Union of India which is part of the basic structure of the Constitution of India.

Case Title : State of Haryana vs Faridabad Industries Association and anothers

Citation : 2022 LiveLaw (SC) 178

Head Notes

Practice and Procedure - Stay of legislation - Stay of legislation can only be when the Court is of the opinion that it is manifestly unjust or glaringly unconstitutional - Sufficient reasons should be given for staying legislations

Haryana State Employment of Local Candidates Act, 2020 - Constitutional Validity - Interim order passed by Punjab & Haryana High Court staying the implementation of the Act set aside - Stay of legislation can only be when the Court is of the opinion that it is manifestly unjust or glaringly unconstitutional - Sufficient reasons should be given for staying legislations.

Click here to read/download the judgment


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