Why Karnataka's Quota Bill Contrasts with Haryana's Legal Rejection?

On July 17, the Karnataka government decided to postpone the implementation of a controversial bill requiring job reservations for locals in the private sector, following strong opposition from industry stakeholders.

Earlier, on July 15, the Karnataka cabinet had approved the draft State Employment of Local Candidates in the Industries, Factories and Other Establishments Bill, 2024. This bill proposed reserving 50 percent of management positions and 70 percent of non-management roles for local candidates, specifically Kannadigas.

Less than a year ago, the Punjab and Haryana High Court had invalidated a similar legislation enacted by Haryana. The court criticized the law, stating that it excessively restricted private employers, infringing upon individuals' rights to pursue occupations, trades, or businesses.

Haryana has since appealed this decision in the Supreme Court, where the matter remains pending.

Similarly, in 2019, Andhra Pradesh passed a law mandating 75 percent reservation for locals in private sector jobs. However, the law has not been implemented, and its constitutional validity is being challenged in the state's High Court.

Why was the Haryana law struck down by the Punjab and Haryana High Court?

The Haryana State Employment of Local Candidates Act, 2020 was invalidated by the Punjab and Haryana High Court for violating the Constitution. According to Akshay Jain of Saraf and Co., the court deemed the law discriminatory, as it implied that individuals not from Haryana were ineligible for employment solely based on their domicile. The court emphasized that the state overstepped its authority by trying to dictate private employers' hiring practices, which infringed upon fundamental constitutional rights.

In its ruling, the court strongly asserted that no law should undermine the essence of the Constitution itself, as the state's attempt to prioritize local candidates risked eroding the nation's constitutional integrity and identity. The judgement underscored that any legislation that differentiates between citizens based on their state of domicile is inherently unjustifiable under constitutional principles.

The court emphasized the concept of fraternity, which embodies a sense of unity among all Indian citizens, regardless of their place of origin. It rebuked the idea that citizens from other states should be barred from seeking employment in Haryana, as this contradicted the foundational values of equality and non-discrimination enshrined in the Constitution.

According to the judgement, the law violated constitutional morality by relegating non-Haryana residents to a secondary status and limiting their fundamental rights to earn a livelihood. The court clarified that the state cannot dictate to private employers whom to hire, as this infringes upon both individual freedoms and the principles of fair employment practices.

Do states have the legal authority to pass such laws?

Sumant Nayak, a senior partner at Desai and Diwanji, emphasized that according to Entry 26 of List II of the Seventh Schedule of the Indian Constitution, the state legislature has the authority to enact laws concerning trade and commerce within its jurisdiction.

Jasmine Damkewala, a senior partner at Circle of Counsels, highlighted that Article 19(1)(g) of the Indian Constitution guarantees citizens the right to practice any profession, carry on any occupation, trade, or business. She pointed out that state-imposed quotas might infringe on this right by restricting employers' freedom to hire based on merit.

Article 19 of the Constitution pertains to fundamental rights, specifically addressing freedom of speech and expression. Damkewala noted that while clause 4 of the same article allows the state to reserve appointments or posts for underrepresented classes in state-run services, the application of such provisions to private employment raises significant questions.

Manmeet Kaur, a partner at Karanjawala and Co., mentioned that certain states in India enjoy special protections under the Constitution. For instance, Andhra Pradesh under Article 371(d) has the authority to conduct direct recruitment for local cadres in specified areas. In Uttarakhand, jobs in class III and class IV categories are reserved for locals.

Several states, including Maharashtra, Gujarat, Nagaland, Assam, Manipur, Andhra Pradesh, Telangana, Sikkim, Mizoram, Arunachal Pradesh, Goa, and Karnataka, have been granted special legislative powers to enact specific laws aimed at uplifting backward communities within their jurisdictions.

Kaur further explained that some states have circumvented the provisions of Article 16(2) of the Constitution by implementing language fluency requirements. In Maharashtra, for instance, eligibility for certain jobs requires residency in the state for over 15 years with fluency in Marathi. Similarly, West Bengal mandates reading and writing skills in Bengali for recruitment to certain posts.