Is Haryana’s new reservation law constitutionally tenable?
Haryana government’s new law to reserve 75% of private sector jobs in the state, till a certain salary slab, only for local candidates, has triggered a controversy. The decision fulfils a key election promise of the ruling coalition, with Haryana joining a growing group of states that reserve jobs for local candidates.
The Haryana State Employment of Local Candidates Act, 2021 provides for reservation for a “local candidate”, which has been defined under the law as someone “domiciled in State of Haryana”. Under the law, every employer is required to employ 75% “local candidates” for posts where the gross monthly salary is not more than ₹50,000.
The law is set to confront serious legal challenges once its constitutionality is challenged before a constitutional court—the Supreme Court or the Punjab and Haryana high court.
Here are some pertinent issues at the centre of the controversy around Haryana’s 2021 Act:
What are the provisions in the Constitution that enable reservation/quota?
Part III in the Indian Constitution earmarks fundamental rights for citizens and all other persons while defining the corresponding duty of the State.
Article 14 guarantees equality before the law and equal protection of law to all persons. Similarly, Articles 15(1) and 15(2) also prohibit the state from discriminating against any citizen on grounds of religion, race, caste, sex, place of birth.
But clauses (3) to (5) of Article 15 empower the state to provide for positive discrimination in favour of the grossly underrepresented and neglected sections of the society in order to promote substantive equality. Article 15(3) empowers the state to make special provisions for women and children while Article 15(4) authorises the state to make special provisions for the advancement of socially and educationally backwards or SC/STs. Article 15(5) goes one step further and says the state can reserve admission into education institutions, including private schools or colleges, whether or not aided by the government.
Similarly, Article 16(1) lays down that the state cannot discriminate against any citizen in the matters of employment. Likewise, Article 16(2) too makes it clear that “no citizen shall, on grounds only of religion, race, caste, sex, descent, place of birth, residence or any of them, be ineligible for, or discriminated against in respect or, any employment or office under the State”.
However, clause 3 of Article 16 allows Parliament to make any law with residence qualifications necessary for government jobs, thus introducing the domicile-based preferential treatment. Article 16(4) also allows the state to reserve employment for any backward class of citizens, which in the opinion of the state, is not adequately represented in services. This opens the door for the reservations of Other Backward Classes (OBCs). Article 16(4A) was incorporated, permitting reservation in promotions but restricting the same to Scheduled Caste (SC) and Scheduled Tribes (ST).
After the Constitution (103rd Amendment) Act, 2019, clauses 6 and Articles 15 and 16 have been inserted to provide a further 10% reservation in jobs and educational institutions for economically backward sections in the general category.
These are the relevant provisions in the Constitution that seek to balance the right to equality for all citizens with the right of the state to legislate for reservation in favour of backward classes.
At the same time, the Supreme Court, in Triloki Nath Tiku & Anr Vs State of Jammu & Kashmir, 1966, made it clear that the issue of determination by the state as to whether a particular class of citizens is backward or not is a justiciable one. It said that the state is not the final word on identifying a backward class for providing reservation and that a court can overturn any such determination if it is based on irrelevant consideration or manifests an abuse of power.
Can courts direct the state to provide reservation to SC/ST or backward classes?
No. It has been held in a body of judgments of the Supreme Court that directions cannot be issued to the state to give reservation to any class of citizens.
Starting 1963, several rulings have emphasised that Articles 15(4) and 16(4) are enabling provisions and do not confer any right on SC/STs, OBCs or any other group of citizens to demand reservation as a matter of right, and thus, no such directive can be issued to the state.
In MR Balaji Vs State of Mysore, 1963, a five-judge bench had underscored: “It is necessary to emphasise that Article 15(4) like Article 16(4) is an enabling provision, it does not impose an obligation, but merely leaves it to the discretion of the appropriate government to take suitable action, if necessary.” This judgment quashed the order of the state of Mysore, providing as much as 75% reservation in educational institutions to all communities except Brahmins. It also held that caste cannot be the sole and dominant test for determining social backwardness and the reservation made under Article 15(4) should be reasonable and less than 50%.
Another Constitution Bench in CA Rajendran Vs Union of India, 1968, made it amply clear: “Our conclusion therefore is that Article 16(4) does not confer any right on the petitioner and there is no constitutional duty imposed on the government to make reservation for Scheduled Castes and Scheduled Tribes, either at the initial stage or at the stage of promotion. In other words, Article 16(4) is an enabling provision and confers discretionary power on the State to make a reservation of appointment in favour of backward class of citizens which, in its opinion, is not adequately represented in the services of the State.”
A nine-judge bench in the Indra Sawhney case, 1992, ruled that the power conferred on the state to give reservation to backward classes is to be exercised only if “in the opinion of the State” that there is no adequate representation in the services under the state. This judgment, while dealing with the issues relating to reservation for other backward classes (OBCs) also put a cap of 50% on reservation—a rule that holds the field till now.
Again, in M Nagaraj Vs Union of India, 2006, a five-judge bench ruled that the ceiling of 50%, the concept of creamy layer and the compelling reasons, namely, backwardness, inadequacy of representation and overall administrative efficiency are all constitutional requirements without which the structure of equality of opportunity in Article 16 would collapse. It upheld validity of Article 16(4A) but clarified in the same breath that the state is not bound to make reservation for SC/ST in matter of promotions.
Both the judgments in Indra Sawhney and M Nagaraj have underscored that reservation cannot exceed beyond 50% unless there are “extraordinary reasons” to justify why this ceiling has to be breached. Sufficient reasons must provide the necessity to go beyond 50%, said the judgments, which have recently been applied by the Supreme Court to stay the implementation of the Maratha quota in Maharashtra since it took the total percentage of reservation in excess of 50%. The final decision is yet to come through.
In Suresh Chand Gautam Vs State of UP, 2016, the Supreme Court held that no direction can be given by the court to the state government to collect quantifiable data on the basis of which a decision to provide reservation should be taken, let alone the order to make reservation.
Most recently, in Mukesh Kumar & Anr Vs State of Uttarakhand, 2020, the apex court reiterated that the state cannot be directed to provide reservations for appointment in public posts nor are they bound to make reservation for SC/ST in matters of promotions.
These judgments bring home the point that although the state has been given the authority to provide reservation, such decisions are amenable to judicial review and the Supreme Court, in appropriate cases, has gone ahead to even strike down some of these reservation policies.
Can a law be framed for reservation on the basis of domicile?
Yes, but only by the Parliament. Article 16(3) in the Constitution empowers Parliament to provide domicile-based reservation in public employment and jobs with local or any other authority under a state or a Union Territory.
Exercising this power, in 1957, the Centre passed The Public Employment (Requirement as To Residence) Act to repeal all existing laws in a state or a Union Territory that prescribed requirements as to residence (domicile) for public employment. The Centre, however, reserved its right to lay down rules in respect of certain classes of public employment in certain areas of some states such as Manipur, Tripura, Andhra Pradesh and Himachal Pradesh.
But this power with the Central government is also not unfettered, as was made clear by a judgment of the Supreme Court in 1969 when a Constitution bench of the Supreme Court in AVS Narasimha Rao Vs State of AP declared that the law enacted by Parliament under Article 16 (3), making a special provision for domicile within the Telangana region of the state of Andhra Pradesh for the purpose of public employment, was ultra vires (without power under) the Constitution. It ruled that even Parliament cannot use the power under Article 16(3) to provide for domicile-based reservation in a particular part of the state and that the entire state must be the venue for residential qualification.
Do state governments have any specific power to make laws/policies for domicile-based reservation?
No. State governments have no such power to pass laws directly on domicile-based reservation. The Supreme Court has decried this practice in several judgments.
When the reservations of certain percentage of seats in medical colleges in favour of candidates from rural areas was sought to be justified on economic considerations, a three-judge bench of the Supreme Court, in state of Uttar Pradesh Vs Pradip Tandon, emphatically rejected the plea.
It held: “The reservation for rural areas cannot be sustained on the ground that the rural areas represent socially and educationally backward classes of citizens. This reservation appears to be made for majority population of the State. Eighty per cent of the population of the State cannot be a homogeneous class. Poverty in rural areas cannot be the basis of classification to support reservation for rural areas. The incident of birth in rural areas is made the basic qualification. No reservation can be made on the basis of place of birth as that would offend Art. 15”.
In 1979, in Ramana Dayaram Shetty Vs International Airport Authority of India & Ors, the apex court stated that the power or discretion of the government in the matter of grant of largess including award of jobs, contracts, quotas, licences etc., must be confined and structured by rational, relevant and non-discriminatory standard or norm and if the government departs from standards or norms in any particular case or cases, the action of the government would be liable to be struck down.
In Dr Pradeep Jain Vs Union of India, 1984, the top court dealt specifically with the issue of domicile-based reservation, noting that to regard an individual from one state as an outsider in another state “would be to deny him his constitutional rights and to derecognise the essential unity and integrity of the country by treating it as if it were a mere conglomeration of independent States.”
“It would appear that residential requirement would be unconstitutional as a condition of eligibility for employment or appointment to an office under the State which also covers an office under any local or other authority within the State or any corporation, such as a public sector corporation, which is an instrumentality or agency of the State,” it further held.
The court, in this judgment, also discussed the “sons of the soil” concept while regretting that the Supreme Court initially allowed “sons of the soil” demands to develop claiming special treatment on the basis of residence in the concerned State, because recognising and conceding such demands had a populist appeal. “The result is that ‘sons of the soil’ claims, though not altogether illegitimate if confined within reasonable bounds, are breaking asunder the unity and integrity of the nation by fostering and strengthening narrow parochial loyalties based on language and residence within a state.”
In Nidamarti Maheshkumar Vs State of Maharashtra, 1986, when region-wise classification for admissions to medical colleges was sought to be defended on the ground that Vidharbha and Marathwada regions are backward as compared to Pune and Bombay regions, the apex court declined to accept such contention, saying it is not possible to categorise the regions within the jurisdiction of the various universities as backward or advanced as if they were exclusive categories.
In Sunanda Reddy Vs State of Andhra Pradesh, 1995, the Supreme Court affirmed the observation in Pradeep Jain to strike down a state government policy that gave 5% extra weightage to candidates who had studied with Telugu as the medium of instruction.
In Govind A Mane Vs State of Maharashtra, 2000, the top court quashed the state government’s decision to distribute seats district-wise for admission to B.Ed course, saying that such allocation based on residence would be violative of Article 14 (equality) of the Constitution when it fails to put forth any material to show the nexus between such distribution and the object sought to be achieved.
Similarly, in Kailash Chand Sharma Vs State of Rajasthan, 2002, the court held that “measures taken by the State on considerations of localism are not sanctioned by the constitutional mandate of equality”.
“Attempts to prefer candidates of a local area in the State were nipped in the bud by this Court since long past. We would like to reiterate that residence by itself be it be within a State, region, district or lesser area within a district cannot be a ground to accord preferential treatment or reservation, save as provided in Article 16(3),” highlighted this judgment.
In reserving jobs for “local candidates,” the Haryana’s new law, on the face of it, falls foul of the principles evolved by the Supreme Court in catena of judgments that have developed over last 60-odd years. This will be the prime legal hurdle the state government shall face once the law is challenged in a constitutional court.
How have some states reserved jobs, seats in state assemblies for the locals?
Article 371 of the Constitution lays down “special provisions” for 11 states, including six states of the Northeast. In view of the special circumstances of individual states, Article 371 includes a wide range of specific safeguards that are deemed important for these states.
Under Article 371D, Andhra Pradesh government can organise “any class or classes of posts in a civil service of, or any class or classes of civil posts under, the State into different local cadres for different parts of the State”. There are similar powers vis-à-vis admissions in educational institutions.
Other clauses in Article 371 talk about reserving seats in the Hills area in the Manipur assembly and Sikkim assembly; protection of customs and practices of local inhabitants of Nagaland and Mizoram.
Some states have circumvented the prohibition under Article 16(2) by providing for institutional reservations in technical and medical education wherein certain number of seats can be reserved for students passing the PUC or pre-medical examination of the same university or clearing the qualifying examination from the school system of the educational hinterland of the medical colleges in the state, as was ratified by the Supreme Court in Dr Pradeep Jain’s case.
In addition to this, some states have bypassed requirements for Articles 16(2) and 14 by including local language as a chief criterion, given the fact that some states conduct official business in their regional languages. Prescription of local language indirectly ensures that local citizens are preferred for jobs. States such as Maharashtra, West Bengal and Tamil Nadu require a language test.
As on date, several states have enacted laws to provide reservation for their local residents in the private sector. These states include Maharashtra (up to 80% quota), Karnataka (75%), Andhra Pradesh (75%) and Madhya Pradesh (70%). But validity of most of these laws are pending challenged before the Supreme Court and high courts and an authoritative ruling is awaited.
Can a state make it legally contingent for a private sector firm to reserve jobs for local residents?
The Act mandates all private establishments in Haryana to provide 75% of new jobs to local candidates. Under Article 19(1)(g), all citizens have a fundamental right to practice any profession, or to carry on any occupation, trade or business as a fundamental right. By mandating private institutions to employ a certain set of candidates, the Act constricts their right to carry on their occupation freely, which will be a major leg of challenge to the law.
Following a series of judgments until 2005 when PA Inamdar case ruled that the state cannot insist on private educational institutions which do not receive aid from the state to implement reservation on any criterion except merit, the 93rd Constitutional Amendment Act was passed in 2005 to allow the state to make provisions for the advancement of socially and educationally backward class of citizens or SC/ST in matters relating to admission in private educational institutions.
However, the amendment does not give power to the state to make such provisions for employment in private institutions and therefore, any law in this regard lacks a constitutional support.
The private sector firms are going to cite the constraints arising out of this legal obligation to buttress that the law effectively interferes with their constitutional rights to carry on their trade freely, especially when they do not receive any sops from the government and the law also fails on constitutional touchstone.
A state law that prima facie exercises a power exclusively within the domain of the Parliament under Article 16(3), breaches 50% ceiling on reservation, and also interferes with the constitutional right of citizens to conduct business or trade has be tested on the anvils on the constitutional and legal principles. The Supreme Court must pronounce a commanding judgment to settle the issue once and for all.