Case title: 

IMT Industrial Association & Anr v. State of Haryana & Anr

Date of Order: 

17.11.2023

Bench: 

Hon’ble Mr. Justice G.S. Sandhawala

Hon’ble Ms. Justice Harpreet Kaur Jeewan

Parties: 

Petitioner(s): IMT Industrial Association & Anr

Respondent(s): State of Haryana & Anr

SUBJECT:

In the case of IMT Industrial Association & Anr v. State of Haryana, the Hon’ble High Court of Haryana (hereinafter referred to as ‘the High Court’ or ‘the HC’) emphatically struck down the Haryana State Employment of Local Candidates Act, 2020 which provided 75% reservation in the private sector jobs for domiciles of Haryana earning less than Rs 30,000 per month. The High Court declared the law unconstitutional, citing its far-reaching and unreasonable restrictions on private employers’ rights.

IMPORTANT PROVISIONS:

• The Constitution of India
• The Haryana State Employment of Local Candidates Act, 2020 (the 2020 Act):
• The Haryana Registration & Regulation of Societies Act, 2012
• The Indian Companies Act, 1956
• The Public Employment (Requirement as to Residence) Act, 1957
• The Indian Trust Act, 1882
• The Haryana Parivar Pehchan Act, 2021 (Pehchan Act)
• The Representation of People Act, 1951
•  The Nagpur Improvement Trust Act, 1936
• The Land Acquisition Act, 1984

OVERVIEW:

• Petitioners challenge the Haryana State Employment of Local Candidates Act, 2020, which reserves jobs in the private sector for local candidates.
• Petitioner contested that the provisions of the 2020 Act constitute an unprecedented intrusion by the State Government into the fundamental rights of private employers under Article 19.
• The Petitioners allege infringement of Article 14 of the Constitution, asserting that all citizens have the right to equal employment and the freedom to reside and settle anywhere in the State of Haryana.
• A fundamental objection is raised against the Act for attempting to create a divide among individuals domiciled in different states.
• The petitioners contested that the State of Haryana lacks the legislative competence to pass such a law, asserting that it falls within the domain of central legislation and violates Article 246 of the Constitution.

ISSUES RAISED:

• Whether the Writ petition would be maintainable keeping in view the fact that the Act has been challenged principally by an association of persons and whether they could claim the violations of the fundamental rights under Part-III of the Constitution of India and whether they are liable to be heard on the merits?
• Whether it was within the ambit of the State to legislate upon the issue in question given the specific bar provided under Article 35 of the Constitution of India and whether the legislation would be covered under Entry No. 81 of the Union List?
• If question no. 2 is answered either way, whether the State could provide legislation to private employers to do what was forbidden for it to do under the Constitution of India?
• Whether the legislation provides reasonable restrictions in the interest of the public and thus gives the right to the State under Article 19(5) and 19(6) of the Constitution of India to justify the same?

ARGUMENTS ADVANCED BY THE PETITIONER(S):

• The 2020 Act conflicted with Constitutional provisions, particularly Sections 16(2) and 16(3).
• The Parliament alone could legislate on employment based on residence.
• The 2020 Act violated fundamental rights, specifically targeting Article 19(1)(g) regarding the practice of professions or occupations. References were made to Articles 19(5) and 19(6), stressing that any restrictions must be reasonable and in the interest of the general public.
• The 2020 Act constitutes a fraud of State power, by allegedly overstepping permissible limits, especially in light of Article 15(3) prohibiting discrimination based on place of birth.
• The 2020 Act promotes regional chauvinism and contradicts the Constitutional mandate of equality of opportunity in public employment as per Article 16(2). It undermines the unity of the country by denying private employment based on birthplace.
• As per Article 38, a State is obliged to minimize inequalities and provide opportunities. The 2020 Act, withdraws opportunities based on birth, which is a departure of constitutional principles.

• The word “migrants” used in the 2020 Act, ran afoul of Article 51’s mandate of promoting harmony and common brotherhood.
• The Act is aimed at protecting the livelihood, health, living conditions, and employment rights of Haryana’s domiciled people by preventing an influx of human resources, which is violative of Articles 19(1)(e) and 19(1)(g) of the Constitution.

ARGUMENTS ADVANCED BY THE RESPONDENT:

• The petition lacked merit.
• Reference was made to the case of State Trading Corporation of India Ltd v. the Commercial Tax Officer and Ors, asserting that a company was not a citizen and could not invoke protection under Article 19 as per the Indian Companies Act.
• Fundamental Rights cannot be challenged based on preliminary objections, relying on the cases of British India Steam Navigation Co. Ltd. v. Jasjit Singh and Tata Engineering and Locomotive Co. Ltd. v. The State of Bihar.
• Objections were raised regarding the alleged concealment of information related to industrial plot allotments, arguing that similar clauses requiring the appointment of 75% local candidates existed.
• Conditions mandating preference for Haryana domicile candidates were referred to in the State Management Procedures for plot allotments.
• In the case of S.P. Chagalvaraya Naidu v. Jagannath, to argue that if a case was based on falsehood, the petitioner had no right to approach the court.
• Parties with non-disclosures should not be heard on merits and unscrupulous litigants could not invoke writ jurisdiction if vital facts were withheld- M/S. Prestige Lights Ltd v. State Bank of India.

JUDGEMENT ANALYSIS:

• Judgments of the Supreme Court have clarified the issue of maintainability and it is not for the State to raise objections that an association of persons cannot claim violation of Fundamental Rights.
• The issue before the High Court is not regarding any cancellation of allotment, thus arguments raised against conditions of plot allotments were not concerned in this aspect.
• The High Court is not barred from examining the validity of the Statute on the grounds of concealment by Petitioners and the Statute ultra vires the Constitution of India.
• The mere use of the word ‘migrant’ used in the Statement of Objects and Reasons would not bring the Statute beyond the purview of the State Legislation.
• The purpose was to boost local employment and train the local workforce and it was in the interest of the general public.
• Relying upon Article 15(4), it was pointed out that it was permissible for the State to make special provisions for the advancement of any socially and educationally backward classes of citizens, though discrimination based on birthplace was prohibited for the State.
• Article 15(6)(a) specially provides for the advancement of weaker sections of citizens which gave the power to the State.
• There is a bar as such mandated under the Constitution regarding discrimination against citizens of India relating to employment based on their birthplaces and residence and to make them ineligible or discriminated against in respect of the State.
• The Parliament alone was given the right to enact an exception regarding the ban on discrimination based on residence and regarding positions with the employment of the State Government.
• The State lacks the authority to legislate on the matter and constrain private employers from hiring individuals from the open market, particularly for roles earning less than Rs.30,000 per month, implying a view that such restrictions on private employment fall outside the State's legislative jurisdiction.
• In the presence of constitutional restrictions, it is unjustifiable for the State to compel private employers to hire local candidates. Such a practice could result in multiple states enacting similar protective measures, creating artificial barriers among regions.
• The High Court highlighted the potential adverse consequences of such state-specific enactments on the national unity envisioned by the Constitution's framers.
• The limitations outlined in the statute have extensive and unreasonable consequences, leading to restrictions that cannot be justified or protected under Articles 19(5) and 19(6) of the Constitution of India.

CONCLUSION

In its decisive ruling against the restrictions imposed by the State of Haryana, the Punjab and Haryana High Court, firmly declared that the far-reaching effects of the imposed restrictions cannot be deemed reasonable in any way, precluding any justification under Articles 19(5) and 19(6) of the Constitution of India. The Division Bench emphasized that a government should not discriminate against individuals based on their state of origin, as demonstrated by its annulment of the 2020 law from the Haryana State Government, which aimed at providing 75% reservation in private jobs exclusively to state residents. The High Court ruled in favour of the petitioner, stating that the statute goes against the fundamental concept of common citizenship outlined in the Constitution of India by creating differences among individuals from different states. The writ petition was allowed.