The Punjab and Haryana high court on Friday struck down a Haryana law that reserved 75% private sector jobs, paying up to ₹30,000 a month, for local candidates and found it unconstitutional, delivering a setback to the Manohar Lal Khattar government less than a year before assembly polls.

A two-judge bench of the high court quashed the 2021 law as unconstitutional and violative of Part III (fundamental rights) of the Constitution. The judges held that notions about individual rights have to be in accordance with the text and spirit of the Constitution and not popular or majoritarian notions.

Read here: Haryana govt’s 75% quota for locals in private sector quashed by HC

“The state cannot direct the private employers to do what has been forbidden to do under the Constitution of India. It cannot as such discriminate against the individuals on account of the fact that they do not belong to a certain state and have a negative discrimination against other citizens of the country,” the 83-page verdict by justices GS Sandhawalia and Harpreet Kaur Jeewan said.

“The state, thus, was acting with a telescopic vision and the statute as such is liable to fall foul of the principles laid down by the constitutional judgments of the apex court and the Constitution itself. The concept of constitutional morality has been openly violated by introducing a secondary status to a set of citizens not belonging to the state of Haryana and curtailing their fundamental rights to earn their livelihood,” the bench said.

The court also cautioned that the Haryana law could lead to similar pieces of legislation in other parts of the country. It observed that it was beyond the purview of the state to legislate on the issue and restrict a private employer from recruiting from the open market.

The court “cannot see any reason how the State can force a private employer to employ a local candidate as it would lead to large scale similar state enactments providing similar protection for their residents and putting up artificial walls throughout the country, which the framers of the Constitution had never envisaged”, it observed.

Haryana deputy chief minister Dushyant Singh Chautala told a news channel that the state government will move Supreme Court after examining the detailed judgment.

Industry owners and associations across the state on Friday welcomed the verdict, calling the law an anti-business move with the potential to kill entrepreneurship.

JN Mangla, former president of the Gurgaon Industrial Association, said the court had upheld the fundamental rights of workers and industry owners. “As a private entrepreneur, one should be free to hire a worker, and we had approached the high court as this law infringed on our rights. The court has validated our submission that every person from across the country has the right to work in Haryana. There can be no discrimination,” he said.

Passed in 2021, the Haryana law provided reservation for a “local candidate” defined as someone “domiciled in the state of Haryana”. Under the law, every employer was required to employ 75% “local candidates” for posts where the gross monthly salary was not more than ₹30,000. The Act, which covered private companies, societies, trusts and partnership firms, came into force from January 15, 2022. The law was made applicable for 10 years, but was stayed by the high court last year.

In the judgment, the court said that the Constitution barred discrimination against citizens’ employment on the basis of places of birth and residence.

“The underlying object of the legislation, as has been succinctly put by counsel for the petitioners, is to create an artificial gap and a discrimination qua the citizens of India,” the verdict said.

“Such a brazen act of impunity, thus, cannot be swallowed by the constitutional courts,” the bench said, adding the Act imposes unreasonable restrictions regarding the right to move freely throughout the territory of India or to reside and settle in any part or the territory of India.

The petitioners — which included a clutch of industry bodies — argued that the act is unconstitutional on account of being excessively vague, arbitrary, and also against the basic principle of meritocracy that was the foundation for businesses to grow and remain competitive. It will affect productivity and industrial competitiveness, the pleas said, adding that the government by introducing this policy of “sons of the soil” wants to create reservation in the private sector, which is an infringement of constitutional rights of the employees and citizens of India.

The Haryana government rejected this argument in court, saying the law was necessary to protect the right to life and livelihood of the people domiciled in the state and to protect their health, living conditions and their right to employment. The government maintained that the law does not discriminate against any person on grounds of place of birth or residence, but provides employment to local candidates on the basis of domicile.

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A major electoral promise of the Chautala-led Jannayak Janta Party (JJP), the domicile reservation law was billed as a game changing move by the BJP-JJP coalition government, which used the law to signal to local communities that it will protect their interests. Haryana was also one of several states that have enacted laws in recent years to provide reservation for local residents in the private sector. These include Maharashtra (up to 80% quota), Karnataka (75%), Andhra Pradesh (75%) and Madhya Pradesh (70%). But the validity of most of these laws has been challenged before the Supreme Court and high courts.

Reacting to the judgment, Congress Rajya Sabha MP Deepender Hooda questioned the framing of the law and the government’s efforts in defending it. “It has also become clear that the real BJP-JJP agreement was not about ₹5100 pension and 75% reservation, but about openly engaging in corruption together,” he told media.