– Arshnit Sandhu
Reservation is a concept derived from the principle of equity. The Principle of Equity ensures the need for preferential treatment to vulnerable groups of people in society to achieve a level of equality with the general population of the society. Therefore, reservations in the field of education, government jobs, etc help the individual of the scheduled caste, the scheduled tribes, and other backward classes to secure an equal status in society. In our Indian Constitution, the domicile reservation by the state in public employment is prohibited and there is no provision related to the reservation in the private sector.
Recently, Haryana has enacted the legislation (Haryana State Employment of Local Candidates Act, 2021) ensuring 75% domicile reservation in private jobs. In the list of granting reservations in the private sector, the states of Madhya Pradesh, Andhra Pradesh, and Karnataka have tried to implement the legislation. Also, Jharkhand Assembly has passed The Jharkhand State Employment of Local Candidates Act, 2021 to provide 75% in private jobs for residents of salary up to Rs 30,000. With the implementation of this legislation, it becomes pertinent to understand the constitutional validity of reservation in private jobs.
Constitution Provisions related to Reservation
In order to understand the present reservations in the private sector, the provision of reservation under the Indian Constitution must be well-read. Article 16 of the Constitution of India postulates about
“Equality of opportunity in matters of public employment. –
(1) There shall be equality of opportunity for all citizens in matters relating to employment or appointment to any office under the State.
(2) 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 of, any employment or office under the State.
(3) Nothing in this article shall prevent Parliament from making any law prescribing, regarding a class or classes of employment or appointment to an office [under the Government of, or any local or other authority within, a State or Union territory, any requirement as to residence within that State or Union territory] prior to such employment or appointment”.
This article nowhere specifies about the reservation in private sector jobs. It is confined to public employment i.e state under Article 12 of the Indian Constitution.
Domicile Reservation (Reservation to Local Residence)
Reservation to the residents of a particular state can be referred to as ‘son of soils’ policies which is prohibited under Article 16(2). The purpose of Article 16(2) was to ensure that India is one nation and there is freedom of movement and multiple job opportunities for an Indian national. Though Article 16(3) provides for a reservation to a residence in public employment, the power is vested on the Central Government via enactment of a law.
The Public Employment (Requirement as to Residence) Act, 1957 enacted by the government in pursuance of Article 16(3) aims to enact “special provisions for residence in regard to certain classes of public employment in certain Andhra Pradesh, Himachal Pradesh, Manipur or Tripura” Article 371D the Indian Constitution also gives special power to the state government to provide equal opportunities to the residents in education and public employment.
As far as the position of the courts is concerned, the Supreme Court Dr. Pradeep Jain vs. Union of Indiacriticized the reservation to a residence in the admission of medical college and observed as follows :
“Today, unfortunately, a citizen who has his permanent residence in a state entertains the feeling that he must have a preferential claim to be appointed to an office or post in the state or to be admitted to an educational institution within the state vis-a-vis citizen who has his permanent residence in another state because the latter is an outsider and must yield place to a citizen who is a permanent resident of the state, irrespective of merit. This, in our opinion, is a dangerous feeling which, if allowed to grow, indiscriminately, might one day break up the country into fragments, though, as we shall presently point out, the principle of equality of opportunity for education and advancement itself may justify, within reasonable limits, a preferential policy based on residence.”Dr. Pradeep Jain vs. Union of India
Also, in the case of V.N. Sunanda Reddy and others vs. State of Andhra Pradesh and others, the Supreme court observed the finding of the Pradeep Kumar Case and struck down a government policy that ensured 5% extra weightage to one who studied and knew Telugu. From the above two judgments, it becomes clear that the courts are not in favor to uphold the legislation which gives preferential treatment to the residents of a particular state because it damages the very spirit of the constitution.
Reservation in Private Sector: legal or illegal?
The above discussion related to “resident reservation” was limited to public employment. In the matters of reservation in private sector jobs, there is no provision to validate the laws which are being enacted by the different states. Therefore, the question arises whether the reservation in the private sector can be in consonance with Article 14, Article 19(1)(d), Article 19(1)(e), and Article 19(1)(g).
Before delving into this question, it is necessary to know the meaning of the private sector. In the Haryana State Employment of Local Candidates Act, a private sector means companies, societies, trusts, and limited liability partnership firms. Similarly, in The Jharkhand State Employment of Local Candidates Act, 2021, there is a wide meaning of private sector as it includes shops, establishments, mines, enterprises, industries, companies, societies, trusts, Limited Liability Partnership firms, and any person employing ten or more persons as the private sector and an entity.
- Conflict with Article 14
Article 14 of the Indian Constitution ensures equality before the law and equal protection of laws to all the persons in India. Here “all person” means a natural or a legal person. According to the spirit of the Indian Constitution, all persons, resident or non-resident, citizen or non-citizen must be treated equally. Therefore, a reservation in private jobs will be directly violative of Article 14.
The recent legislation relating to reservation in private sector can also be tested on the touchstone of reasonable classification i.e there can be the differential treatment if there is a proper nexus between the legislation and the purpose which it ought to achieve. Here, the primary object of the Haryana State Employment of Local Candidates Act is to have a check on the influx of migrants for low-income jobs, therefore, the reservation is limited to salary up to Rs 50,000.
The influx of migrants, who ought to be citizens of India cannot be denied employment and increasing competition in the low-income jobs can increase efficiency as well. The state government can also come up with more employment opportunities in the state. Indirectly, the restriction or the reservation in private sector is unjust differential treatment. Passing the test of reasonable classification requires the court to analyze the facts and circumstances of the situation. There is no strict rule of such classification.
- Conflict with Article 19(d), Article 19(e), and Article 19(g)
The above articles postulate freedom to freely throughout the territory of India, freedom to reside and settle in any part of the territory of India, and freedom to practice any profession or to carry on any occupation, trade, or business respectively. If a non-resident of a state is not provided with a job opportunity in any particular state, his freedom to move freely and settle down in any part of India will be violated.
The repercussions of these state actions, not only will affect the non-residents but also will affect the private sector. It will be a direct violative of freedom to practice any profession or to carry on any occupation, trade, or business. The private sectors will be forced to take residents in jobs and there will be the elimination of choice. Rather than being a mere directory provision to fill the private job position with residents, it makes it mandatory by providing a non-compliance i.e punishable with a penalty which shall not be less than fifty thousand rupees but which may extend to two lakh rupees and if the contravention is continued after conviction, with a further penalty which may extend to one thousand rupees for each day till the time contravention is so continued. Therefore, it is clear that the states are focusing on implementing the ‘sons of soils’ policy which is much criticized against the spirit of the constitution.
Recent Development on the Haryana State Employment of Local Candidates Act, 2021
On the question of the validity of the Act. Punjab and Haryana High Court, in Faridabad Industries Association v. State of Haryana which put a stay on the law by interim order unless the matter is not decided by the court. Recently, the Supreme Court bench comprising of Justice L. Nageswara Rao and Justice Pamidighantam Sri Narasimha in State of Haryana v. Faridabad Industries Association has struck down the stay on the law and gave the following directions i,e the Punjab and Haryana Court must decide on the matter soon, and the government shall not force the private employers to implement the law for the appointment.
As the matter of validity of reservation in private sectors is sub judice, the state actions have been criticized by the commerce industry as violative of their freedom to carry on their businesses. The stakeholders are of the view that reservation is not a solution but are willing to partner with the Government. Reservations, per se, is not a fundamental right of every citizen, its main purpose is to fight social-economic discrimination of the society. It is very much possible that in the light of ‘public interest, the implementation of these laws is necessary to protect the residents of the state. But, the scope of public interest being vague, it becomes necessary to draw a line to what extent the reservation can be granted in the name of public interest. Also, the reservation for admission of private sectors has been upheld, meeting the doctrine of proportionality. Despite being violative of the constitutional provisions, a liquet position on the respect of the reservation in private sector arises curiosity to await the decision by the Hon’ble Courts across the country.
**The author is pursuing LLM in Corporate and Commercial Law from National University of Study and Research in Law (NUSRL), Ranchi.
Disclaimer: The views, thoughts, and opinions expressed in the text belong solely to the author and not to the Jurisedge Academy.
 Article 16 of the Indian Constitution.
 12. Definition.—In this Part, unless the context otherwise requires, “the State” includes the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India.
 Special provisions with respect to 5 [the State of Andhra Pradesh or the State of Telangana].—6 [(1) The President may by order made with respect to the State of Andhra Pradesh or the State of Telangana, provide, having regard to the requirement of each State, for equitable opportunities and facilities for the people belonging to different parts of such State, in the matter of public employment and in the matter of education, and different provisions may be made for various parts of the States.]
 AIR 1984 SC 1420
 AIR 1995 SC 914
 Article 4 of the Haryana State Employment of Local Candidates Act, 2021
 Article 19(1)(g) of the Indian Constitution
 Section 12 of the Haryana State Employment of Local Candidates Act, 2021