The Supreme Court on Thursday set aside a Punjab and Haryana High Court order staying a controversial State law which provides 75 per cent reservation for local youths in private sector jobs earning less than ₹30,000 a month.

Industry associations have said the law “affects the idea of India as an economic unit”.

A Bench of Justices L. Nageswara Rao and P.S. Narasimha set aside the February 3 stay order of the High Court on the ground that it did not give “sufficient reasons”.

The Bench observed that every law passed by legislature is presumed to be legal and an order of stay of their implementation by a court of law should be reasoned. The High Court has not given sufficient reasons for stopping the Haryana law in its tracks on February 3.

“There should be manifest illegality... This is not the way a statute ought to be dealt with... We are not on the merits, but the way in which the High Court dealt with this,” Justice Rao remarked orally.

The apex court, without going into the merits of the issue, requested the High Court to expeditiously decide the pending writ petition filed by industrialists within four weeks from today.

The parties were directed to not to seek adjournments in the High Court.

Meanwhile, the top court ordered the State government not to take any “coercive steps”, for the time being, against employers in the highly industrialised State for violating the Haryana State Employment of Local Candidates Act. Industry bodies said in court that the Act impacts 48,000 registered companies by ushering in “inspector raj”.

Provisions of the Act

An employer faces a fine of ₹10,000 to ₹2 lakh for violation of the Act. The statute covers companies, societies, trusts, limited liability partnership firms, partnership firms, and large individual employers. Many of these hire talents from outside Haryana.

Senior advocate Dushyant Dave, appearing for Faridabad Industries Association, opposed the Haryana government’s appeal against the High Court stay.

“Reservation in private sector has no basis in the Constitution. The law impacts not only employment but the very existence of livelihood. There was no empirical study done, no data whatsoever to justify this law. Entry 24 of the Concurrent List in the Seventh Schedule of the Constitution does not back this law. What is the presumption of constitutionality which this law provides?” Dave asked.

‘Far-reaching effects’

He submitted that the continuation of the law’s implementation, which came into effect in January 2022, would have far-reaching effects, not only in Haryana, but across India as it would not stop other States from enacting similar laws which exclude jobs to residents of other states.

“Everybody will be affected... Even law firms,” Dave said.

He said if the apex court felt that the High Court need to give reasons to maintain the February 3 order, the High Court could be asked to decide the writ petition pending before it finally.

Dave said the questions on the validity of the law required immediate litigation and a quick decision.

Senior advocate Shyam Diwan, for Manesar Industrial Welfare Association, said the law had a “profound impact on ongoing businesses” and required day-to-day hearing.

“This is a drastic Act,” he submitted.

Solicitor General Tushar Mehta, for Haryana, said the stay order of the High Court was passed without application of mind.

“There is a presumption of legality in favour of a law and it is ordinarily not stayed unless the legislation is prima facie unconstitutional or illegal... There was no reason given by the HC for staying the legislation,” Mehta argued.

He referred to the need “to regulate migrants from settling elsewhere”. “Firstly, we are concerned about livelihood... The livelihood of everyone,” Justice Rao reacted. Mehta said States, including Haryana, Andhra Pradesh, Jharkhand and Maharashtra, have implemented similar laws. He requested the apex court to examine the validity of the laws in all these States and deliver an authoritative decision on their validity. But the top court left it to the Punjab and Haryana High Court to decide the case finally, assuring that it has meanwhile “protected those working”.