Authored by Chandra Kant Singh a 2nd-year student at RMLNLU, Lucknow
Introduction
Recently, the Karnataka Legislature withheld a controversial bill named Karnataka State Employment of Local Industries Factories Establishment Act Bill, 2024, which steered to an uproar in the private industry of the state. The bill aimed at reserving 50% and 70% seats for Kannadigas in management and non-management respectively in private companies in the state. Unsurprisingly, Karnataka is not the first state to introduce domicile reservation in private employment, states like Haryana and Jharkhand are also included. This alarming trend is witnessing an uptick because of widespread unemployment on local levels, which pressurises the representatives to reserve a major portion for the locals in employment. However, such actions must withstand the test of constitutional scrutiny, which they appear to be failing.
Affirmative action is an important scheme of the Constitution, tailored to ensure equality of opportunities for the marginalised–a principle endorsed in a multitude of judgments. However, a balance must be struck between equality of opportunity and affirmative action, which these states’ actions fail to attain. This poses questions regarding the permissibility of reservations in the private sector, or the competence of state legislature to enact these laws. The author shall meticulously analyse these issues in the piece.
Domicile Reservation (Local Job Reservation): A New Norm
Domicile reservation or Local Reservation refers to a policy that reserves a specific portion of seats either in educational or employment opportunities for the locals. These reservations intend to cater to the local unemployment issues by prioritising local candidates over outsiders. However, this has ignited the debate over dual citizenship within the territory of India because the recognition of domicile may lead to regional citizenship, which runs contrary to the idea of single citizenship. Ananthasayanam Ayyangar astutely emphasised the issue during the Constituent Assembly debates that the idea of single citizenship would be undermined by the residence criteria. Thereby, in Pradeep Jain, the single domicile of the citizens i.e., the domicile of India was upheld.
However, residence and domicile are not coterminous as highlighted in DP Joshi where the court distinguished the two. The Court noted that the former implies the place of residence for a span of period whereas the latter is referred to as permanent home i.e. place of birth. Therefore, reservations based on residence are constitutionally valid in reasonable circumstances, those based on the latter will stand repugnant to Articles 14, and 15 of the Indian Constitution.
Domicile Reservation in the Private Sector: Ultra Vires
Karnataka as an example makes it apparent that unbridled legislative powers are employed to appease the locals by enacting policies of reservation with nationwide ramifications in the course of employment. The author poses three arguments against the constitutionality of domicile reservation in the private sector. These are:
Residence Reservations: Not Infinitely Constitutional
The residence reservation aims to cater to locals in state employment, which resultantly expels the majority who are not staying in the state within the scope of employment. Presently, in the case of Karnataka, 50% and 70% of seats were reserved for the locals in management and non-management roles respectively, strengthening the narrative of domicile by depriving non-residentials of the scope of Article 19(1)(g) because of the creation of the residence-based reservation. This not only defeats certain fundamental rights but also derecognises the essence of unity and integrity of the nation guaranteed under the preamble of the Constitution.
In the landmark case of Pradeep Jain, the Supreme Court commented that “prima facie this (residence-based reservation) would seem constitutionally impermissible though we do not wish to express any definite opinion upon it”. Thus, this ambiguous stance strengthened the clouds of uncertainty over this policy. However, classifications under this policy are subjected to the test of intelligible differentia and reasonable classification under Article 14. The test aids in determining the non-classificatory arbitrariness, a standard that various states’ law defining local candidates fails to meet. Under the Karnataka Bill, the criteria for reservation include being born and domiciled in the state for a stipulated time and proficiency in the regional language i.e. Kannada, which significantly contradicts the right to freedom of profession and discriminates based on place of birth under Articles 19(1)(g) and 15(1) of the Indian Constitution respectively. Therefore, they failed to pass the reasonable classification test, as manifest arbitrariness is ground for invalidation of a classification.
In Prashant Vidyarthi v. State of Jharkhand, the court emphasised the meaningful and rational definition of local residents as the definition should not be highly arbitrary for outsiders in all private jobs. Moreover, the Court had cautioned and condemned blanket or wholesale reservation for the state residents as being violative of Article 14 of the Constitution as residence cannot be a basis for preferential reservation within a state. Merit was held to be given preference even in the presence of residence requirements. The reasoning is the requirement of skills, which might get compromised when recruitment is not based on skill but on residence, consequently, dampening the quality of people being employed.
Only State Employment
The constitution framers endorsed the residence-based reservation for classes of employment under the State offices only, as evident from the nature of Article 16(3) being exhaustive. This Article specifically refers to “office under the Government of, or any local or other authority within, a State or Union Territory”, thereby encapsulating offices under the state which can be any local or other authority within the state or any corporation that is an instrumentality or agency of the state. This indicates the intent of the constitution makers to limit the ambit of Article 16(3) to only public employment within the state, resulting in the exclusion of private employment from its ambit. Therefore, no constitutional protection is granted upon residence-based discrimination in private employment in the Indian territory.
Only Parliament is Competent
Article 16(3) explicitly grants only Parliament the power to legislate in the case of residence as criteria for appointment in public office, reiterated in Article 35 of the Indian Constitution. In contrast to Article 16(3), the delegation of power to state legislature is obvious in Articles 16(4), 16(4-A), 16(4-B), and 16(6), empowering the reservation of seats in public employment for scheduled castes (SCs), scheduled tribes (STs) and economically weaker sections (EWS) respectively, therefore state legislatures are constitutionally incompetent under Article 16(3) to enact any law. The rationale for this was discussed in the Constituent Assembly’s debate on November 30, 1948, where it was opined that only Parliament i.e. central legislature is qualified to bring in such reservation because it was said that
Dr. B.R. Ambedkar, in the same debate, rightfully noted that
Parliament trimmed the scope of residence reservations in 1957, under Article 16(3) enacting the Public Employment (Requirement as to Resident) Act, 1957 leading to the abolition of all existing residence requirements, while giving leeway to Andhra Pradesh, Manipur, Tripura, and Himachal Pradesh. Here, the central government can issue residence guidelines for public employment. Therefore, the actions of Haryana, Jharkhand, and Karnataka to enact residence qualifications in private employment will stand inconsistent due to incompetence.
The Supreme Court deplored states’ actions by adopting the ‘Sons of Soil’ as unconstitutional policies. Therefore, any state legislature enacting a law requiring residence as a qualification in private or public employment is an example of legislative overreach.
Suggestions and Conclusions
The judgment of Punjab and Haryana High Court in IMT Industrial Association v. State of Haryana is welcomed as the court struck down the reservation in private employment in Haryana. This indicates the rampant trend of state legislatures legalising residence-based reservations which is alarming as this can have grave repercussions endangering the nation's development. Plausible factors for these policies include regional unemployment, political pressure, economic disparities, and efforts to prevent migration.
With increased instances of such reservation policies across states, it is imperative to engage in real-time talks and implement pragmatic solutions that not only address the local demands but also those from outside. Judicial activism by the apex court becomes essential to strike down such laws and establish a precedent that bars states from formulating such policies. The appeal of the aforementioned judgment serves as an ideal opportunity for the Supreme Court to a precedent. Additionally, the central government should intervene by forbidding such enactments by categorising them as an overreach.
While the purpose of this reservation is wise, it is imperative to maintain some constitutional boundaries between regional demands and national unity and growth. This trend must be carefully scrutinised due to its far-reaching ramifications, including a compromise of skill in the name of residence as a criterion in private jobs. It can be addressed by fostering educational and skill development programs on the regional level by the local government, bolstering public employment by creating more jobs in the light of low governmental job opportunities, and emphasising more transparent hiring practices, thereby, thinning the lens of doubt while employing.