Stay on a law? The High Court forgot one thing: reasons.

Two shots. One Act stayed. The Supreme Court's message to every High Court.

When the State of Haryana enacted a law requiring employers to reserve 75% of jobs paying up to Rs.30,000 per month for local candidates, it was a political promise delivered. But within months, the Faridabad Industries Association challenged the Haryana State Employment of Local Candidates Act, 2020 before the High Court of Punjab & Haryana at Chandigarh. On 3rd February 2022, the High Court granted a blanket stay on the entire legislation. No detailed reasons. No finding that the Act was manifestly unjust or glaringly unconstitutional. Just a stay. The State of Haryana, through the Solicitor General, rushed to the Supreme Court of India. The stakes were enormous: the livelihood of thousands of local job-seekers, the operational freedom of every employer in the state, and the very principle that courts do not strike down legislation without a fight.

The Act that split Haryana's job market

The Haryana State Employment of Local Candidates Act, 2020 mandated that every employer in the state reserve 75% of positions with a monthly salary up to Rs.30,000 for candidates who are "local" — defined by domicile or residence criteria. The law was passed by the Haryana legislature and received the Governor's assent. Industry bodies, led by the Faridabad Industries Association, saw it as a direct attack on merit, mobility, and the constitutional guarantee of equality under Article 14 and 19(1)(g). They moved the High Court in CWP No.24967/2021, challenging the constitutional validity of the entire Act.

The High Court, on 3rd February 2022, passed an interim order staying the implementation of the Act. The order, as the Supreme Court would later note, did not record sufficient reasons for why the legislation was prima facie unconstitutional. It simply granted a stay. The State of Haryana, aggrieved, approached the Supreme Court through Special Leave Petition (C) No.1917/2022.

What the Solicitor General argued

Appearing for the State of Haryana, the learned Solicitor General argued that the High Court's interim order was contrary to well-settled principles of judicial restraint. He relied on a line of judgments — though not specifically named in the order — that establish a presumption of legality in favour of legislation. The core argument: a court should not stay a statute unless it is manifestly unjust or glaringly unconstitutional. The High Court, he submitted, had done neither. It had not even recorded a prima facie finding of unconstitutionality. The stay was, in effect, a judicial veto without reasons.

The Faridabad Industries Association, represented by its counsel, defended the stay. They argued that the Act was ex facie unconstitutional — that it violated the fundamental rights of employers and non-local job-seekers alike. The Act, they contended, created a closed labour market, violated the right to carry on any occupation, and discriminated on the basis of residence. The High Court, they said, was justified in staying such a law pending final hearing.

The Supreme Court's intervention: a lesson in judicial restraint

Justice L. Nageswara Rao, writing for the two-judge Bench that also included Justice Pamidighantam Sri Narasimha, did not mince words. The Court held that the High Court's stay order was unsustainable for one fundamental reason: it lacked reasons.

The Bench observed that courts should be reluctant to pass interim orders staying legislations. A stay of legislation can only be granted when the Court is of the opinion that it is manifestly unjust or glaringly unconstitutional. The High Court had not recorded any such opinion. The order, the Supreme Court said, was vitiated by the absence of sufficient reasons.

The Court did not stop there. It directed the High Court to decide the writ petition expeditiously — within four weeks from 17th February 2022. The parties were directed to appear before the High Court on 22nd February 2022 for fixing the schedule, and no adjournments were to be granted. The Supreme Court also directed the State of Haryana not to take coercive steps against employers in the interim, balancing the interests of both sides.

THE TEST: A court cannot stay a legislation without recording reasons that the Act is manifestly unjust or glaringly unconstitutional. No reasons = no stay.

What the Court did not decide

The Supreme Court was careful to note that it was not dealing with the merits of the constitutional challenge. The question of whether the Haryana State Employment of Local Candidates Act, 2020 is valid under the Constitution remains open. The Court did not express any opinion on whether a state can mandate local hiring quotas. That question — one of immense constitutional significance — will be decided by the High Court in the final hearing.

What the Supreme Court did decide is a procedural principle of great importance: when a court stays a legislation, it must give reasons. And those reasons must show that the court has applied its mind to the presumption of constitutionality that every statute enjoys.

Why this matters in practice

For advocates, this judgment is a reminder that interim orders staying legislation are not routine. They are extraordinary. The presumption of constitutionality is not a formality — it is a substantive barrier that must be crossed before a court can paralyse a law. Every petition seeking a stay of a statute must now plead, and every judge must now record, why the legislation is manifestly unjust or glaringly unconstitutional.

For CFOs and founders, the immediate takeaway is practical: the Haryana Act is not dead. The stay has been lifted. Employers in Haryana must comply with the 75% local hiring mandate until the High Court decides otherwise. But the Supreme Court has also directed the State not to take coercive steps — meaning no penalties, no prosecutions, no show-cause notices for non-compliance until the High Court rules. This gives businesses a breathing window, but not a permanent escape.

For the State of Haryana, the message is equally clear: you cannot enforce the Act coercively, but you can continue to implement it voluntarily. The High Court will decide the constitutional validity within four weeks. The clock is ticking.

The broader constitutional question

The obiter dicta in this judgment is significant. The Supreme Court left open the question of whether state-level employment reservation for locals is constitutionally permissible. This is a question that has been debated for decades. The D.P. Joshi case (1955) upheld the validity of domicile-based reservations for medical admissions in Madhya Pradesh. But later judgments, including the Dr. Pradeep Jain case (1984), struck down residence-based quotas for postgraduate medical courses. The law is not settled on whether a state can mandate private employers to hire locals.

The Haryana Act is one of several such laws passed by states like Andhra Pradesh, Telangana, and Karnataka. If the High Court upholds the Act, it could trigger a wave of similar legislation across the country. If it strikes it down, it could set a precedent that limits the power of states to create closed labour markets. Either way, the Supreme Court's eventual decision on the merits will be a landmark.

The bottom line

For every lawyer who drafts a writ petition challenging a statute, and for every judge who considers an interim stay: the Supreme Court has made it clear — stay of legislation is not a default remedy. It requires reasons. It requires a finding of manifest injustice or glaring unconstitutionality. Without that, the stay order is dead on arrival.

THE PLAY: If you are challenging a statute, do not ask for a stay without first demonstrating why the law is manifestly unjust or glaringly unconstitutional. And if you are defending a stay, ensure the court records those reasons in the order itself. A stay without reasons is no stay at all.