SC: OBC Creamy Layer Status Cannot Be Based Solely on Parental Income
Top court says treating children of PSU and private sector employees differently from government staff for reservation benefits amounts to discrimination.
New Delhi: The Supreme Court on Wednesday ruled that the creamy layer status of Other Backward Classes (OBCs) cannot be determined solely on the basis of parental income. The court also held that treating children of employees in private companies and Public Sector Undertakings (PSUs) differently from those of government employees while deciding eligibility for reservation amounts to hostile discrimination.
A bench comprising Justices P.S. Narasimha and R. Mahadevan made the observation while upholding the judgments of the Madras, Kerala and Delhi High Courts, which had dealt with the eligibility of candidates claiming OBC (Non-Creamy Layer) benefits for the Civil Services Examination.
Some of the High Court rulings had allowed claims by candidates who argued that they were wrongly classified under the creamy layer because of the income of their parents working in PSUs, banks or private companies.
Writing for the bench, Justice Mahadevan said the reasoning adopted by the High Courts—that treating similarly placed employees of private entities and PSUs differently from government employees and their wards would amount to hostile discrimination—was justified.
The Supreme Court dismissed the Centre’s appeals against the High Court judgments.
The dispute revolved around the September 8, 1993 Office Memorandum (OM) issued by the Union government, which defined the criteria for identifying the creamy layer among OBCs, and a clarificatory letter dated October 14, 2004.
The court noted that while the 1993 OM excluded salary and agricultural income from the income and wealth test used to determine creamy layer status, the 2004 clarification directed the inclusion of salary income of PSU and private sector employees. This, the court said, created discrimination between the wards of government employees and those of PSU or private sector staff.
The bench observed that a comprehensive reading of the 1993 OM and the 2004 clarification makes it clear that income from salaries alone cannot be the sole criterion to determine whether a candidate falls under the creamy layer. The status and category of the post held by the candidate’s parents must also be considered.
The court said determining creamy layer status solely on income brackets without considering the categories of posts and status parameters laid down in the 1993 OM is legally unsustainable.
It further noted that excluding the children of PSU or private sector employees from reservation benefits solely based on salary income, without reference to the nature of their posts, would violate the principle of equality under Articles 14, 15 and 16 of the Constitution.
“The object of excluding the creamy layer is to ensure that socially advanced sections within the OBCs do not appropriate benefits meant for the genuinely backward. It is not to create artificial distinctions between equally placed members of the same social class,” the court said.