Creamy Layer Cannot Be Determined Solely On Income; Social Status Of Parents Must Also Be Considered In UPSC OBC Claims: Supreme Court

The Bench noted that the respondent candidates had cleared the Civil Services Examination. However, since the equivalence of posts in Public Sector Undertakings, banks and other organisations with government posts had not been formally determined, the DoPT applied the Income/Wealth Test under Category VI of the 1993 Office Memorandum read with the clarificatory letter dated 14-10-2004.

After assessing the parental income for the preceding three financial years, the DoPT classified the candidates as falling within the OBC Creamy Layer, making them ineligible for OBC (Non-Creamy Layer) reservation and service allocation under the reserved category. The candidates challenged this before the Central Administrative Tribunal (CAT) and obtained favourable orders, which were upheld by the High Courts of Madras, Delhi and Kerala, leading to the present civil appeals.

A Division Bench of Justice Pamidighantam Sri Narasimha and Justice R. Mahadevan observed, “…It is settled law that a clarificatory instruction cannot introduce a substantive condition that does not exist in the parent policy. If it travels beyond explanation and alters rights or liabilities, it ceases to be clarificatory and assumes the character of an amendment…The status as well as the category of post to which a candidate’s parent or parents belong is essential. The exclusion under Categories I to III of the Schedule is status-based rather than purely income-based, reflecting the policy understanding that advancement within the governmental service hierarchy denotes social progression independent of fluctuating salary levels. Mere determination of the status of a candidate as to whether he/she falls within the creamy layer or the non-creamy layer of the OBCs cannot be decided solely on the basis of the income”.

The Bench addressed two broad issues that the batch of appeals squarely fell in, wherein several tribunals and High Courts had directed reconsideration of their status. The first issue was:

-Whether the clarificatory letter dated 14-10-2004 can have any overriding or superseding effect over the Office Memorandum dated 08-09-1993, which expressly lays down the criteria for exclusion from the benefit of reservation for OBCs by identifying the creamy layer namely, the socially advanced persons of sections among the Socially and Educationally Backward Classes?

While answering in negative, the Bench observed, “…any attempt to read paragraph 9 of the 2004 Letter in isolation, so as to dilute or override the substantive scheme of the 1993 OM would be legally untenable. Overemphasis on the 2004 Letter to the extent of making income alone determinative without regard to parental status or category of service would defeat the structural framework of exclusion envisaged under the 1993 OM. Thus, determination of creamy layer status solely on the basis of income brackets, without reference to the categories of posts and status parameters enunciated in the 1993 OM is clearly unsustainable in law”.

“The observations of the Parliamentary Committee lend institutional support to the view that paragraph 9 has generated interpretative ambiguity and may have been applied beyond its intended contours. The Report records that the 2004 Letter did not emanate from the DoPT Secretariat and that its origin could not be traced in terms of the initial note file. It further observes that determining exclusion from reservation solely on the basis of income from salaries, as indicated in the 2004 Letter, would not be consistent with the original framework. The entire architecture of paragraph 9 of the 2004 Letter is premised on a prior determination of equivalence. Income is intended to operate only as a surrogate measure in the absence of such equivalence; it cannot supplant the primary status-based framework embodied in the 1993 OM”, the Bench further noted.

-Whether there can be hostile discrimination between employees of the Government and those working in Public or Private Sector Undertakings, when both occupy posts of the same grade or class?

Attending to the issue, the Bench noted, “Adopting an interpretation that disadvantages one segment of the same backward class without rational justification would amount to treating equals as unequals and would thus become the antithesis of equality, the corner stone of our Republic. Having regard to the peculiar facts of the present cases, the reasoning adopted by the High Court that treating similarly placed employees of private entities and PSUs differently from Government employees and their wards, while deciding their entitlement to reservation, would amount to hostile discrimination, is certainly one that inspires the confidence of this Court”.

Tushar Mehta, Solicitor General, Aishwarya Bhati, A.S.G. appeared for the appellants and Senior Advocates Basavaprabhu Patil, Sanjay Hegde, and T. Raja appeared for the respondents.

The matter came to the light after some candidates who had secured ranks in the UPSC examination sought allocation to services against OBC vacancies. The authorities had treated candidates as belonging to the creamy layer on the basis of parental income, thereby denying them the benefit of OBC reservation.

The Court examining the framework governing OBC reservations, traced the development of the creamy layer doctrine from the landmark judgment in Indra Sawhney v. Union of India & Ors. 1992 Supp (3) SCC 217, which mandated that socially advanced sections within OBCs must be excluded from reservation benefits.

The Court emphasised that the government’s 1993 Office Memorandum lays down multiple criteria for determining creamy layer status. These include both the service status of parents and the income/wealth test, and not income alone.

It further explained that relying exclusively on income could distort the constitutional objective of reservations. The Bench noted that excluding salary income altogether from the calculation or determining eligibility only through income thresholds could allow relatively advanced sections within OBCs to continue claiming reservation benefits.

At the same time, the Court warned that improper application of the criteria could also lead to the exclusion of genuinely backward candidates, which would undermine the very purpose of affirmative action.

The Court, thus, clarifying the legal position, held that authorities must apply all the prescribed tests under the 1993 guidelines while verifying OBC-NCL claims in UPSC selections. The Court directed to create such supernumerary posts, as required, to accommodate the candidates who satisfy the non-creamy layer criteria as clarified in the present judgment.

Cause Title: Union Of India And Others v. Rohith Nathan And Another, Etc. [Neutral Citation: 2026 INSC 230]

Appearances:

Appellants: Arvind Kumar Sharma, AOR, Tushar Mehta, Solicitor General, Aishwarya Bhati, A.S.G., Alka Agrawal, Apoorva Kurup, Navanajay Mahapatra, Madhav Sinhal, Mayank Pandey, Sansriti Pathak, Santosh Ramdurg, Yogesh Vats, Shreekant Neelappa Terdal, AOR, Advocates.

Respondents: Basavaprabhu Patil, Sr. Adv., Sanjay Hegde, Sr. Adv., Vikram Hegde, Hima Lawrence, AOR, Chinmayi Shrivastava, Trishan Dollny, Ankit Tiwari, Arijit Sukla, Ashish, Tanay Hegde, Roy Abraham, Reena Roy, Adithya Koshy Roy, Akhil Abraham Roy, Saraswata Mohapatra, Himinder Lal, AOR, T. Raja, Sr. Adv., M.T. Arunan, M.A. Aruneshe, Prateek K. Chadha, AOR, Sreekar Aechuri, Aniket Chauhaan, Shashank, Shantanu Lakhotia, Divyaveer Singh, Harsh Parashar, AOR, A. Sirajudeen, N. Visakamurthy, AOR, Vardhman Kaushik, AOR, Arindam Sarin, Mayank Sharma, Dhruv Joshi, Vinay Kaushik, P. S. Vijayadharni, Nishant Gautam, Varinder Kumar Sharma, AOR, Sanjay Singh Thakur, Hitesh Kumar Sharma, Vijay Prtap Singh, Akhileshwar Jha, Shreya Jha, Anupam Kumar, Manju Jetley, AOR, Vibhav Mishra, Megha Gaur, Parmanand Gaur, AOR, Abhikalp Pratap Singh, AOR, Ashish Batra, AOR, Siddhartha Jha, AOR, Anuroop Chakravarti, M. S. Vishnu Sankar, Prakhar Srivastava, Athira G. Nair, Aditya Santhosh, Dimple Nagpal, For M/s Lawfic, AOR, Advocates.

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