SC quashes 2016 Haryana notification: Economic criterion cannot be sole basis to decide creamy layer

It added that “the criteria mentioned for identifying such of those persons who are socially advanced have not been taken into account by the Government of Haryana while issuing the notification dated 17.08.2016”.

In the Indira Sawhney case, also known as the Mandal Commission case, the top court, while calling upon state governments to identify creamy layer amongst the backward classes and exclude them from the purview of reservation, also held that “the basis of exclusion of creamy layer cannot be merely economic”.

According to the notification issued in pursuance of the powers under Section 5(2) of the Haryana Backward Classes (Reservation in Services and Admission in Educational Institutions) Act, 2016, children of those with gross annual income of up to Rs 3 lakh shall be the first to get the benefit of reservation in services and admission in educational institutions. The remaining quota shall go to those from the backward classes who earn more than Rs 3 lakh but up to Rs 6 lakh per annum. The sections of backward classes earning above Rs 6 lakh per annum were to be considered as creamy layer.

The state government said the sub-classification amongst the backward classes is to ensure that people with lower income amongst backward classes get the benefit of reservation as they need a helping hand more than the others in the higher income bracket.

But the court pointed out that Section 5(2) of the 2016 Act “clearly provides that social, economic and other factors have to be taken into account for the purpose of determining and excluding” the creamy layer within a backward class. “Strangely, by the notification dated 17.08.2016, the identification of creamy layer amongst backward classes was restricted only to the basis of economic criterion,” it said.

The ruling recalled that implementation of the Indra Sawhney-I judgment by identification of creamy layer was not done promptly by certain states, and in the case of Kerala, a high-level committee was directed to be constituted by the court for identifying the creamy layer.

In Indra Sawhney-II, the court examined certain questions relating to recommendations of the high-level committee. “After thoroughly examining the factors which were given emphasis in the various opinions rendered in Indra Sawhney-I for determining creamy layer amongst the backward classes, this court held that persons from backward classes who occupied posts in higher services like IAS, IPS and All India Services had reached a higher level of social advancement and economic status and therefore, were not entitled to be treated as backward. Such persons were to be treated as ‘creamy layer’ without any further inquiry,” the court said.

“Likewise, people with sufficient income who were in a position to provide employment to others, should also be taken to have reached a higher social status and therefore, should be treated as outside the backward class,” it said. “Similarly, persons from backward classes who had higher agricultural holdings or were receiving income from properties, beyond a prescribed limit, do not deserve the benefit of reservation. The above-mentioned categories were necessarily to be excluded from backward classes.”

“This court in Indra Sawhney-II held that the exclusion of the above-mentioned categories is a ‘judicial declaration’ made in Indra Sawhney-I,” it said.

Quashing the Haryana notification, the court gave liberty to the state government to issue a fresh notification within a period of three months after taking into account the principles laid down in Indra Sawhney-I and the criteria mentioned in Section 5(2) of the 2016 Act for determining creamy layer.