Parental income can’t be sole factor to decide creamy layer: Supreme Court

“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,” Justice Mahadevan, writing for the bench, said while dismissing the Centre’s appeals against the judgments.

The dispute centred around the September 8, 1993 Office Memorandum (OM) issued by the Government of India, specifying who shall be creamy layer among OBCs and the clarificatory letter issued in this regard on October 14, 2004.

The court noted that while the OM excluded income from salary and agricultural income from the Income/ wealth test for determination of creamy layer status, the letter dated October 14, 2004 directed inclusion of salary income of PSU and private sector employees and this resulted in hostile discrimination between the wards of government servants and those of PSU/private sector employees.

The SC said, “It is… evident from a comprehensive reading of the 1993 OM along with the clarificatory letter dated 14.10.2004 that income from salaries alone cannot be the sole criterion to decide whether a candidate falls within the creamy layer. The status as well as the category of post to which a candidate’s parent or parents belong is essential… Mere determination of the status of a candidate as to whether he/she falls within the creamy or the non-creamy layer of the OBCs cannot be decided solely on the basis of the income.”

It said, “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 bench said, “Treating the children of those employed in PSUs or private employment etc., as being excluded from the benefit of reservation only on the basis of their income derived from salaries, and without reference to their posts (whether Groups A, B, C or D) would certainly lead to hostile discrimination between parties who are similarly placed and would amount to equals being treated unequally, thereby attracting the rigour of the equality doctrine under Articles 14, 15 and 16, of which reservation is a facet.”

It said that “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.”