Supreme Court rejects Centre's plea on OBC creamy layer, says parents' salary not to be counted

The Supreme Court has dismissed the Centre's modification petition in the OBC creamy layer case. The court has made it clear that parents' salary income will not be counted when determining the creamy layer for OBC reservation. Exclusion from the creamy layer will be based on the parents' status and rank in service, not on their income, the court said. It also said the decision will not apply retrospectively.

On March 11, in the case titled "Union of India versus Rohit Nathan", the Supreme Court had given an important clarification on the criteria for the OBC non-creamy layer. The Centre then filed this modification petition.

On the creamy layer rule, the court said the determination is based on status and not on income alone. The position of the parents, that is, whether they fall in Group A, B, C or D, is important to consider. A candidate with annual income above Rs 8 lakh is generally regarded as qualifying for the creamy layer. But under the original rules in the 1993 office memorandum, income from salary and agricultural land is excluded from the Rs 8 lakh calculation.

The Centre's main plea was that the court should order the ruling to apply prospectively rather than retrospectively. The government argued that if the March 11 decision applied retrospectively, appointments made since 2012, service allocations (for example, IAS, IPS and IFS cadre allocation) and seniority lists would have to be revised. It said this would also affect employees who were not parties to the case and would bring the administrative machinery to a complete halt.

The Centre had also asked for two years to frame a new, uniform policy for comparing posts in public sector undertakings (PSUs), banks and the private sector with government posts. The court rejected this request as well.

The report also explains what the OBC creamy layer is. Other Backward Classes (OBCs) get reservation in all government jobs. Some candidates in this category are treated as the "creamy layer", a section considered economically and socially advanced and not in need of reservation. An annual income of Rs 8 lakh has been fixed for this purpose. Earlier, the criterion also included parents' income. However, under the Supreme Court's ruling, the income of parents working in the private sector or in public sector undertakings (PSUs) cannot be used as a basis for the "creamy layer".

After this latest decision, the Centre and the Department of Personnel and Training (DoPT) will have to take further action. Some candidates who passed the civil services examination had been denied appointment or service allocation even though they were eligible for OBC non-creamy layer status under the March 11 ruling. The court has directed that such eligible candidates be appointed. The effect is said to go beyond the present cases, with criteria under the 1993 rules to be applied in future as well to determine the OBC creamy layer.