Summary
OBC candidates in the Civil Services Examination were treated as creamy layer because their parents, employed in PSUs, banks or private firms whose posts had no established equivalence with Government posts, earned salaries above the income limit. DoPT had applied paragraph 9 of its 2004 clarificatory letter. The Supreme Court held that the letter could not override the 1993 Office Memorandum, which makes exclusion status-based, and that salary income alone cannot decide creamy layer status. Treating wards of PSU or private employees differently from wards of similarly placed Government employees was hostile discrimination. The Union's appeals were dismissed and supernumerary posts directed.
Issues
- Whether the clarificatory letter of 14.10.2004, particularly paragraph 9, can override or supersede the Office Memorandum of 08.09.1993 laying down the creamy layer exclusion criteria for OBCs.
- Whether wards of employees of PSUs, banks and private undertakings may be treated differently from wards of Government employees holding posts of the same grade or class when determining creamy layer status.
- What relief should follow for the respondent candidates and intervenors.
Provisions considered
- Schedule, Category II (II-A, II-B, II-C), DoPT Office Memorandum No. 36012/22/93-Estt. (SCT) dated 08.09.1993Exclusion under the service category is status-based and turns on direct recruitment to Group A or Group B posts. Category II-C applies these criteria mutatis mutandis to equivalent or comparable posts in PSUs, banks and similar bodies. Pending evaluation of equivalence, II-C cannot be applied to deprive the whole category of reservation, and exclusion can only be under Category VI. (¶¶ 21.11, 21.12, 21.14, 21.15, 22, 23)
- Schedule, Category VI (Income / Wealth Test), Explanation (i), DoPT Office Memorandum No. 36012/22/93-Estt. (SCT) dated 08.09.1993A residual filter. Explanation (i) provides that income from salaries and from agricultural land is not to be clubbed with income from other sources when computing gross annual income, so salary and agricultural income are kept out of the common pool. (¶¶ 21.15, 26)
- Paragraph 9 (read with paragraphs 7, 8 and 10), DoPT clarificatory letter No. 36033/5/2004-Estt. (Res.) dated 14.10.2004Paragraph 9 provides that, where equivalence has not been evaluated, salary income and income from other sources are assessed separately and exceeding the limit in either makes the ward creamy layer. The Court held that the letter can only explain the 1993 OM and cannot be read in isolation to make salary income alone decisive. (¶¶ 21.16, 23, 24, 25, 26, 27, 29, 30, 31)
- Article 162, Constitution of IndiaA mere government letter cannot override or supersede an Office Memorandum issued in exercise of executive power under this Article. A clarification that adds a substantive condition becomes an amendment. (¶ 24)
- Articles 14, 15 and 16 (including Article 16(4)), Constitution of IndiaApplying the twin test of classification, the Court held that excluding wards of PSU or private employees on salary income alone, while wards of Government Group C/D employees with comparable salaries are not excluded, treats equals unequally. It noted that Article 16(4) reflects the substantive equality in Article 16(1). (¶¶ 21.2, 33, 34, 35, 36, 37, 39, 40)
Held
- Exclusion of the creamy layer is a constitutional imperative flowing from Indra Sawhney. The 1993 OM, framed on the Expert Committee's recommendations, is the operational mechanism that gives effect to it and rests primarily on social status rather than income alone. (¶¶ 21.10, 21.13, 21.14, 33)
- Equivalence of posts in PSUs and similar bodies with Government posts is a policy matter for the Government, to be decided on expert analysis of data. Until it is evaluated and notified, the entitlement of candidates whose parents are not in Class I or II Government service is to be decided by the Income / Wealth Test. (¶¶ 21.15, 23)
- A government letter cannot override an Office Memorandum issued in exercise of executive power under Article 162. A clarificatory instruction cannot add a substantive condition absent from the parent policy; if it alters rights it becomes an amendment. (¶ 24)
- Read with the 1993 OM, the 2004 Letter shows that incomes from salary, agriculture and other sources cannot be clubbed, and that salary income alone cannot decide creamy layer status. The status and category of the parent's post are essential, because exclusion under Categories I to III is status-based. (¶¶ 26, 27)
- Paragraph 9 of the 2004 Letter, which the Parliamentary Committee found to have created confusion, cannot be read in isolation to dilute the 1993 OM. Determining creamy layer status solely by income bands, without regard to the category and status of the parent's post, is unsustainable in law. (¶¶ 28, 29, 30, 31)
- Wards of Government Group C and D employees whose salaries cross the limit are not excluded. Excluding wards of PSU or private employees in equivalent posts on salary income alone is hostile discrimination that treats equals unequally, contrary to Articles 14, 15 and 16. (¶¶ 34, 35, 36, 40)
- If identification of the creamy layer is not carried out rationally and equally, genuine OBC claimants are wrongly denied reservation, which is a facet of equality protected by the Constitution. (¶¶ 37, 38, 39)
- Since DoPT had already assured supernumerary posts, as recorded in the 21st Report of the Parliamentary Committee on Welfare of OBCs, the appellants were directed to create such posts as required for candidates who meet the non-creamy layer criteria as clarified, subject to other eligibility conditions. (¶¶ 42, 43)
Result
All civil appeals by the Union of India are dismissed, and the judgments of the Madras, Delhi and Kerala High Courts are upheld. The appellants are to consider the claims of the respondent candidates and intervenors under the principles laid down, creating supernumerary posts as required, and implement this within six months. No costs.