Context: The Supreme Court reaffirmed its March 2026 judgment that parental salary income alone cannot determine the creamy layer status of children belonging to Other Backward Classes (OBCs).
The judgment clarifies the criteria for excluding socially and economically advanced OBC sections from reservation benefits and addresses discrimination between public-sector, private-sector and government employees.
Evolution of Creamy Layer Criteria
Indra Sawhney Case (1992): Supreme Court upheld 27% reservation for OBCs in central government employment and directed exclusion of the creamy layer.
DoPT Office Memorandum (September 1993): The Department of Personnel and Training introduced criteria for identifying the creamy layer.
Government employees: Group A/Class I officers of All India Services, Central and State services; specified Group B/Class II officers.
Public Sector Undertakings (PSUs): Employees holding specified equivalent positions.
Armed Forces: Officers holding specified ranks.
Professionals and businesspersons: Persons engaged in specified professions, trade and industry.
Property owners: Certain categories of agricultural and other property holders.
Income/wealth test: Exclusion based on prescribed income and wealth criteria.
Important exclusion: Salary income and income from agricultural land were excluded from the income/wealth test under the 1993 OM.
DoPT Clarification, 2004
Change: The Department of Personnel and Training clarified that salary income of PSU and private-sector employees could be considered where equivalence of their posts with government positions had not been established.
Three-year criterion: If salary exceeded the prescribed income threshold for three consecutive years, their children could be classified as creamy layer.
Implementation: The clarification began to be applied rigorously from the Civil Services Examination (CSE) 2015, corresponding to the 2016 batch.
Controversy: Candidates were excluded from OBC reservation despite their parents' higher salaries resulting from pay revisions rather than actual occupational or social advancement.
Supreme Court's March 2026 Judgment
Salary alone insufficient: Parental salary income cannot independently determine the creamy layer status of children of PSU and private-sector employees.
Equivalence of posts: The Court settled the issue of equivalence between PSU/private-sector positions and government positions.
No discrimination: Treating children of PSU and private-sector employees differently from children of government servants holding equivalent posts amounts to hostile discrimination.
2004 clarification invalid: A clarificatory letter cannot introduce a substantive condition absent from the original 1993 policy.
Centre's argument: Since the CSE 2025 results were declared five days before the March judgment, retrospective implementation could disturb completed selections, appointments and service allocations.
Court's response: Rejected the attempt to reopen the merits of the March judgment through miscellaneous applications.
No general retrospective exercise: The six-month deadline applied to considering the claims of the respondents in the case and did not require reopening all previous recruitment years.
Applicable principle: All selections, appointments and roster allotments must follow the 1993 OM as interpreted by the March judgment.
Where equivalence is not established: Children of PSU and private-sector employees must be assessed under the income/wealth test, which excludes salary income.
Comprehensive assessment: Salary cannot be the sole criterion; the status and category of the parent's post must also be considered.
Key Principles for Determining Creamy Layer Status
Criterion
Position
Parental salary alone
Cannot be the sole basis for exclusion
Status of parental post
Relevant for determining social advancement
Equivalence of posts
Must be considered across government, PSU and private sectors
Income/wealth test
Applies where post equivalence is not established
Salary under income/wealth test
Excluded under the 1993 OM
Agricultural land income
Excluded under the 1993 OM
Relevant Constitutional Provisions
Article 15(4): Enables special provisions for the advancement of socially and educationally backward classes and SCs/STs.
Article 16(4): Enables reservation in public employment for backward classes inadequately represented in State services.
Article 14: Guarantees equality before law and equal protection of laws; relevant to the prohibition of arbitrary discriminatory treatment.
