The Supreme Court on Wednesday ruled that the definition of creamy layer among Other Backward Classes (OBC) should be the same for public sector wards or private sector employees as compared to government employees.
In a ruling on the Centre’s appeals against decisions of three high courts, which held the various scales adopted for calculating income to determine the creamy layer status of PSUs vis-à-vis government employees to be “discriminatory”, the apex court said that income cannot be the sole criterion for determining the creamy layer status of OBC parents.
Justices PS Narasimha and R Mahadevan said: “The aim of excluding the creamy layer is to ensure that the socially advanced sections within the OBCs do not fit into the benefits meant for the truly backward. It is not to create artificial distinctions between equal members of the same social caste.”
The high courts of Madras, Delhi and Kerala heard the cases of three OBC candidates seeking admission into the civil services on the basis of their scores in the Union Public Service Commission (UPSC) examination. After verifying their eligibility, the three were classified as belonging to the creamy layer. They approached the Central Administrative Tribunal and high courts, which directed the Center to treat them as a non-creamy layer of OBC.
The high courts relied on the Office Memorandum (OM) of 1993 setting out the criteria for the creamy layer, along with a clarification letter issued by the Center in 2004, to conclude that wards of OBC parents working in PSUs and the private sector, as was the case with all the three petitioners, are being discriminated against when it comes to determining the creamy layer. She believed that the decision should be based solely on the status or position of the candidate’s parents and not their income alone.
The Supreme Court agreed with the view of the higher courts. “Any interpretation of the Employment Act, 1993 or the 2004 letter that results in unequal treatment of OBC candidates in similar positions would not only be legally wrong but constitutionally impermissible,” it said. “Defining cream layer status on the basis of income brackets alone, without reference to the job categories and status criteria set out in the 1993 Operating Manual, is clearly unsustainable in law.”
The Supreme Court said that adopting an interpretation that harms one section of the same backward class without rational justification would amount to treating “equals as unequal” and thus become the antithesis of equality, the cornerstone of the republic.
“Given the peculiar facts of the present cases, the reasoning adopted by the Supreme Court that treating similarly situated employees of private entities and TSUs differently from employees of the Government and their departments, while limiting their right to reservation, would amount to hostile discrimination, is certainly a matter that inspires the confidence of this Court.”
The Operational Order of September 8, 1993 provides for an income/wealth test, and this category specifically stipulates that income from salaries and income from agricultural land shall not be combined with income from other sources for the purpose of calculating total annual income. In essence, he said that salaries and agricultural income should remain outside the common pool while determining exclusion under the test.
On 14 October 2004, a letter issued by the Center stated that if job equivalence in PSUs and similar organizations is not assessed, creamy layer status should be determined based on income/wealth test. The clarification stated that income from salaries and income from other sources (excluding salaries and agricultural land) will be evaluated separately, and exclusion will only take place if any component exceeds the prescribed limit for three consecutive years.
