A significant ruling from the Supreme Court of India has drawn a clear line on how the “creamy layer” within the Other Backward Classes reservation system should be identified. The Court has ruled that a parent’s salary alone cannot be used to decide whether a candidate falls into the creamy layer category.
The decision came while a bench of Justice PS Narasimha and Justice R Mahadevan dealt with appeals filed by the Union government. The bench ultimately sided with several civil services candidates who had cleared the Civil Services Examination (India) but were denied appointments after being classified as belonging to the creamy layer.
Income Alone Not a Deciding Factor
The Court emphasised that determining creamy layer status requires examining the nature of the parent’s post and social status within the organisation, not merely their income. Authorities had relied almost entirely on salary figures to exclude certain candidates from the OBC non-creamy layer category.
Rejecting this approach, the judgment explained that simply assessing income cannot conclusively decide whether a person belongs to the creamy layer among OBCs.
How the Dispute Began
The controversy emerged during the verification of candidates who had claimed reservation under the OBC non-creamy layer category. While assessing their eligibility, the Department of Personnel and Training treated several of them as creamy layer candidates because their parents’ salaries exceeded the prescribed income limit.
Many of these parents were employees in public sector undertakings, banks, or similar organisations. Authorities relied on a clarification issued in October 2004 which suggested that if equivalence between PSU posts and government posts had not been formally established, the income/wealth test could be applied separately.
As a result, candidates whose parents’ income crossed the threshold were denied reservation benefits despite clearing the examination.
Challenge Before Tribunals and High Courts
The affected candidates approached the Central Administrative Tribunal, arguing that the authorities had misapplied the rules. They contended that the government’s 1993 policy governing creamy layer identification did not permit parental salary to be the sole basis for exclusion.
The issue eventually reached multiple courts, including the Madras High Court, Delhi High Court, and Kerala High Court, all of which sided with the candidates. The Union government then carried the matter to the Supreme Court.
The 1993 Framework
The Court closely examined the 1993 policy that followed the landmark ruling in Indira Sawhney v. Union of India, the case that reshaped India’s reservation framework.
That policy placed primary importance on the status of the parent’s post in determining social advancement. For instance, children of senior government officers—such as those in Group A services or certain Group B officers promoted to Group A at a relatively young age—are automatically considered part of the creamy layer.
The policy also extended this logic to equivalent positions in public sector companies, banks, universities, and even private employment once the equivalence of posts with government positions is established.
The Limited Role of Income
Income, the Court noted, was designed only as a residual test. Under the income/wealth test, families whose annual income from sources other than salary and agricultural land crosses the prescribed limit for three consecutive years may fall within the creamy layer.
Crucially, the 1993 policy clearly stated that salary income and agricultural income should not be mixed with other sources of income while applying this test.
By relying only on parental salary, the authorities had ignored this distinction and misapplied the framework, the Court concluded.
Outcome
With this clarification, the Supreme Court upheld earlier rulings that had favoured the candidates and dismissed the Union government’s appeals. The decision reinforces that the social and occupational status of parents—rather than raw income figures alone—remains the central benchmark in identifying the creamy layer among OBCs.
