The Supreme Court docket on Wednesday (March 11) dominated that earnings can’t be the only criterion to determine the creamy layer amongst Different Backward Courses (OBCs), and settled the long-pending query of equivalence between PSUs and personal sector workers and people within the authorities sector.
These included within the ‘creamy layer’ should not entitled to OBC reservation advantages. Here’s what the long-running challenge is about, and its doable affect.
The Supreme Court docket on Wednesday delivered a verdict reserved on October 30, 2025. The division Bench of justice PS Narasimha and justice R Mahadevan held that, “The thing of excluding the creamy layer is…to not create synthetic distinctions between equally positioned members of the identical social class…. unequal remedy of equally positioned OBC candidates wouldn’t solely be legally inaccurate however constitutionally impermissible.”
The Bench was listening to petitions arising as a consequence of an October 14, 2004 letter issued by the Division of Personnel and Coaching (DoPT) with regard to the creamy layer criterion, clarifying an Official Memorandum (OM) issued lengthy again in September 1993.
The courtroom famous that whereas the OM excluded earnings from wage and agricultural earnings from the earnings/ wealth take a look at for willpower of creamy layer standing, the letter dated October 14, 2004 directed inclusion of wage earnings of PSU and personal sector workers, and this resulted in hostile discrimination between the wards of presidency servants and people of PSU/non-public sector workers.
The courtroom dominated, “…in different phrases, treating the kids of these employed in PSUs or non-public employment, and many others., as being excluded from the advantage of reservation solely on the idea of their earnings derived from salaries, and regardless of their posts (whether or not Group A or B, or Group C or D) would definitely result in hostile discrimination between events who’re equally positioned and would quantity to equals being handled unequally, thereby attracting the rigour of the equality doctrine underneath Articles 14, 15 and 16…”
The origin of the creamy layer in OBC quota
Following the landmark 1992 SC ruling in Indra Sawhney vs Union of India, also called the Mandal verdict, the idea of ‘creamy layer’ inside the OBCs was launched.
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On September 8, 1993, the DoPT issued a round clarifying who is classed as OBC and who belongs to the creamy layer amongst them.
For these in authorities jobs, the ‘creamy layer’ specifies teams similar to individuals occupying constitutional posts; Group-A/Class-I officers of All India Companies, Central companies and state companies; Group-B/Class-II companies of Centre and state; workers of PSUs; officers of Armed Forces; professionals and people from commerce and trade; property homeowners; and an earnings/wealth take a look at.
In a nutshell, if both mother or father is a direct recruit of Group-A, or is promoted earlier than the age of 40, their youngsters can not reap the benefits of the OBC quota. Equally, if each mother and father are Group-B direct recruits, their youngsters will likely be coated underneath the creamy layer.
For Armed Forces, officers as much as the rank of Lieutenant Colonel can avail the OBC quota, however larger ranks are within the creamy layer.
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The criterion for these not within the authorities sector was set at Rs 1 lakh each year in 1993. It was revised sooner or later and since 2017, this earnings restrict is Rs 8 lakh.
What are the DoPT OM of 1993 and the clarification of October 2004?
The DoPT issued a “Clarification on Creamy Layer amongst OBCs” on October 14, 2004, saying in para 9 that “the creamy layer standing of little children of individuals employed in organisations the place equivalence or comparability of posts vis-à-vis posts in Authorities has not been evaluated is set as follows: Earnings of the mother and father from the salaries and from the opposite sources (aside from salaries and agriculture land) is set individually. If both the earnings of the mother and father from the salaries or the earnings of the mother and father from different sources (aside from salaries and agricultural land) exceeds the restrict of Rs 2.5 lakh each year (that point this was ceiling for creamy layer for personal individuals) for a interval of three consecutive years, the little children of such individuals shall be handled to fall in creamy layer.”
The DoPT letter was not carried out successfully until 2014, until the UPA authorities was in energy and was making efforts to woo OBCs.
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It was carried out successfully from the Civil Service Examination (CSE) 2015 (batch 2016), with the DoPT verifying caste certificates primarily based on this clarification.
The Centre was contemplating (as The Indian Categorical had reported completely in August 2025) a proposal to use “equivalence” amongst varied Central and state authorities organisations, public sector enterprises, universities and personal sector workers. Nonetheless, sources say, the draft cupboard be aware was not moved.
What was the affect of the DoPT clarification?
Because the 2016 batch, there have been round 100 OBC candidates who have been issued caste certificates from varied authorities and cleared the CSE, however have been rejected in the course of the DoPT scrutiny. Actually, whereas they certified different exams as OBC candidates, the DoPT rejected their declare within the CSE.
Among the affected candidates then reached varied Excessive Courts, like in Madras, Delhi, and Kerala.
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One of many circumstances was filed by Rohit Nathan earlier than the Madras Excessive Court docket and fought by Shashank Ratnoo all the best way to the Supreme Court docket.
Like Nathan, Ratnoo, a practising lawyer, is an affected candidate. He secured the 688th rank and hoped to get the Indian Income Service (IRS) in 2016, however was declared a common class candidate and couldn’t make it to any service.
The EWS quota
Within the September 1993 round, it was categorically said that earnings from “wage” or “agriculture” wouldn’t be counted for the take a look at of earnings and wealth for deciding the creamy layer standing.
Throughout the listening to on petitions in opposition to reservation for Economically Weaker Sections (EWS) launched by the Narendra Modi authorities in 2019, when the Supreme Court docket requested why the earnings criterion for EWS classes and for OBCs was the identical at Rs 8 lakh, the counsel, primarily based on the committee headed by then Income Secretary Ajay Bhushan Pandey, submitted, primarily based on the identical 1993 round, that whereas computing earnings for “Creamy Layer amongst OBCs”, the “earnings from salaries or agricultural land” was “excluded”, however in circumstances of EWS, this was “included.”
Who will profit from the Supreme Court docket ruling?
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Other than the candidates taking exams henceforth, others will profit too. Ratnoo stated, “These already working in varied companies will likely be allotted higher-rank companies. A few of them might get totally different cadres (in case they’re among the many three All India Companies). Some who couldn’t safe a service, will now be allotted one primarily based on their rank revised being an OBC candidate.”
The Supreme Court docket has additionally stated, “…we discover no issue in directing … to create such supernumerary posts, as required, to accommodate the candidates who fulfill the non-creamy layer standards as clarified within the current judgment, topic to their in any other case fulfilling eligibility situations.”
