The Supreme Court has held that determination of creamy layer status for OBC candidates in Civil Services Examinations cannot be made solely on the basis of parental salary income. The Court ruled that the status and category of the post held by the parent, as prescribed under the 1993 Office Memorandum, must be the primary criterion. Salary and agricultural income are expressly excluded from the income/wealth test under Category VI.
A bench comprising Justice R. Mahadevan (authoring the judgment) and Justice PS Narasimha dismissed a batch of appeals filed by the Union of India against judgments of the Madras, Delhi and Kerala High Courts. The Court affirmed that the 2004 clarificatory letter cannot override or dilute the binding framework of the 1993 OM issued pursuant to the Indra Sawhney judgment.
The dispute arose when several candidates who cleared the Civil Services Examinations claiming OBC (Non-Creamy Layer) status were denied service allocation. The Department of Personnel and Training (DoPT) treated them as falling within the creamy layer after applying the income test to their parents’ salary, relying on Paragraph 9 of the clarificatory letter dated 14.10.2004. The parents were employees of Public Sector Undertakings (PSUs), banks or similar organisations where equivalence of posts with Government services had not been formally determined.
The Court observed:
“Mere determination of the status of a candidate as to whether he/she falls within the creamy layer or the non-creamy layer of the OBCs cannot be decided solely on the basis of the income.”
The bench clarified that under the 1993 OM, income from salaries and agricultural land is consciously kept outside the computation while applying the Income/Wealth Test. The 2004 Letter was held to be a mere clarification that cannot introduce a substantive departure from the parent policy. The Court held:
“A clarificatory instruction cannot introduce a substantive condition that does not exist in the parent policy.”
The Supreme Court further held that treating children of PSU/private sector employees differently from similarly placed Government employees by counting salary income alone would amount to hostile discrimination under Articles 14 and 16. It observed:
“The object of excluding the creamy layer is to ensure that socially advanced sections within the OBCs do not appropriate benefits meant for the genuinely backward; it is not to create artificial distinctions between equally placed members of the same social class.”
The Court directed the DoPT to re-verify the creamy layer status of the respondent candidates and intervenors strictly in accordance with the 1993 OM, without including parental salary income. The verification and consequent service allocation (or re-allocation) must be completed within six months. Where necessary, supernumerary posts shall be created to accommodate the candidates, as earlier indicated by the Union before the Parliamentary Committee.
The judgment will govern all pending and future cases involving creamy layer determination for OBC candidates in Central Government recruitments.
Case Title: Union of India and Others v. Rohith Nathan and Another, Etc. (with connected appeals)
Citation: 2026 INSC 230
Click HERE for full judgment
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