Money can’t be the sole basis to decide ‘creamy layer’: Supreme Court

By-Arun Shekhar Jawla

On 24th August, the Supreme Court bench consisting of justices L Nageswara Rao and Aniruddha Bose held that states cannot make money/economic status the sole standard to determine “creamy layer”’ within a backward class and dismiss them from benefits of reservation. Also, said that while defining “creamy layer” other factors must also be taken into consideration apart from the economic criterion such as social, educational and other factors.

This ruling came soon after the SC bench struck down a 2016 notification of the Haryana government. As it turns out it was it denying benefits of reservation in government jobs and educational institutions to those among the backward classes who have an annual income of Rs.6 lakh or more which was considered on the sole basis of income.

The bench has instructed the Haryana government to publish a new standard to determine the “creamy layer” among OBCs within three months while also considering social backwardness and other factors in addition to the economic criterion.

The bench highlighted that “the Supreme Court’s judgment in the Indra Sawhney case (1992) underscored that social, economic and other factors have to be taken into account to determine the “creamy layer” within a backward class and then excluding it from quota benefits”.

Moreover, the Haryana Backward Classes (Reservation in Services and Admission in Educational Institutions) Act, 2016 has only permitted financial income of ₹6 lakh as the sole criterion. SC also criticized the Haryana government for clubbing income from salaries and agricultural land in determining the gross annual income to define the creamy layer and said it was at variance with the 1993 memo issued by the Central government on the review of income criteria to exclude socially progressive sections of society from the purview of reservation for OBCs. Presently, ₹8 lakh has been fixed as the annual income limit for the “creamy layer” for central government reservation.

The case was filed by Pichra Warg Kalyan Mahasabha to challenge the 2016 notification as violative of the recommendations laid down in the Indra Sawhney case. As the 2016 act was found to be discriminatory for creating a sub-classification within the same class. Rather than examining the issue of sub-classification, the court decided the whole criteria to be improper as it was only based on income criteria.