Creamy layer verdict only for those who challenged government decision, says SC

NEW DELHI: Supreme Court Friday said its March 2026 verdict quashing Centre's 2004 decision to factor in salary income of PSU and private sector employees for deciding creamy layer status for OBCs would be applicable only to those who had moved the court, while those already appointed and allotted cadre would not be disturbed. The clarification came following apprehension in many quarters that the March order would affect all subsequent appointments as those denied reservation in the last decades on that calculation would become eligible for fresh entry into the civil services. In March, SC had held that income of parents could not be the sole criterion to determine whether a candidate fell in the creamy layer for exclusion from OBC reservation and the status and category of parents' job had to be considered along with 'income/wealth test' as an additional criterion of exclusion.

Order won't be ground to reopen appointments already made: SC

The ruling has huge implications for wards of PSU and private sector employees as in their case, parents' income was taken as the sole factor to determine creamy layer status, unlike in the case of govt job employees whose category of job was the deciding factor. As it created uncertainty over the validity of the recruitment process for OBC candidates over the years, Centre sought clarification from Supreme Court, saying its order should not be enforced retrospectively. The bench said, "The judgement determines the rights of the parties before this court. It holds that the respondent candidates fall within the non-creamy layer of the OBC category and are entitled to the benefit of reservation together with consequential placement and allotment of posts in the selection processes in which they participated. The grant of such benefit shall not, by itself, operate to the detriment of the seniority of any other person or entail the reopening of selections or appointments already concluded." Advocates Shashank Ratnoo and Varun Thakur, who represented the candidates who have been fighting a legal battle for years, said govt has to create supernumerary posts to accommodate their clients who fulfil the requisite eligibility conditions. The Supreme Court said its judgement shall not, by itself, furnish a ground for reopening selections or appointments already concluded prior to the order and the claims of those asserting that they are similarly placed and whose cases are pending before any court, tribunal or other competent forum or authority, may be considered on their own merits. "This court expresses no opinion on the merits of such claims, save to reiterate that the interpretation of the 1993 OM and the 2004 letter laid down in the judgement may be taken into consideration while adjudicating such claims in accordance with law," the bench said.

The office memorandum (OM) issued by Centre in 1993 had said the same principle would be applied to employees of PSUs, banks, insurance organisations, universities and similar bodies holding equivalent or comparable posts. But the "equivalence of posts" as contemplated in the OM was not done and a clarificatory letter was issued by govt in 2004 making 'income/wealth test' the sole criterion for PSUs and private sector employees. The court, however, had said overemphasis on the 2004 letter to the extent of making income alone determinative without regard to parental status or category of service would defeat the structural framework of exclusion envisaged under the 1993 office memorandum and there could not be different criteria for children of govt employees and the rest.