Supreme Court reserves order on Centre's OBC

The Supreme Court reserved its order on Thursday on a Union government plea seeking to defer its March 11 judgment on OBC creamy layer exclusion by two years and apply it only prospectively. A bench of Justices PS Narasimha and R Mahadevan heard arguments from Solicitor General Tushar Mehta and Additional Solicitor General Aishwarya Bhati for the Centre, who warned that retrospective application would cause complete administrative chaos.

The Centre's application, filed in late August, does not question the judgment itself but requests a limited deferral for operationalisation. It argued that applying the ruling to past and ongoing recruitments would prejudice competing rights and force the reopening of settled matters like seniority and cadre allocation. The government sought a reasonable time of two years to work out equivalent posts similar to Group A and B officers for identifying the creamy layer in public sector undertakings and private employment, a process requiring stakeholder consultation and a uniform policy.

Retrospective implementation, the Centre stated, would have significant consequences for recruitment, service allocation, cadre allocation, seniority, admissions, and the overall administration of OBC reservations across major employers like the railways, banks, Department of Posts, and paramilitary services.

Court highlights implementation timeline and past judgments

The bench noted that its March judgment had already allowed six months for implementation. That ruling traced the creamy layer framework to a 1993 Office Memorandum issued following the landmark 1992 Indra Sawhney judgment.

The 1993 order identified five occupational categories for exclusion, with a sixth based on an income or wealth test. A 2004 clarificatory order stated that income from salaries and from other sources were to be assessed separately, with exclusion following only if either component exceeded the prescribed limit for three consecutive years. The March judgment held that these documents preserve the primacy of status-based exclusion and confine economic exclusion to the sixth category.

It found that treating the children of PSU or private company employees differently from children of government officers in similar posts, by counting the former's parental salary for exclusion while ignoring the latter's, created hostile discrimination. The court ruled that creamy layer exclusion must be based on social status, not solely on total household salary, and that salary income cannot be mechanically aggregated to defeat the constitutional objective.

Impact on candidates and recruitment processes

The judgment is already affecting ongoing processes, with some candidates citing it to claim OBC benefits. Bhati noted that Civil Service Examination recruitment rules for the past and current year have been issued, and applying the judgment retrospectively could affect service allocations since 2012.

She gave examples, including one OBC candidate permitted as non-creamy layer despite a father employed by a multinational corporation with high income, who was then allocated the Indian Foreign Service under OBC reservation. Another candidate was permitted Civil Services benefits after an initial refusal due to a father's PSU employment and higher income. Both had argued that their parents were excluded on income criteria while government servants' creamy layer status is based on parental posts.

The government contends that correcting this discrimination, as directed by the court, requires sufficient time to avoid disrupting lakhs of people. It would affect candidates in ongoing examinations and admissions in higher educational institutions. In its March ruling, the court had directed the Department of Personnel and Training to create supernumerary posts within six months for eligible OBC non-creamy layer candidates wrongfully denied service allocations.

Legal opposition to Centre's plea

Senior advocates Basav Prabhu Patil, Sanjay Hedge, P Wilson, and advocate Prateek Chadha opposed the Centre's application. They argued the plea is in the nature of a review of a final judgment and should not be entertained.

Representing the candidates, P Wilson objected, contending the Centre was trying to delay or undo the judgment. He criticised the Department of Personnel and Training for failing to comply with court directions, Parliamentary Committee recommendations, and its own 1993 rules. Wilson argued the government could create supernumerary posts to accommodate eligible OBC candidates.

Earlier this month, the court refused to stay the judgment while issuing notice on the Centre's plea. The bench stated it will take a decision after hearing both sides.