Creamy Layer Not Based on Income Alone | SC

Case Details: Union of India vs. Rohith Nathan - [2026] 184 taxmann.com 241 (SC)

Judiciary and Counsel Details

• R. Mahadevan & Pamidighantam Sri Narasimha, JJ.
• Arvind Kumar Sharma, Shreekant Neelappa Terdal, Aors, Tushar Mehta, Solicitor General, Ms Aishwarya Bhati, A.S.G., Mrs Alka Agrawal, Apoorva Kurup, Navanajay Mahapatra, Madhav Sinhal, Mayank Pandey, Ms Sansriti Pathak, Santosh Ramdurg & Yogesh Vats, Advs. for the Appellant.
• Basavaprabhu Patil, Sanjay Hegde, T. Raja, Sr. Advs., Vikram Hegde, Ms Chinmayi Shrivastava, Trishan Dollny, Ankit Tiwari, Arijit Sukla, Ashish, Tanay Hegde, Roy Abraham, Ms Reena Roy, Adithya Koshy Roy, Akhil Abraham Roy, Saraswata Mohapatra, M.T. Arunan, M.A. Aruneshe, Sreekar Aechuri, Aniket Chauhaan, Shashank, Shantanu Lakhotia, Divyaveer Singh, A. Sirajudeen, Arindam Sarin, Mayank Sharma, Dhruv Joshi, Vinay Kaushik, Mrs. P. S. Vijayadharni, Nishant Gautam, Sanjay Singh Thakur, Hitesh Kumar Sharma, Vijay Prtap Singh, Akhileshwar Jha, Ms Shreya Jha, Anupam Kumar, Vibhav Mishra, Ms Megha Gaur, Anuroop Chakravarti, M.S. Vishnu Sankar, Prakhar Srivastava, Ms Athira G. Nair, Aditya Santhosh, Ms Dimple Nagpal, Advs., Ms Hima Lawrence, Himinder Lal, Prateek K. Chadha, Harsh Parashar, Dr. N. Visakamurthy, Vardhman Kaushik, Varinder Kumar Sharma, Ms Manju Jetley, Parmanand Gaur, Abhikalp Pratap Singh, Ashish Batra & Siddhartha Jha, Aors for the Respondent.

Facts of the Case

In the instant case, the question was placed before the Supreme Court whether the Creamy layer exclusion solely on income without considering status and post category is unsustainable; differential treatment of similarly placed persons is impermissible

It was noted that the DoPT’s clarificatory letter dated 14.10.2004 cannot be read in isolation to dilute or override the substantive scheme of the Office Memorandum dated 08.09.1993 governing the identification of the OBC creamy layer.

Further, it was noted that 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 1993 OM.

Supreme Court Held

The Supreme Court observed that where equivalence of posts in the PSUs and similar organisations has not been evaluated, the creamy layer status must be determined on the basis of the Income/Wealth Test.

Further, the Supreme Court observed that the income from salaries alone cannot be the sole criterion to decide whether a candidate falls within the creamy layer. The determination of creamy layer status solely based on income brackets, without reference to categories of posts and status parameters enunciated in 1993, OM, is clearly unsustainable in law.

The Supreme Court held that treating similarly placed employees of private entities and PSUs differently from the Government employees and their wards, while deciding their entitlement to reservation, would amount to hostile discrimination.

Thus, the appeals against the High Court’s order directing re-verification of the OBC status of candidates strictly under 1993 OM were to be dismissed.

List of Cases Reviewed

• Order of High Court of Judicature at Madras in W.P. Nos. 6387, 6388 and 6389 of 2017, Dated 31.08.2017
• Order of High Court of Delhi at New Delhi in W.P. Nos. 3073-3084 of 2017, Dated 22.03.2018 (para 41) affirmed

List of Cases Referred to

• Ketan v. Union of India [W.P. Nos. 3073 – 3084 of 2017, dared 22-3-2018] (para 5)
• Union of India v. Dr. Ibson Shah I [OP (CAT) No. 94 of 2021, dated 25-2-2022] (para 6)
• Ashok Kumar Thakur v. Union of India (2008) 6 SCC 1 (para 7)
• Indra Sawhney v. Union of India (2000) 1 SCC 168 (para 7)
• Indra Sawhney v. Union of India 1992 Supp (3) SCC 217 (para 7)
• Neil Aurelio Nunes v. Union of India (2022) 4 SCC 64 (para 8.4)
• Madhuri Patil v. Commissioner, Tribal Development (1994) 6 SCC 241 (para 9.1)
• K. Sampath v. State of Tamil Nadu MANU/TN/9958/2006 (para 9.3)
• R.P. Bhardwaj v. Union of India (2005) 10 SCC 244 (para 9.3)
• Union of India v. Parul Debnath (2009) 14 SCC 173 (para 10.3)
• Delhi Administration v. Nand Lal Pant (1997) 11 SCC 48 (para 10.3)
• Dr. D.K. Reddy v. Union of India (1996) 10 SCC 177 (para 10.3)
• Union of India v. Vijay Kumari 1994 Supp (1) SCC 94 (para 10.3)
• Dr. PPC Rawani v. Union of India (1992) 1 SCC 331 (para 10.3)
• Sushma Gosain v. Union of India (1989) 4 SCC 468 (para 10.3)
• State of Andhra Pradesh and another v. P. Sagar 1968 SCR (3) 595 (para 21.3)
• M.R. Balaji and others v. State of Mysore AIR 1963 SC 649 (para 21.3)
• R. Chitralekha v. State of Mysore (1964) 6 SCR 368 (para 21.4)
• K.S. Jayasree v. State of Kerala (1976) 3 SCC 730 (para 21.4)
• K.C. Vasanth Kumar and another v. State of Karnataka 1985 SCC OnLine SC 339 (para 21.4)
• State of Kerala and Others v. N.M. Thomas and Others MANU/SC/0479/1975 (para 37).