UNION OF INDIA v. ROHIT NATHAN
OBC Creamy Layer Determination - Parental Salary Cannot Be Sole Basis for Exclusion of PSU and Private Sector Employees Absent Post Equivalence.
Court: Supreme Court of India
Citation: 2026 INSC 230
Decision Date: 11-03-2026
List of Laws
The Constitution of India, Articles 14, 15, and 16; Office Memorandum dated 08.09.1993 (OBC Reservation and Creamy Layer); Clarificatory Letter No. 36033/5/2004-Estt. (Res.) dated 14.10.2004; Administrative Law - Validity of Executive Instructions and Clarifications; Service Law - Reservation and Substantive Equality
- Facts: The case involves multiple candidates who were successful in the Civil Services Examinations but were denied Other Backward Classes (OBC) Non-Creamy Layer (NCL) status. The Department of Personnel and Training (DoPT) classified them as falling within the "creamy layer" by applying an income test that included parental salary. These candidates were children of employees in Public Sector Undertakings (PSUs), banks, or private organizations. Under the foundational Office Memorandum (OM) dated 08.09.1993, creamy layer status for such employees was to be determined by comparing their posts to equivalent Government posts (status test). However, where equivalence was not established, the DoPT relied on a clarificatory letter dated 14.10.2004 to include salary as a separate head under the Income/Wealth Test, leading to the exclusion of candidates whose parents were in lower-grade posts (equivalent to Group C or D) but earned salaries above the prescribed threshold.
- Procedural Posture: The Union of India appealed against several judgments from the High Courts of Madras, Delhi, and Kerala. These High Courts had concurrently upheld the orders of various Benches of the Central Administrative Tribunal (CAT), which ruled in favor of the candidates, quashing the DoPT's restrictive interpretation.
- Issue: Whether the clarificatory letter dated 14.10.2004 can override the substantive criteria of the 1993 OM, and whether excluding candidates solely based on parental salary income—without considering post equivalence—constitutes hostile discrimination against PSU/private sector employees compared to Government servants.
- Holding: The Supreme Court dismissed the appeals, holding that the 1993 OM remains the primary authority and that salary income cannot be the sole determinant for creamy layer exclusion in the absence of post equivalence.
- Reasoning: The Court reasoned that the 1993 OM, based on the Indra Sawhney judgment, emphasizes "social status" as the primary filter for the creamy layer. The Income/Wealth Test is a residual filter where "gross annual income" expressly excludes salary and agricultural income. A clarificatory letter cannot introduce substantive amendments or new conditions that contradict the parent policy. Treating children of PSU employees (in lower posts) differently from children of similarly placed Government servants solely because of salary progression violates the equality mandate under Articles 14 and 16. Until the Government determines formal equivalence of posts, candidates must be assessed under the structured parameters of Category VI of the 1993 OM, which excludes salary from the income pool.
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