New Delhi: The salary income of private sector employees cannot be excluded while determining the eligibility for non-creamy layer certificates, the Kerala High Court has ruled, adding that children of affluent private employees cannot claim reservation benefits accorded to Other Backward Classes (OBCs).
The court made these observations while acting on the case of two students, who filed petitions saying they were OBCs and were seeking non-creamy layer certificates for the purpose of applying to the National Eligibility Cum Entrance Test (NEET) and the Kerala Engineering Architectural Medical Examination (KEAM).
A non-creamy layer certificate is given to those OBC applicants whose family annual income is below Rs 8 lakh. In the present case, the father of one of the students owned a flat in Hyderabad, another in Kochi, two motor cars including an Audi.
The court said that the student could not claim the benefit, as his wealth exceeded the maximum permissible limit.
“The parents of the petitioners in both these writ petitions have income as well as wealth, far in excess of the limits prescribed, they cannot fall in the category of Non-Creamy Layer,” Justice Bechu Kurian Thomas had said.
By way of the 29 July order, the court noted that both the petitioners were denied the benefit of the non-creamy layer certificate, on grounds that their income from family sources did not exceed Rs 8 lakh, which is the cut off limit required to avail the non-creamy benefit.
The court also took note of a 1 January, 2015 Government Order (GO), which laid down the criteria for excluding creamy layer candidates from admission to professional courses. The candidates were categorised based on their parents’ job and status, including whether such applicants belonged to families of army officers, government officers and PSUs, among others.
However, the court rejected the petitioner’s reliance on this circular saying the explanation given in the GO was that government employees who are not disentitled to reservation, but still have other income sources will fall within the non-creamy layer.
Income from salaries and agricultural land will not be clubbed only for these people, it said, adding that the GO was never meant for those working in the private sector.
How the case unfolded
One of the students before the court said that her father is the senior vice president of a limited liability partnership (LLP) at Hyderabad, and had an annual salary income of Rs 1.12 crore.
The father owned apartments at Thripunithura and Hyderabad, both of which were purchased via loans. Apart from his salary, the father had an income of Rs. 58,163 under the head ‘Income from Other Sources’. The student’s mother ran a small business, with only a meagre income.
The primary ground was that since the salary income had to be excluded, she was eligible for the Non-Creamy Layer certificate, as also the benefit of reservation.
The other petitioner told the court that his father, though a Non Resident Indian (NRI), working in the UK as a lead solution architect at Barclays UK Consumer Bank, had no other income other than salary, which totals to Rs 33 lakh.
One of the counter affidavits filed earlier in this case by the government said that the petitioner’s application for the certificate was rejected owing to the father’s annual income exceeding Rs 1 crore, and the possession of numerous assets like two apartments and luxury cars.
Relying upon the judgment of the Supreme Court in Union of India vs. Rohith Nathan, where it said that salary income ought to be excluded, while considering the income limit for issuance of a non-creamy layer certificate, the students contended that their parents had a very limited income from other sources, and could not be denied the benefit of the Non-Creamy Layer certificate.
But, the Kerala government argued that though salary and agricultural income cannot be clubbed together, it does not mean that the former should be excluded, as they are separate heads.
Relying on a 2010 circular, it said that if the income from salary or income from other sources exceeds the prescribed limit, one should be considered falling under the creamy layer. The limit set in the circular was Rs 30 lakh per annum.
The Kerala government argued that one of the parents was a senior vice-president in a large private company, an executive-level position, analogous to the highest echelons of management in the public sector.
Subsequently, the court rejected the argument that income from private sector jobs should be considered for non-creamy layer eligibility because the government had not separately declared equivalent private sector posts while notifying certain government posts as ineligible.
“In view of the binding declaration of the Supreme Court in the two Indira Sawhney cases, there cannot be a situation where merely because equivalent posts in the private sector have not been notified, all those working in the private sector would automatically become eligible to be included in the Non-Creamy Layer, unless they have income from other sources,” it said.
The gross annual income is the factor to be reckoned for the persons employed in the private sector, the court added.
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How courts view ‘creamy layer’
The court cited the Madras HC’s 2025 ruling in Rupak Roshan v. Sub-Collector (Revenue) saying that the purpose of excluding the economically affluent class from the benefits of reservation is that the actual benefits should reach the deserving people, who are economically weaker within the OBC.
In that case, the petitioner who had an annual income of Rs 18 lakh, was held to be well above the prescribed income limit and therefore, held ineligible for reservation under ‘Non-Creamy Layer’.
A nine-judge SC bench, in a landmark judgment in the 1992 Indira Sawhney case held that, though reservation can be for a backward class citizen of a particular caste, from among the socially and economically backward class, the creamy layer has to be eliminated.
It was also held that the creamy layer cannot be termed as socially and economically backward as the ‘creamy layer’ in the backward class has to be treated “on par” with the forward classes and are not entitled to the benefits of reservation.
The top court further held that if the ‘creamy layer’ is not excluded, there will be discrimination and the violation of Article 14 (right to equality).
However, Kerala government failed to abide by the directions in the said judgment, to identify the Creamy Layer and contempt proceedings were initiated against it
Soon, a legislation was enacted as Kerala State Backward Classes (Reservation of Appointments or Posts in the Services under the State) Act, 1995.
Section 3 of the 1995 Act said there are no socially advanced sections in any Backward Classes who have acquired capacity to compete with forward classes and also that the Backward classes were not “adequately represented” in the services under the State and they would continue to be entitled to reservation.
The Kerala High Court appointed the K.J. Joseph Committee to identify the creamy layer. The panel submitted a report in August 1997 to the Supreme Court identifying the ‘creamy layer’ in the backward classes in Kerala.
Apart from this, the Supreme Court, last year, in March, in Union of India vs Rohit Nathan, where the court held that income cannot be the only criterion to decide the creamy layer status among OBCs, while acting on a case which concerned an employee who working in the private organisation as well as a public sector undertaking.
A two-judge bench had said that the object of excluding the creamy layer (from reservation) is to ensure that socially advanced sections within the OBCs do not appropriate the benefits meant for the genuinely backward classes.
(Edited by Tony Rai)