1999 Supreme(SC) 1494

1999(10) Supreme 270
Supreme Court of India
(Under Article 32 of the Constitution of India)
M. Jagannadha Rao, D.P. Wadhwa & M.B. Shah, JJ.
Indira Sawhney -Petitioner
versus
Union of India & Ors. -Respondents
IAS Nos. 35-36 In WP (C) No. 930 of 1990
With
WP (C) 699/95 and WP (C) 727/95 IA 2/99, IAs 8 and 9 in WP (C) 699/95
Decided on 13-12-1999
Counsel for the Parties :
For the Appearing Parties : K.N. Rawal, Additional Solicitor General, (Gopal Subramanium) Sr. Advocate (A.C.), P. Krishnamoorthy, K.K. Venugopal, Sr. Advocates, Dayan Krishnan, (Ms. Indira Sawhney) (In-person), (NP), Ms. V.M. Rahana, G. Prakash (S.W.A. Quadri) Advocate for S.N. Tardol, T.C. Sharma, (Ms. Neelam Sharma) Advocate, for Ms. Sushma Suri, Ms. A. Subhashini, Ajay Kumar Yadav, K.V. Mohan, S.R. Setia, A.N. Rajan Babu, Shakil Ahmad Syed), E.M.S. Anam, Ms. Lilly Thomas, Sr. Justus Nadar, Dr. Rajiv Dhawan, Roy Abraham, (Rajan Babu) Advocate for Ms. Baby Krishnan, V.J. Francis, P.I. Jose, M.T. George, Advocates.
For the Intervenor in I.A. No. 2/99 and for R.No. 3-4 in W.P. (C) No. 699/95 : (A.N. Rajan Babu and Shakil Ahmad Syed), Advocates.

Very Important Points
1. Caste only cannot be the basis for reservation. Reservation can be for a backward class citizen of a particular caste. Therefore, from that caste, creamy layer and non-backward class of citizens are to be excluded.
2. Non-exclusion of creamy layer among backward classes for purposes of reservation, as laid down by the Supreme Court in Indira Sawhney’s case, would amount to violation of Articles 14 and 16; any executive or legislative action refusing to exclude the creamy layer from the benefits of reservation will be violative of Articles 14 and 16(1) and also of Article 16(4).
3. The qualifications, standard and talent necessary for Backward Classes cannot be relaxed or reduced to a level which may affect the efficiency of administration.
4. Violation of Articles 14 and 16 amounts to violation of the basic structure of the Constitution of India.
5. Sections 3, 4 and 6 of the Kerala State Backward Classes (Reservation of Appointments or Posts in the Services under the State) Act, 1995, which are against the law laid down by the Supreme Court in Indira Sawhney case to eliminate creamy layer among backward classes are held to be unconstitutional and struck down as violative of Articles 14 and 16 of the Constitution.

Headnote:(i) Constitution of India-Articles 14 and 16-Reservation-Backward classes-Caste only cannot be basis for reservation-Creamy layer and non-backward class of citizens are to be excluded-Creamy layer of caste is to be eliminated for granting benefit of reservation-Creamy layer cannot be termed as socially and economically backward class-Law laid down in Indira Sawhney case explained-Non-exclusion of creamy layer in backward class will be violative of Articles 14, 16(1) and 16(4)-Any executive or legislative action refusing to exclude creamy layer will be violative of Articles 14, 16(1) and 16(4).

       Held : Caste only cannot be the basis for reservation. Reservation can be for a backward class citizen of a particular caste. Therefore, from that caste, creamy layer and non-backward class of citizens are to be excluded. If the caste is to be taken into consideration then for finding out socially and economically backward class, creamy layer of the caste is to be eliminated for granting benefit of reservation, because that creamy layer cannot be termed as socially and economically backward. (Para 8)

       Inclusion of castes in the list of Backward classes cannot be mechanical and cannot be done without adequate relevant data. Nor can it be done for extraneous reasons. Care should be taken that the forward castes do not get included in the backward castes list. Periodic examination of a Backward class could lead to its exclusion if it ceases to be socially backward or if it is adequately represented in the services. Once backward, always backward is not acceptable. In any case, the `creamy layer’ has no place in the reservation system. If forward classes are mechanically included in the list of backward classes or if the creamy layer among backward classes is not excluded, then the benefits of reservation will not reach the really backward among the backward classes. Most of the benefits will then be knocked away by the forward castes and the creamy layer. (Paras 9 & 10)

       In Indira Sawhney case as appears from the judgments of sic out of the eight Judges, viz. Jeevan Reddy (for himself and three others), Sawant and Sahai JJ. - (i.e. six learned Judges out of nine) - they specifically refer to those in higher services like IAS, IPS and All India Services or near about as persons who have reached a higher level of social advancement and economic status and therefore as a matter of law, such persons are declared not entitled to be treated as backward. They are to be treated as creamy layer “without further inquiry”. Likewise, persons living in sufficient affluence who are able to provide employment to others are to be treated as having glaced a higher social status on account of their affluence, and therefore outside the backward class. Those holding higher levels of agricultural land holdings or getting income from property, beyond a limit, have to be excluded from the backward classes. This, in our opinion, is a judicial “declaration” made by this Court. (Para 21)

       Observations in the judgment of Jeevan Reddy, J. to the effect that in such a big country as ours, norms may differ from State to State or from region to region. Do not detract from the declaration of law that the above sections belong to the creamy layer and hence are to be kept outside the backward class. We may add that some more categories of persons who can be said to have gone outside the creamy layer are those “broad categories” enumerated in the notification of the Central Government dated 8.9.93 pursuant to Indira Sawhney and the said broad categorisation has been accepted by this Court in Ashok Kumar Thakur v. State of Bihar & Ors. as valid. With respect, we are in entire agreement with the principles laid down in Ashok Kumar Thakur. (Para 22)

       The identification of creamy layer in every backward class is in fact based upon horizontal division of every section of the backward class into creamy layer or non-creamy layer. For example, if there are a dozen named backward classes and each have particular percentage of quota in the reservation, they can be arranged in a vertical distribution one after the other (see para 812 of Indira Sawhney referring to vertical and horizontal divisions), and the separate and the aggregate quota meant for them can be spelled out. But in each of these named backward classes listed one below the other, it is not difficult to make horizontal divisions of those belonging to (i) constitutional offices (ii) particular services, (iii) professions (iv) industry and trade (v) particular income level and (vi) particular holding of property etc. to segregate the creamy and non-creamy layers in each vertical sub-classification of backward class and say that the children of such persons in these horizontal sub-divisions of the backward classes will be creamy layer and therefore outside the backward classes. This is not a difficult exercise. It is also important to notice that such a horizontal division based on such norms will be applicable not only to those in the Backward Classes presently falling under the norm but the norms or limits so set would also be applicable to those reaching that level in the future. May be, as stated in the notification of the Central Government dated 8.9.93 issued pursuant to Indira Sawhney, the income levels may have to be reasonably upgraded periodically to set off inflation. Subject to such a reasonable revision in the norms, if any, periodically, the norms whether laid down by the Central Government or the State Governments must apply not only for the immediate present but also for the future. This, in our view, was the declaration of law made in Indira Sawhney and in Ashok Kumar Thakur in relation to identification and exclusion of creamy layer. (Para 23)

       As the ‘creamy layer’ in the backward class is to be treated “on par” with the forward classes and is not entitled to benefits of reservation, it is obvious that if the ‘creamy layer’ is not excluded, there will be discrimination and violation of Articles 14 and 16(1) inasmuch as equals (forwards and creamy layer of backward classes) cannot be treated unequally. Again, non-exclusion of creamy layer will also be violative of Articles 14, 16(1) and 16(4) of the Constitution of India since unequals (the creamy layer) cannot be treated as equals that is to say, equal to the rest of the backward class. Thus, any executive or legislative action refusing to exclude the creamy layer from the benefits of reservation will be violative of Articles 14 and 16(1) and also of Article 16(4). (Para 26)

       (ii) Constitution of India-Articles 14 and 16-Reservation-Backward class-Declaration of law in Indira Sawhney case in regard to exclusion of ‘creamy layer’-Cannot be undone by legislature by retrospective validating law by statutory declaration that no creamy layer exist.

       Held : It is true that whenever legislative or executive action is declared as being violative of the provisions of Part III of the Constitution, it will be permissible for the Executive of Legislature to remove the defect which is the cause for discrimination prospectively and which defect has been pointed out by the Court. The defect can be removed retrospectively too by legislative action and the previous actions can also be validated. But where there is a mere validation with retrospective effect, without the defect being legislatively removed with retrospective effect, the legislative action will amount to overruling the judgment of the courts by way of legislative fiat and will be invalid as being contrary to the doctrine of separation of powers. (Para 27)

       In the context of the law laid down in Indira Sawhney and in Ashok Kumar Thakur if the legislature of any State does not take steps to remove the defect or to effectively and realistically remove the defect to exclude the ‘creamy layer’ from the backward classes then the benefits of reservations which are invalidly continued in favour of the ‘creamy layer’ cannot be declared retrospectively valid merely by a legislative declaration that such creamy layer is absent. Nor can it be done by means of a validating provision. The creamy layer principle laid down in Indira Sawhney, cannot be ignored as done by Section 6 of the said Act. We shall elaborate these aspects later. If under the guise of elimination of the ‘creamy layer’, the legislature makes a law which is not indeed a true elimination but is seen by the Court to be a mere cloak, then the Court will necessarily strike down such a law as violative of principle of separation of powers and of Articles 14, 16(1) and Article 16(4). (Para 28)

       (iii) Kerala State Backward Classes (Reservation of Appointments or Posts in the Services under the State) Act, 1995-Sections 3, 4 and 6-Constitutional validity-Section 3 declaring that no creamy layer in backward class exist in Kerala State-Declaration contrary to findings contained in Justice K.J. Joseph Committee appointed under Directions of Supreme Court to identify creamy layer-Declaration a mere cloak to get over principles of law laid down in Indira Sawhney case-Section 4 providing for continuance of reservation for backward class as they stood in 1958 ignoring directives of Supreme Court in Indira Sawhney for exclusion of creamy layer-Section 6 giving retrospective effect-Sections 3, 4 and 6 unconstitutional and violative of Articles 14, 16(1) and 16(4) and of law laid down by Supreme Court-Justice K.J. Joseph ‘Committees Report accepted in toto-Principles of prospective overruling adopted-Exclusion of creamy layer as stated in Justice K.J. Joseph Report shall be applicable from date of Judgment-Recommendation of Justice K.J. Joseph would be effective until State of Kerala makes provisions for exclusion of creamy layer among Backward classes in the State in accordance with law.

       Held : In view of the facts and circumstances, referred to above, we hold that the declaration in sub-clause (a) of Section 3 made by the legislature has no factual basis in spite of the use of the words ‘known facts’. The facts and circumstances, on the other hand, indicate to the contrary. In our opinion, the declaration is a mere cloak and is unrelated to facts in existence. The declaration in Section 3(a) is, in addition, contrary to the principles laid down by this Court in Indira Sawhney and in Ashok Kumar Thakur. It is, therefore, violative of Articles 14 and 16(1) of the Constitution of India. Sub-clause (a) of Section 3 is, therefore, declared unconstitutional. (Para 41)

       The Kerala Act has mixed up two different concepts in this sub-clause (b) of Section 3. Article 16(4), it will be seen, is an enabling provision which permits the State to provide reservation for Backward Classes if, in the opinion of the State, such reservation is felt necessary and if there is inadequate representation. Lack of adequate representation of a particular backward class may be a factor for consideration by the State for providing reservation. But, the said factor cannot be the sole ground for continuance of the creamy layer in that backward class. The first step no doubt is the identification of the backward class which is inadequately represented. But there is a second step also and that is the elimination of the creamy layer from the Backward Class. The second step cannot be mixed up with the first step nor can it be forgotten. (Para 43)

       The mere inadequate representation of a particular backward class in public services flowing as a consequence of exclusion of creamy layer is not legally sufficient to provide or continue reservation to the creamy layer. Reservation even for Backward classes can be made only if it will not undermine the efficiency of the administration in the particular department. The Constitution has not envisaged that inadequately represented backward classes are to be placed on a more favourable footing than inadequately represented Schedule Castes/Tribes for that would offend Article 14 as between two sets of Backward Classes - namely the Scheduled Castes and the Other Backward Classes, the qualifications, standard and talent necessary for Backward Classes cannot be relaxed or reduced to a level which may affect the efficiency of administration. (Para 48)

       The constitutional principle that equals cannot be treated unequally and unequals cannot be treated equally based on Articles 14 and 16(1) overrides other considerations. Thus, assuming that, when creamy layer is excluded, these will be inadequate representation of certain Backward classes in services, that cannot be a valid reason for the continued inclusion of the creamy layer in the Backward Class, after Indira Sawhney. (Paras 50 & 51)

       For all the aforesaid reasons, sub-clause (b) of Section 3 does not provide any valid answer for not eliminating the creamy layer and must also be held to be unconstitutional and violative of Articles 14, 16(1) and 16(4) of the Constitution. (Para 52)

       Section 4 provides for the continuance of reservation for the backward classes as they stood in 1958 ignoring the directives of this Court in 1992 in Indira Sawhney for exclusion of `creamy layer’. The non-obstante clause in section 4 too cannot come to the rescue of the State. As already stated, the said clause cannot override the judgments of this court based on Articles 14, 16(1) and 16(4) if the defect is not removed by the legislation. Neither Parliament nor the State Legislature can make any law to continue reservation to the creamy layer inasmuch as the above judgments of this Court are based on Articles 14 and 16(1) of the Constitution of India, and no law can obviously be made to override the provisions of Articles 14 and 16(1). Section 4 of the Act along with the non-obstante clause is declared unconstitutional and violative of the judgments of this Court and also violative of Articles 14, 16(1) and 16(4) of the Constitution of India. (Paras 55 to 58)

       Once Section 3 of the Act is held unconstitutional, the position is that the legislative declaration as to non-existence of creamy layer goes and the existence of creamy layer becomes a staring reality. That will mean that under the Act of 1995, the Legislature has not eliminated the defect. Nor can section 4 in this connection be of any help because that provision has also been declared as unconstitutional. Section 6 cannot stand alone once sections 3 and 4 are declared unconstitutional. As long as the creamy layer is not excluded and the defect continues, any validation - without elimination of the defect which is the basic cause of unconstitutionality - is, as already stated, ineffect and will be invalid. Thus, section 6 is also unconstitutional. (Para 59)

       Guidelines and criteria fixed by Justice K.J. Joseph to exclude creamy layer are on the same lines as those in the Central Government’s O.M. dated 8.9.93 which were accepted in Ashok Kumar Thakur as reasonable. In fact, there is now an upward increase of income to Rs. 1.50 lakhs. Having regard to Ashok Kumar Thakur, we are clearly of the view that the above guidelines and criteria fixed by the Justice Joseph Committee are reasonable so far as the State of Kerala is concerned. We accept the Justice Joseph Committee’s Report in toto subject to the addition of communities and sub-castes as pointed out in the affidavit of the State dated 16.1.98, referred to above. (Paras 73 to 76)

       Directions :

       We, therefore propose to adopt the principle of prospective overruling and we think it appropriate to put the recommendations in the Report dated 4.8.97 of the High Level Committee presided over by Justice K.J. Joseph (with the addition of the communities and sub-castes mentioned in the affidavit of the Chief Secretary dated 16.1.1998) into immediate operation from today prospectively, as stated below. We apply the principle of prospective overruling, as done in Ashok Kumar Thakur’s case, keeping the suo motu contempt case pending. We, therefore, direct as follows: (1) We direct that the exclusion of creamy layer as stated in that Report shall be applicable from today, to all cases where appointment orders have not been issued to the members of the Backward classes and for all future selections in public service as stated in the Report. (The five communities referred to in the affidavit of the Chief Secretary dated 16.1.98 shall also be treated as Backward subject to the guidelines and norms fixed by the Committee). It will be obligatory to implement the Report, as so modified, in the Government Departments of Kerala/Organisations/Institutions/Public Sector Undertakings/Government owned Companies/Co-operative Societies/Autonomous Bodies, as stated in the Report, wherever the principles of reservation embodied in Article 16(4) or Rules 14 to 17 of Part II of the Kerala State and subordinate Service Rules, 1958 are applicable. It shall be necessary for the candidates belonging to the Backward Classes to file the certificates as envisaged in the Report and satisfy the employer that he or she does not belong to the creamy layer. The income limits and property holdings as mentioned in the Schedule to the said Report will be applicable from today. The exclusion of certain occupations/communities etc. shall however be as specified in the Report. Any violation of this direction will make the appointment or selection made on or after this day, unconstitutional. (2) We are of the view that it will be appropriate to allow the State of Kerala one more chance to conform to the Rule of law. We, therefore, permit the State of Kerala to make such provision as it may deem fit for exclusion of creamy layer among the Backward Classes in the State of Kerala, in accordance with law and in a manner consistent with the Constitution, the basic structure of the Constitution, Articles 14 and 16 and the judgment in Indira Sawhney and in Ashok Kumar Thakur and in accordance with the principles laid down in the judgment now rendered by us. (3) Once such provision is made and published in accordance with law, it shall come into force and the recommendations of the Justice K.J. Joseph Committee as accepted by this Court shall cease to apply. But as long as the State of Kerala does not bring about any such alternative provisions to exclude the creamy layer, the recommendation of the Justice K.J. Joseph Committee shall operate from today subject to any further directions which this Court might give in that behalf. Any fresh alternative provision that may be made by the State of Kerala, it is needless to say, will be subject to such further decision of this Court, in case the validity thereof is questioned. (4) In the event of alternative provisions being made by the State of Kerala either by executive order or by legislative measures or by way of Rules, no Court shall entertain any challenge thereto, and all proceedings in relation thereto shall have to be taken out only in this Court. (Paras 79 & 80)

       (iv) Constitution of India-Articles 14 and 16-Reservation-Backward classes-Exclusion of creamy layer-Non-exclusion of creamy layer or inclusion of forward castes in list of backward classes will amount to violation of Articles 14 and 16-Violation of Article 14 and Article 16 amounts to violation of basic structure of Constitution.

       Held : The legislatures in this Country cannot transgress the basic feature of the Constitution, namely, the principle of equality enshrined in Article 14 of which Article 16(1) is a facet. Whether creamy layer is not excluded or whether forward castes get included in the list of backward classes, the position will be the same, namely, that there will be a breach not only of Article 14 but of the basic structure of the Constitution. The non-exclusion of the creamy layer or the inclusion of fowad castes in the list of backward classes will, therefore, be totally illegal. Such an illegality offending the root of the Constitution of India cannot be allowed to be perpetuated even by Constitutional amendment. The Kerala Legislature is, therefore, least competent to perpetuate such an illegal discrimination. What ever Parliament cannot do, the Kerala Legislature cannot achieve. (Para 63)

       Unfortunately, in the decision making process which enables the forwards to get into the list of backward classes or which enables the creamy layer to grab the benefits of reservations, it appears to us that the voice of the really backwards, namely, the voice of the non-creamy layer, is nowhere heard. Else there is no reason why the State should decide not to exclude the ‘creamy layer’. (Para 64)

       (v) Constitution of India-Article 16-Reservation-Backward classes -Mere inadequate representation of a particular Backward Class in public services-Not ground for reservation-Reservation cannot undermine efficiency in service-Qualification, standard and talent cannot be relaxed or reduced to a level which may affect efficiency of reservation. (Paras 47 & 48)