1. Candidates in public service examinations challenged the inclusion of salary income for determining the creamy layer status for Other Backward Classes reservation eligibility. (Para 4 )
Back
Next 
2026 Supreme(SC) 251
SUPREME COURT OF INDIA
PAMIDIGHANTAM SRI NARASIMHA, R. MAHADEVAN, JJ.
Union Of India And Others – Appellants
Versus
Rohith Nathan And Another, Etc. – Respondents
Civil Appeal No(s). 2827 – 2829 of 2018
With
Union of India – Appellant
Versus
Ketan And Others, Etc. – Respondents
Civil Appeal No(s). 3130 – 3141 of 2024
With
Union Of India & Another – Appellants
Versus
Dr. Ibson Shah. I. And Another – Respondents
Civil Appeal No(s). 3297 of 2026 [Arising out of SLP (C) No. 17651 of 2022
Decided On : 11-03-2026
Important Points
The creamy layer status for reservation should be determined considering both parental status and income, and must not impose disparities between government and private sector employees under OBC classification.
Subject
Constitutional Law - Social Justice and Reservation
Act Referred
Headnote
(A) Constitutional Law - Article 14, 15, 16 - Socially and Educationally Backward Classes (SEBC) - Reserve benefits - Determination of creamy layer status must account for both status and income, as exclusion criteria cannot rely solely on salary income; OBC candidates denied reservation must not be treated disparately based on service type of parents. (Paras 21, 22, 36)
Facts of the case:
The appeals arise from the High Court's judgments dismissing challenges by Union of India against orders from Central Administrative Tribunal allowing OBC candidates' claims for reservation despite their parent's salary exceeding the creamy layer threshold. Candidates argued for inclusion based on status and salary sample calculations. (Paras 3-17)
Findings of Court:
The court affirms prior cases establishing a need for status consideration in creamy layer determination, asserting that salary should not alone dictate OBC status, emphasizing equality across government and PSU classifications. (Paras 34, 35, 41)
Issues: Whether the 2004 clarificatory letter can amend the 1993 Memorandum on OBC eligibility; whether there's discriminatory practice against PSU employees vis-a-vis government employees in creamy layer assessment. (Paras 19, 20)
Ratio Decidendi: The court ruled that interpreting benefits should reflect both income limits and the posts' nature held by candidates’ parents; the clarificatory letter did not alter foundational eligibility criteria. (Paras 30, 31)
Result: Civil Appeals dismissed, directions given for candidates' claims to be reevaluated based on clarified OBC non-creamy layer criteria within six months.
Facts of the case:
The appeals arise from the High Court's judgments dismissing challenges by Union of India against orders from Central Administrative Tribunal allowing OBC candidates' claims for reservation despite their parent's salary exceeding the creamy layer threshold. Candidates argued for inclusion based on status and salary sample calculations. (Paras 3-17)
Findings of Court:
The court affirms prior cases establishing a need for status consideration in creamy layer determination, asserting that salary should not alone dictate OBC status, emphasizing equality across government and PSU classifications. (Paras 34, 35, 41)
Issues: Whether the 2004 clarificatory letter can amend the 1993 Memorandum on OBC eligibility; whether there's discriminatory practice against PSU employees vis-a-vis government employees in creamy layer assessment. (Paras 19, 20)
Ratio Decidendi: The court ruled that interpreting benefits should reflect both income limits and the posts' nature held by candidates’ parents; the clarificatory letter did not alter foundational eligibility criteria. (Paras 30, 31)
Result: Civil Appeals dismissed, directions given for candidates' claims to be reevaluated based on clarified OBC non-creamy layer criteria within six months.
Judgement Key Points
The doctrine of merger is mentioned in the section where the court discusses the finality of its judgment and the binding effect of its decision. Specifically, it is referenced in the context of the appellate process and the binding nature of the judgment upon subsequent proceedings. The court indicates that upon dismissal of the appeals, the principles laid down in the judgment will merge with the orders of subordinate courts or tribunals, thereby binding them to apply the ratio of the Supreme Court's decision. This is articulated in the context of ensuring consistency and finality in the application of the legal principles established by the court.
The relevant mention appears in the part where the court discusses the implications of the dismissal of the civil appeals and the application of the doctrine of merger to the subordinate fora, emphasizing that the subordinate authorities would be bound to follow the ratio of the court’s judgment.
[Reference: p_59]
Legal Category Hierarchy
Advocates appeared:
For the Appellant(s) Mr. Arvind Kumar Sharma, AOR Mr. Tushar Mehta, Solicitor General Ms. Aishwarya Bhati, A.S.G. Mrs. Alka Agrawal, Adv. Mr. Apoorva Kurup, Adv. Mr. Navanajay Mahapatra, Adv. Mr. Madhav Sinhal, Adv. Mr. Mayank Pandey, Adv. Ms. Sansriti Pathak, Adv. Mr. Santosh Ramdurg, Adv. Mr. Yogesh Vats, Adv. Mr. Shreekant Neelappa Terdal, AOR
For the Respondent(s): Mr. Basavaprabhu Patil, Sr. Adv. Mr. Sanjay Hegde, Sr. Adv. Mr. Vikram Hegde, Adv. Ms. Hima Lawrence, AOR Ms. Chinmayi Shrivastava, Adv. Mr. Trishan Dollny, Adv. Mr. Ankit Tiwari, Adv. Mr. Arijit Sukla, Adv. Mr. Ashish, Adv. Mr. Tanay Hegde, Adv. Mr. Roy Abraham, Adv. Ms. Reena Roy, Adv. Mr. Adithya Koshy Roy, Adv. Mr. Akhil Abraham Roy, Adv. Mr. Saraswata Mohapatra, Adv. Mr. Himinder Lal, AOR Mr. Basavaprabhu Patil, Sr. Adv. Mr. T. Raja, Sr. Adv. Mr. Vikram Hegde, AOR Ms. Hima Lawrence, Adv. Ms. Chinmayi Shrivastava, Adv. Mr. M.t. Arunan, Adv. Mr. Trishan Dollny, Adv. Mr. M.A. Aruneshe, Adv. Mr. Arijit Sukla, Adv. Mr. Prateek K. Chadha, AOR Mr. Sreekar Aechuri, Adv. Mr. Aniket Chauhaan, Adv. Mr. Shashank, Adv. Mr. Shantanu Lakhotia, Adv. Mr. Divyaveer Singh, Adv. Mr. Harsh Parashar, AOR Mr. A.sirajudeen, Adv. Dr. N. Visakamurthy, AOR Mr. Vardhman Kaushik, AOR Mr. Arindam Sarin, Adv. Mr. Mayank Sharma, Adv. Mr. Dhruv Joshi, Adv. Mr. Vinay Kaushik, Adv. Mrs. P. S. Vijayadharni, Adv. Mr. Nishant Gautam, Adv. Mr. Varinder Kumar Sharma, AOR Mr. Sanjay Singh Thakur, Adv. Mr. Hitesh Kumar Sharma, Adv. Mr. Vijay Prtap Singh, Adv. Mr. Akhileshwar Jha, Adv. Ms. Shreya Jha, Adv. Mr. Anupam Kumar, Adv. Ms. Manju Jetley, AOR Mr. Vibhav Mishra, Adv. Ms. Megha Gaur, Adv. Mr. Parmanand Gaur, AOR Mr. Abhikalp Pratap Singh, AOR Mr. Ashish Batra, AOR Mr. Siddhartha Jha, AOR Mr. Basavaprabhu Patil, Sr. Adv. Mr. Sanjay Hegde, Sr. Adv. Mr. Vikram Hegde, Adv. Ms. Hima Lawrence, AOR Ms. Chinmayi Shrivastava, Adv. Mr. Trishan Dollny, Adv. Mr. Ankit Tiwari, Adv. Mr. Arijit Sukla, Adv. Mr. Ashish, Adv. Mr. Tanay Hegde, Adv. Mr. Prateek K. Chadha, AOR Mr. Basavaprabhu Patil, Sr. Adv. Mr. Shantanu Lakhotia, Adv. Mr. Divyaveer Singh, Adv. Mr. T. Raja, Sr. Adv. Mr. Vikram Hegde, AOR Ms. Hima Lawrence, Adv. Ms. Chinmayi Shrivastava, Adv. Mr. M.T. Arunan, Adv. Mr. Trishan Dollny, Adv. Mr. M.A. Aruneshe, Adv. Mr. Arijit Sukla, Adv. Mr. Anuroop Chakravarti, Adv. Mr. M.S.vishnu Sankar, Adv. Mr. Prakhar Srivastava, Adv. Ms. Athira G. Nair, Adv. Mr. Aditya Santhosh, Adv. Ms. Dimple Nagpal, Adv. For M/s Lawfic, AOR
For the Appellant(s) Mr. Arvind Kumar Sharma, AOR Mr. Tushar Mehta, Solicitor General Ms. Aishwarya Bhati, A.S.G. Mrs. Alka Agrawal, Adv. Mr. Apoorva Kurup, Adv. Mr. Navanajay Mahapatra, Adv. Mr. Madhav Sinhal, Adv. Mr. Mayank Pandey, Adv. Ms. Sansriti Pathak, Adv. Mr. Santosh Ramdurg, Adv. Mr. Yogesh Vats, Adv. Mr. Shreekant Neelappa Terdal, AOR
For the Respondent(s): Mr. Basavaprabhu Patil, Sr. Adv. Mr. Sanjay Hegde, Sr. Adv. Mr. Vikram Hegde, Adv. Ms. Hima Lawrence, AOR Ms. Chinmayi Shrivastava, Adv. Mr. Trishan Dollny, Adv. Mr. Ankit Tiwari, Adv. Mr. Arijit Sukla, Adv. Mr. Ashish, Adv. Mr. Tanay Hegde, Adv. Mr. Roy Abraham, Adv. Ms. Reena Roy, Adv. Mr. Adithya Koshy Roy, Adv. Mr. Akhil Abraham Roy, Adv. Mr. Saraswata Mohapatra, Adv. Mr. Himinder Lal, AOR Mr. Basavaprabhu Patil, Sr. Adv. Mr. T. Raja, Sr. Adv. Mr. Vikram Hegde, AOR Ms. Hima Lawrence, Adv. Ms. Chinmayi Shrivastava, Adv. Mr. M.t. Arunan, Adv. Mr. Trishan Dollny, Adv. Mr. M.A. Aruneshe, Adv. Mr. Arijit Sukla, Adv. Mr. Prateek K. Chadha, AOR Mr. Sreekar Aechuri, Adv. Mr. Aniket Chauhaan, Adv. Mr. Shashank, Adv. Mr. Shantanu Lakhotia, Adv. Mr. Divyaveer Singh, Adv. Mr. Harsh Parashar, AOR Mr. A.sirajudeen, Adv. Dr. N. Visakamurthy, AOR Mr. Vardhman Kaushik, AOR Mr. Arindam Sarin, Adv. Mr. Mayank Sharma, Adv. Mr. Dhruv Joshi, Adv. Mr. Vinay Kaushik, Adv. Mrs. P. S. Vijayadharni, Adv. Mr. Nishant Gautam, Adv. Mr. Varinder Kumar Sharma, AOR Mr. Sanjay Singh Thakur, Adv. Mr. Hitesh Kumar Sharma, Adv. Mr. Vijay Prtap Singh, Adv. Mr. Akhileshwar Jha, Adv. Ms. Shreya Jha, Adv. Mr. Anupam Kumar, Adv. Ms. Manju Jetley, AOR Mr. Vibhav Mishra, Adv. Ms. Megha Gaur, Adv. Mr. Parmanand Gaur, AOR Mr. Abhikalp Pratap Singh, AOR Mr. Ashish Batra, AOR Mr. Siddhartha Jha, AOR Mr. Basavaprabhu Patil, Sr. Adv. Mr. Sanjay Hegde, Sr. Adv. Mr. Vikram Hegde, Adv. Ms. Hima Lawrence, AOR Ms. Chinmayi Shrivastava, Adv. Mr. Trishan Dollny, Adv. Mr. Ankit Tiwari, Adv. Mr. Arijit Sukla, Adv. Mr. Ashish, Adv. Mr. Tanay Hegde, Adv. Mr. Prateek K. Chadha, AOR Mr. Basavaprabhu Patil, Sr. Adv. Mr. Shantanu Lakhotia, Adv. Mr. Divyaveer Singh, Adv. Mr. T. Raja, Sr. Adv. Mr. Vikram Hegde, AOR Ms. Hima Lawrence, Adv. Ms. Chinmayi Shrivastava, Adv. Mr. M.T. Arunan, Adv. Mr. Trishan Dollny, Adv. Mr. M.A. Aruneshe, Adv. Mr. Arijit Sukla, Adv. Mr. Anuroop Chakravarti, Adv. Mr. M.S.vishnu Sankar, Adv. Mr. Prakhar Srivastava, Adv. Ms. Athira G. Nair, Adv. Mr. Aditya Santhosh, Adv. Ms. Dimple Nagpal, Adv. For M/s Lawfic, AOR
Table of Contents
2. The State contended that salary income is a valid indicator of social advancement, while respondents argued that the administrative memorandum expressly excluded salary from creamy layer determination. (Para 7 , 8 , 9 )
3. The court found that the 1993 Office Memorandum and subsequent clarifications do not permit mechanical aggregation of salary income to deny reservation, emphasizing status-based criteria over purely economic factors. (Para 26 , 29 , 30 , 31 , 34 , 36 , 40 )
4. The creamy layer exclusion must be based on status-based criteria prescribed in the 1993 Office Memorandum; executive instructions cannot substantively alter this framework or treat similar categories unequally. (Para 24 , 31 , 34 , 37 )
5. The appeals were dismissed, and the State was directed to reconsider candidate claims in accordance with the judgment and create supernumerary posts for eligible candidates. (Para 41 , 43 , 44 )
6. Can executive instructions in a clarificatory letter override the foundational 1993 Office Memorandum regarding creamy layer criteria?
No. A mere government letter cannot override, overrule, or supersede an Office Memorandum issued in exercise of executive power. Clarificatory instructions must be construed strictly as supplementing the foundational guidelines and cannot introduce substantive conditions that alter rights or liabilities. (Para 24 , 25 , 27 )
7. Is holding a post in a Public Sector Undertaking, bank, or private entity inherently sufficient to deny OBC reservation benefits under the creamy layer rule?
No. The 1993 Office Memorandum mandates that exclusion for PSU or private sector employees is based on equivalence to Group A or Group B government posts. Absent such formal determination, income-based criteria apply, but these must not be applied in a manner that causes hostile discrimination by ignoring status parameters. (Para 23 , 26 , 31 , 34 )
8. Does including salary income as a primary factor in determining creamy layer status for certain employees create unconstitutional discrimination?
Yes. Treating children of PSU or private sector employees differently from government servants by mechanically using salary income, without reference to their relative grade or post, creates hostile discrimination that violates the principle of equality under Articles 14 and 16. (Para 34 , 35 , 36 , 37 , 40 )
JUDGMENT :
R. MAHADEVAN, J.
Leave granted in SLP (C) No. 17651 of 2022.
2. This judgment deals with three matters arising out of separate orders passed by different High Courts. Since the questions of law involved in all the cases are substantially identical and common, they were heard together and are being decided by this common judgment.
FACTUAL BACKGROUND
3. The facts giving rise to the respective appeals are set out below.
C.A. No(s). 2827 – 2829 of 2018 [Union of India & Ors. v. Rohith Nathan and Anr. Etc.]
4. The present Civil Appeals have been filed against the common judgment dated 31.08.2017 passed by the High Court of Judicature at Madras in W.P. Nos. 6387, 6388 and 6389 of 2017, whereby the High Court dismissed the writ petitions filed by the appellants and affirmed the common order dated 12.01.2017 passed by the Central Administrative Tribunal1[For short, “CAT”], Chennai Bench in O.A. Nos. 1133, 1132 and 1375 of 2014.
4.1. Respondent No. 1 in CA. Nos. 2827 and 2828 of 2018, Rohith Nathan, secured All India Rank 174 in the Civil Services Examination, 2012 under the OBC category. His father was employed in a private organisation namely M/s. HCL Technologies Ltd., and was drawing a salary exceeding the prescribed creamy layer limit under the extant guidelines. On that basis, he was treated as falling within the creamy layer. Though he was recommended by the UPSC as a General Merit candidate and allocated to the Indian Police Service against an unreserved vacancy, Respondent No. 1 sought benefit of OBC reservation and allocation to the Indian Foreign Service against the vacancy reserved for OBC candidates by treating him as OBC (Non-Creamy Layer) candidate. He accordingly filed O.A. No. 1132 of 2014 before the CAT, Chennai seeking a direction for allotment to the Indian Foreign Service as per his OBC rank in the Civil Services Examination, 2012. He also filed O.A. No. 1133 of 2014 seeking to quash the portion relating to Category II(C) in the Schedule to the Office Memorandum dated 08.09.1993 (O.M. No. 36012/22/93-Estt (SCT)).
4.2. Respondent No. 1 in C.A. No. 2829 of 2018, G. Babu, appeared in the Civil Services Examination, 2013 under the OBC category and secured Rank 629. His father was employed in a Public Sector Undertaking namely Neyveli Lignite Corporation, as a Senior Executive Engineer. As his father’s salary income exceeded the prescribed limit, he was also treated as falling within the creamy layer under the applicable guidelines. To claim the benefit of OBC reservation for allocation to a service against a vacancy reserved for OBC candidates, Respondent No. 1 filed O.A. No. 1375 of 2014 before the CAT, Chennai Bench seeking reallocation to the Indian Police Service or any other service as per his OBC rank.
4.3. The CAT, having heard the parties, held that under the Office Memorandum dated 08.09.1993, income from salary and agricultural income stood excluded from the Income / Wealth Test for determination of creamy layer status. It further held that paragraph 9 of the clarificatory letter dated 14.10.2004, insofar as it directed inclusion of salary income of PSU and private sector employees under Category II(C), resulted in hostile discrimination between the wards of Government servants and those of PSU/private sector employees. By its common order dated 12.01.2017, the CAT allowed all three Original Applications and directed as follows:
"We direct the DoPT to withdraw the clarification in para 9 of the OM dated 14.10.2004 to the extent it is made applicable to II-C and reformulate it appropriately in the light of the observations made herein within a period of three months. The respondents are also directed to reallocate the service of the two applicants on the basis of their OBC status within a period of three months from the date of receipt of a copy of this order."
4.4. Aggrieved, the Union of India and others filed W.P. (C) Nos. 6387, 6388 and 6389 of 2017 before the High Court of Madras. By common judgment date
