The Supreme Court reserved orders on the Centre’s plea for a two-year period to fix the creamy layer OBC policy

View of the Supreme Court of India. File | Photo credit: PTI

The Supreme Court on Thursday (September 24, 2026) reserved orders on the Union government’s plea seeking the eventual implementation of the March 11, 2026 judgment to reassess the status of non-creamy OBCs under the Bureau’s 1993 memorandum by excluding parental salary income and agricultural income from the income/wealth test.

A bench of Justices PS Narasimha and R Mahadevan was hearing a plea filed by the Centre, represented by Advocate General Tushar Mehta and Additional Advocate General Aishwarya Bhati, which also sought a “reasonable time” of two years to carry out the necessary post equivalence exercise after consultation with stakeholders and formulate a suitable and uniform OBC level/policy level mechanism.

The government said retrospective implementation of the Supreme Court verdict would have significant implications for recruitment, service allocation, cadre allocation, seniority, recruitment and administration of OBC reservation in general, affecting thousands of people.

“Unintended Consequences”

“The court has the power under Article 142 of the Constitution to declare its judgment to be prospective. If the judgment is not given prospective effect, it will result in several harsh and unjust unintended consequences for the employees/appointees who were not even parties to the litigation and utter administrative chaos. Therefore, we pray that the judgment (Union of India Center vs. Rohith Nathan) does not affect the ongoing and recruitment processes.

Ms Bhati said the implementation of the March 11 judgement, particularly with retrospective effect, may affect the allocation of services from 2012. Retrospective redistribution would affect existing seniority and grading and affect recruitment by large employers such as railways, banks, postal services and paramilitary services. The implementation of the judgment would currently not only affect college admissions but also candidates participating in the ongoing examinations/recruitment processes after the judgment. Ms. Bhati said the immediate move would have implications for the OBC reservation policy across the country.

She said the government needed enough time to establish a new policy to remedy hostile discrimination, as the court emphasized in the ruling.

Delay tactics: candidates

Senior Advocate P. Wilson, who is representing the candidates, objected and claimed that the Center was only trying to delay, even cancel the final judgment of the Supreme Court. He criticized the Department of Personnel and Training (DoPT) for not following the court’s directions, recommendations of a parliamentary committee and its own rules of 1993. He said the government could very well create surplus posts to accommodate eligible OBC candidates.

In its judgement, the court directed the DoPT to create surplus posts within six months to accommodate eligible Other Backward Castes-Non-Creamy Layer (OBC-NCL) candidates who were wrongly denied allotment of services due to misclassification of Creamy Layer.

According to an office memorandum in 1993, the government proposed a policy of excluding salary income and agricultural income of parents to calculate whether an OBC candidate belonged to the cream of the OBC, the high-income group excluded from reservation.

However, in 2004, the DoPT issued a clarification on crediting the pay of parents working in Public Sector Undertakings (PSUs), banks or private companies, while ignoring the pay of government employees in equivalent positions. This resulted in PSU employees being disqualified for the benefits of OBC reservation after being included in the creamy layer group, unlike the similarly placed children of government officials.

In a judgment in March, the Supreme Court upheld that the differential treatment of PSU employees and civil servants without proper employment parity constituted “hostile discrimination”.

The Supreme Court judgment found that the exclusion of the creamy layer should have been based on social status and not just the total household salary. He stated that salary income cannot be mechanically added up to deny OBC quota to the children of PSU employees by pushing them into the creamy layer.

Published – 24 Sep 2026 22:54 IST