The Centre has asked the Supreme Court to clarify that its March 11 judgment on the creamy layer for OBCs should not be applied to the already-concluded selection process of the Civil Services Examination (CSE) 2025, warning that doing so could trigger cascading effects on training, cadre allocation, and seniority.

In its appeal, the government said the judgment “altering settled position (on creamy layer) was rendered five days after the final result of CSE-2025 already stood declared.” It cautioned that any delay in finalising the category-wise merit and allocation list would have a cascading effect on the training schedule, batch strength, logistics arrangements, the training calendar fixed by the respective academies, cadre allocation for IAS and IPS officers, and the seniority and pay fixation of the incoming batch vis-à-vis subsequent recruitment cycles.

The government stated that “a mechanical or unqualified application of the ratio of the said judgement, with retrospective effect, to the already-concluded selection process of CSE-2025, would result in a peculiar and acute anomaly amounting to discrimination inter se candidates of the very examination cycle sought to be benefited.” It also argued that the appeal for clarification was concerned solely with CSE-2025, whose selection process “stood substantially concluded prior to the pronouncement of the judgment and is presently at the terminal stage of service allocation.” However, the DoPT's appeal did not mention the applicability of the judgment from the next batches.

Background: The creamy layer dispute

The matter traces its origins to a DoPT letter of October 14, 2004, clarifying an Official Memorandum (OM) of September 1993 on the creamy layer criterion for OBCs. The 1993 OM had excluded income from salary and agricultural sources from the income/wealth test used to determine creamy layer status. However, the 2004 clarification said the salary income of employees in public sector undertakings (PSUs) and the private sector would be a criterion.

Petitioners called this “hostile discrimination” between the wards of government servants and those of PSU or private sector employees. The 2004 clarification was not implemented effectively until 2014 and began to be applied rigorously from CSE-2015 (2016 batch). Since then, around 100 candidates who possessed caste certificates and cleared the CSE have found their OBC claims rejected by the DoPT on creamy layer grounds. Some of the affected candidates successfully claimed OBC status in other examinations conducted by the UPSC or state bodies, but were rejected in the CSE process.

The Supreme Court's March 11 judgment

On March 11, a Division Bench of Justices P S Narasimha and R Mahadevan ruled in the case of Rohith Nathan that income cannot be the sole criterion for determining the creamy layer among OBCs. The Court said: “The object of excluding the creamy layer is… not to create artificial distinctions between equally placed members of the same social class… unequal treatment of similarly placed OBC candidates would not only be legally erroneous but constitutionally impermissible.”

The Court held that treating children of those employed in PSUs or private employment as excluded from reservation benefits solely on the basis of salary income, without reference to the nature of their posts, would lead to hostile discrimination under Articles 14, 15 and 16. The bench also held that the DoPT's 2004 clarificatory letter could not override the 1993 OM that excluded salary from the income test. The 1993 OM required the government to establish equivalence of posts in PSUs as well as private sector vis-à-vis posts in the government.

The judgment put an end to what the petitioners said was a discriminatory practice, and the SC upheld High Courts' reasoning that the DoPT's letter treated similarly placed employees differently, constituting hostile discrimination. The Court dismissed the Centre's appeal filed in 2017. The judgment was rooted in the concept of creamy layer and the objective behind OBC reservation, which was a constitutional mandate, not merely administrative policy. The ruling resolved long-standing ambiguities regarding treatment of PSU/private sector employees vis-à-vis government servants.

Government's concerns and proposal

In its application, the Centre said it will formulate an appropriate and uniform policy/mechanism for determination of OBC creamy layer status. For this, the Centre would have to establish equivalence of posts in PSUs and identify similar posts in private sectors. To complete this task and establish a level-playing field, the Centre said it needs two years, involving consultation with stakeholders including all states and Union territories.

The Centre did not formally seek a review or recall of the March judgment, but through the modification application made a prayer to the top court to allow it to undertake this policy exercise.

The Centre's application stated: “It may adversely affect the spirit and intention of the reservation policy as it can potentially impact the interests and prospects of those candidates who actually belong to lower income group of OBC NCL vis-à-vis those who are economically well off and having greater exposure to better facilities by virtue of their financial positions.”

The Centre also said that implementation of the judgment “would deprive the candidates who have limited access to resources vis-à-vis those candidates with similar social background but with economically well-off parents earning higher salary income in private sector (where equivalence of posts in government posts has not been established).”

The Centre highlighted that if implemented, candidates whose parents earn more than Rs 1 crore annually would benefit and be considered as OBC NCL. It said there is no criteria to test the creamy layer for private sector employees, and implementation without 'guardrails' would leave no criteria for OBC candidates whose parents are employed outside government and constitutional posts.

The Centre also raised apprehensions about retrospective implementation and sought a specific prayer to disallow it. Its application stated: “Its implementation, particularly with retrospective effect, may nevertheless have significant consequences for recruitment, service allocation, cadre allocation, seniority, admissions and administration of quadrilateral reservation generally.”

The Centre wants the Supreme Court to clarify that the judgment shall not apply to recruitments, admissions in higher educational institutions or academic sessions where degrees have already been conferred or rights resting on all these, or where the process has started.

DoPT sources said that verification of documents of all affected candidates had been completed.

Legal route and objections

The Centre asked the top court for an opportunity for a detailed physical hearing. On Tuesday, Solicitor General Tushar Mehta requested a Chief Justice Surya Kant-led bench to hear the Centre's modification applications, including one to allow for cadre-allocation for 2025 candidates dehors the March judgment.

Advocate Varun Thakur opposed the Centre's approach, saying only a review petition can be filed and that the government wanted a relook in the garb of a modification application. The bench listed the application for hearing finally on 31 August and indicated it be taken up by the same bench that delivered the March verdict.

The Centre's application also stated that the current basket of OBC candidates has great diversity as candidates are from very divergent economic/social strata. The Centre. also noted that retrospective implementation would open a floodgate of litigation.

The Centre's appeal of its judgment has been filed as a modification application, not a review, and it is part of a broader legal strategy that could potentially affect other admission processes.