The Kerala High Court (Ernakulam Bench) has held that high-income OBC candidates earning over Rs. 1 Crore and Rs. 33 Lakhs cannot claim reservation by seeking exclusion of salary from Income Test. The Court clarified that the Explanation to Category VI of the Income/Wealth Test i.e., “income from salaries or agricultural land shall not be clubbed”, merely prevents the clubbing of salary income with agricultural income and does not warrant total exclusion of salary from gross annual income computation. For private sector employees whose equivalent government posts remain unnotified, the income/wealth test under Category VI is the governing method, and salary income must be reckoned as part of gross annual income.
The Court held that excluding salary would contravene the constitutional imperative of Creamy Layer exclusion established in the First and Second Indira Sawhney cases and would enable high-income earners to appropriate reservation benefits meant for the genuinely backward. Since the parents of both petitioners possess income and wealth far exceeding the prescribed Rs. 8 lakh income limit and Rs. 30 lakh wealth thresholds, the petitioners fall squarely within the Creamy Layer and are ineligible for Non-Creamy Layer certificates.
A Single Judge Bench of Justice Bechu Kurian Thomas observed that the Explanation to Category VI of the Income/Wealth Test in the Kerala Government Order dated Jan 01, 2015, which states that “income from salaries or agricultural land shall not be clubbed”, merely bars the clubbing of salary income with agricultural income. It does not mean that salary income is to be excluded altogether from the computation of gross annual income for Non-Creamy Layer determination.
The Court further observed that the said Explanation operates within the context of Category VI(b), which covers persons already falling under Categories I, II, III, and V-A (constitutional post holders, Group A and B officers, armed forces officers, and large agricultural landholders) who may still be excluded if income from other sources of wealth crosses the threshold. It does not extend to Category VI(a), which applies to private sector employees whose equivalent government posts have not been notified.
Since no equivalent or comparable posts in the private sector have been notified by the government to date, the Court clarified that income/wealth test under Category VI is the applicable method for identifying the Non-Creamy Layer for privately employed persons. Salary income must be factored into gross annual income under this test. The Court also pointed out that while the Supreme Court in Union of India and Others v. Rohith Nathan and Another [2026 INSC 230], emphasised that Creamy Layer exclusion is a constitutional imperative and that income operates only as a surrogate measure, it does not hold that the income or wealth test should not be applied at all.
Briefly, two minor petitioners, both aged 17 years and belonging to backward communities, approached the Kerala High Court seeking Non-Creamy Layer (NCL) certificates for the purpose of claiming reservation benefits in professional degree course admissions, one for NEET UG 2026 and the other for KEAM 2026. Their applications for NCL certificates were rejected by the revenue authorities on the ground that their family income exceeded the prescribed Non-Creamy Layer limit of Rs. 8 lakhs per annum.
The first petitioner belongs to the Ezhava community, notified as an Other Backward Community (OBC) in Kerala. Her father is employed as the Senior Vice President of a Limited Liability Partnership in Hyderabad, drawing an annual salary of Rs. 1.12 crores for the financial year 2025-26. Apart from this salary, her father has an income of Rs. 58,163/- under the head “Income from Other Sources,” and her mother runs a small business with a meagre income. The family owns two apartments, one at Thripunithura and another at Hyderabad, both purchased through loans, with one held in joint ownership with the son. The family also possesses two luxury cars and 5 cents of land at Thripunithura. Her application for an NCL certificate was rejected on the basis that her father’s salary and assets placed the family squarely within the Creamy Layer.
Another petitioner is the son of a Non-Resident Indian working in the United Kingdom as a Lead Solution Architect at Barclays UK Consumer Bank. His father’s salary income totals £26,000, equivalent to approximately Rs. 33 lakhs at present exchange rates. The petitioner contended that since his father has no income other than salary, and if salary income is excluded from the NCL computation, the family falls within the Non-Creamy Layer. His application was similarly rejected.
The respondents argued that the very constitutional purpose of the Creamy Layer exclusion would be defeated if high-income earners were granted reservation benefits. The respondents also pointed out that the petitioner Karthika Sivaji’s father held an executive-level position analogous to the highest echelons of management in the public sector, and that the combined value of his assets, including apartments, luxury cars, and land, far exceeded the wealth threshold of Rs. 30 lakhs, prescribed under the Circular of the SC/ST Department.
