The Supreme Court on Friday clarified the scope of its March 11 judgment, which held that salary income of parents employed in PSUs, banks and other organisations cannot be mechanically included to determine whether an OBC candidate falls within the creamy layer.
The Court held that its March 11 judgment on the exclusion of salary income while determining the Other Backward Classes (OBC) creamy-layer status would not reopen selections, appointments or service allocations already concluded. However, it held that the revised interpretation must apply to the allocation of services to OBC candidates selected through the Civil Services Examination (CSE) 2025, as the allocation process is still pending.
A Bench of Justice Pamidighantam Sri Narasimha and Justice R. Mahadevan passed the order while deciding miscellaneous applications filed by the Union Government seeking clarification of the March 11 judgment in Union of India & Ors. v. Rohith Nathan & Anr.
The Union had sought permission to finalise service allocation for CSE 2025 candidates by applying the earlier criteria for determining creamy-layer status. It also sought clarification that the March judgment would not retrospectively disturb completed selections, appointments, cadre allocations and seniority. Further, it sought two years to establish equivalence between posts in Public Sector Undertakings (PSUs), banks and government services, and formulate a uniform policy for determining OBC creamy-layer status.
The Union argued that retrospective application of the judgment could have far-reaching consequences for recruitment and service administration. Solicitor General Tushar Mehta pointed out that the CSE 2025 final result had been declared on March 6, five days before the judgment, and that reopening the selection process could affect service allocation, seniority and other consequential benefits. He also referred to more than 6.69 lakh reserved vacancies, including 3.70 lakh OBC vacancies, filled over the preceding decade.
The respondents opposed the applications, arguing that the Union was attempting to dilute the March judgment and administrative difficulties could not be used to deny eligible candidates reservation benefits. They also pointed out that the Union had failed to undertake the exercise of establishing equivalence of posts despite earlier assurances.
March 11 judgment not to reopen completed selections
The Bench clarified that the earlier judgment had determined the rights of the candidates who were parties to the proceedings and the intervenors. It held that the judgment did not direct the Union to revisit appointments already made or revise the seniority of persons who were not parties to the original proceedings.
The Court observed that reopening concluded selection processes after a substantial interval could prejudice other candidates and disrupt service administration.
It clarified that the binding legal principle laid down under Article 141 of the Constitution must be distinguished from the individual relief granted to the candidates in the original proceedings.
The Bench stated that the judgment could not be interpreted as directing a general revision of service allocations or seniority across successive recruitment years.
CSE 2025 allocation to follow revised creamy-layer criteria
However, the Court refused to exempt the CSE 2025 service allocation process from the March judgment. It noted that although the final result had been declared on March 6, 2026, service allocation had not yet been finalised. The Bench held that there was no reasonable justification for deferring implementation of the judgment in respect of the ongoing allocation process.
Accordingly, it directed that the creamy-layer principles laid down in the March 11 judgment would govern service allocation to OBC candidates selected through CSE 2025.
The Court also clarified that the judgment would not, by itself, provide grounds to reopen selections or appointments concluded before March 11, 2026. Claims of similarly placed candidates whose matters are pending before courts, tribunals or other competent authorities may be considered on their own merits.
No two-year timeline for equivalence exercise
The Bench also declined the Union’s request for a two-year timeline to establish equivalence between posts in PSUs, banks and government services. It held that the formulation of a policy on reservation and creamy-layer criteria remained within the domain of the executive and legislature. The Government was at liberty to formulate its policy in accordance with the Constitution and the principles laid down by the Court.
The Court also reiterated that the interpretation of the 1993 Office Memorandum and the 2004 clarification, including the rejection of mechanical exclusion based on salary income, was not open to reconsideration in the miscellaneous applications.
The miscellaneous applications were accordingly disposed of. The Court extended the time for compliance with its March 11 judgment by two months.
