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CASE NO.: Writ Petition (civil)  598 of 2000

PETITIONER: Nair Service Society

RESPONDENT: State of Kerala

DATE OF JUDGMENT: 23/02/2007

BENCH: S.B. Sinha & P.P. Naolekar

JUDGMENT: J U D G M E N T With Contempt Petition (Civil) No.108 of 2000  And Contempt Petition (Civil) No.109 of 2000 With Suo Motu Contempt Petition (Civil) No. \005\005\005../ 2006 In Writ Petition (Civil) No.930 of 1990

S.B. SINHA, J :   In these petitions, interpretation of this Court’s judgment as regards  identification of ’creamy layer’ amongst the backward classes and their  exclusion from the purview of reservation, vis-‘-vis, the report of Justice  K.K. Narendran Commission (hereinafter referred to as ’Narendran  Commission’) and acceptance thereof by the State of Kerala in issuing the  impugned notification dated 27.5.2000, falls for our consideration in this  writ petition by the Nair Service Society (’the Society’), a Society which was  initially registered under Section 26 of the Travancore Companies Act, 1914  and after coming into force the Companies Act, 1956, it would be deemed to  have been registered under Section 25 thereof.  The objects of the Society  are said to be :

(i)     to remove the difference prevailing from places to  places amongst Nairs in their social customs and usages  as well as the unhealthy practices prevalent among  them;

(ii)    to participate in the efforts of other communities  for the betterment of their lot and to maintain and foster  communal amity;

(iii)   to work for the uplift of the depressed classes;

(iv)    to start and maintain such institutions as are found   necessary to promote the objects of the society.

It is not in dispute that it had filed a writ petition before the Kerala  High Court questioning the validity of the report commonly known as  Mandal Commission Report.  The writ petition was later on transferred to  this Court.  It also took part in the proceedings before Narendran  Commission.  Mandal Commission Report was accepted by Union of India.

A writ petition was filed before this Court, questioning the said action  on the part of the Union of India by one Indra Sawhney.  This Court, in its  judgment in Indra Sawhney & Ors. vs. Union of India & Ors. [1992  Supp. (3) SCC 217] (hereinafter referred to as ’Indra Sawhney-I’), inter  alia, directed the States to identify ’creamy layer’ amongst the backward

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classes and exclude them from the purview of reservation.  

Indisputably, pursuant to or in furtherance of the said directions, the  Union of India appointed a Commission.  It issued an Office Memorandum  being dated September 8, 1993 laying down guidelines for identifying  ’creamy layer’, inter alia, stipulating that the sons and daughters of persons  having gross annual income of Rs.1 lakh or above would be excluded.   

The State of Kerala, it is not in dispute, did not comply with the said  direction of this Court.   

At this juncture, it may be noticed that the constitutional validity of  the criteria for determining the ’creamy layer’ for the purpose of exclusion  from backward classes laid down by the States of Bihar and Uttar Pradesh  came up for consideration before this Court in Ashoka Kumar Thakur vs.  State of Bihar & Ors. [(1995) 5 SCC 403].  This Court held that having  regard to the observations made in Indra Sawhney-I, the said criteria were  ultra vires stating :  

"This Court in Mandal case [Indra Sawhney v. Union of  India (1992) Supp.3 SCC 217] has clearly and  authoritatively laid down that the affluent part of a  backward class called "creamy layer" has to be excluded  from the said class and the benefit of Article 16(4) can  only be given to the ’class’ which remains after the  exclusion of the "creamy layer". The backward class  under Article 16(4) means the class which has no element  of "creamy layer" in it. It is mandatory under Article  16(4) \027 as interpreted by this Court \027 that the State  must identify the "creamy layer" in a backward class and  thereafter by excluding the "creamy layer" extend the  benefit of reservation to the ’class’ which remains after  such exclusion. This Court has laid down, clear and easy  to follow, guidelines for the identification of "creamy  layer". The States of Bihar and Uttar Pradesh have acted  wholly arbitrary and in utter violation of the law laid  down by this Court in Mandal case\005"  

By an order dated 10th July, 1995, this Court, while holding the State  of Kerala to be guilty of contempt of this Court, gave it two month’s time to  purge the same and report its compliance.  The Chief Secretary of the State,  pursuant to said order appeared before this Court.

In its order dated 10th July, 1995, this Court, in Indra Sawhney vs.  Union of India & Ors.  reported in (1995) 5 SCC 429, observed :

"We are, therefore, of the opinion that this is a case for  taking action in contempt. We hold the respondent guilty  of contempt. However, in order to give the respondent an  opportunity to purge the contempt before we pass the  sentence, we adjourn the matter by two months to enable  the State Government to report compliance before 11-9- 1995, failing which this Court will proceed to pass  appropriate orders in respect of the contempt. The Chief  Secretary will remain present at the next date of hearing  i.e. on 11-9-1995 to inform this Court whether or not the  order has been complied with. If not, he runs the risk of  being sentenced. Let the IAs Nos. 35 and 36 come up on  11-9-1995."

The legislature of the State of Kerala thereafter enacted the Kerala  State Backward Classes (Reservation of Appointments or Posts in the  Services Under the State) Act, 1995 (’the State Act’), in terms whereof it  was declared that there was no socially advanced section in the State.  

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Section 4 of the State Act contemplates that nothing contained in the law or  in any judgment, decree or order of any Court or any other authority, the  reservation, which had been in operation since 1958, shall continue to  operate.  The Society filed a writ petition before the Kerala High Court  questioning the validity of the State Act.  This Court admittedly passed an  order dated 4.11.1996 requesting the Chief Justice of the Kerala High Court  to appoint a High Powered Committee to determine the criteria for  identification of ’creamy layer’.

Pursuant to the directions of the Chief Justice of Kerala High Court, a  Committee headed by Justice K.J. Joseph (hereinafter referred to as ’the  Joseph Committee’) was constituted.  The  Committee submitted its report  on 4.8.1997.  Objections to the said report were filed before this Court.  By  judgment and order dated 13.12.1999 in Indra Sawhney vs. Union of India  & Ors., since reported in (2000) 1 SCC 168 (hereinafter referred to as  ’Indra Sawhney-II’), this Court, while holding the provisions of Sections 3,  4 and 6 of the State Act to be unconstitutional, upon consideration of the  objections to the report of the Joseph Committee, accepted the same in toto,  subject to certain additions of communities and sub-castes, in the following  terms:

"In the result, we accept the Justice Joseph Committee  Report in toto subject to the addition of communities and  sub-castes as pointed out in the affidavit of the State  dated 16-1-1998, referred to above."

The Court furthermore noticed the contemptuous acts on the part of  the authorities of State of Kerala and held that they had deliberately been  violating the orders of this Court.  Some strictures were also passed against  the State Government.  It was directed that the recommendations of the  Joseph Committee should be implemented forthwith until such time the State  comes up with its own criteria for determining ’creamy layer’.  It further  directed that the suo motu contempt previously initiated by the Court would  be kept pending and the State should purge its contempt only by complying  with the directions contained in Indra Sawhney-II.   

The recommendations made by the Joseph Committee in its report,  however, were not implemented forthwith in terms of the directions of this  Court.  The State, on the other hand, appointed another Commission headed  by Justice K.K. Narendran.  The terms of reference for the said Commission  were as under:  

" (a)   What should by the criteria to be adopted to  exclude those belong to the creamy layer among  Other Backward Classes from the benefits of  reservation in accordance with the observations in  the judgment of the Supreme Court or what criteria  should be adopted to provide maximum protection  to those belonging to such communities in  accordance with the above mentioned judgment. (b)     Whether there is any class which may be excluded  from the creamy layer on the basis of hereditary  occupation or otherwise. (c)     (i)     Whether there should be different criteria   regarding income/property for different categories  coming within the creamy layer.         (ii)    If so, what should be the ceiling for such  income/property.         (iia)   While calculating the income, whether it is  necessary to exclude income from any particular  source or sources.         (iii)   While making its recommendations, the  Commission will take into account the existing  socio-economic conditions and the special features

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of the Other Backward Classes in the State.         (iv)    The Commission should submit its report to  Government within one month.         (v)     The Officer of the Commission will be at  Thiruvananthapuram and its Headquarters at  Ernakulam.         (vi)    The Commission will have the salary,  allowances and other perquisites as admissible to a  sitting Judge of the High Court."    The Commission submitted an interim report.  Its request seeking    extension of time was accepted.  At the instance of the petitioner-Society the  Commission, however, in its interim report directed the State to implement  the report of the Joseph Committee.  The Committee sought for certain  records of 9.2.2000.   On 16.2.2000 the State issued fresh guidelines for  identifying creamy layer in accordance with the Joseph Committee report.   The Commission submitted its final report on 11.4.2000.  In this writ petition  filed by the Society, the validity of the said notification is in question.      

Mr. Krishan Venugopal, learned counsel appearing on behalf of the  petitioner would submit that the State in accepting the said report violated  the underlying principles contained in the judgments of this Court in Indra  Sawhney-I & II (supra) as also in Ashoka Kumar Thakur (supra).   According to the learned counsel, therein this Court emphasized the  requirements to exclude those categories, which ceased to be backward  classes so as to obtain the benefit of reservation.  Attempt in the said report  was to include more and more people thereunder.  It would be evident from  the fact, argued Mr. Venugopal, that even by the terms of reference alone the  Commission has been directed to give more than the maximum protection  otherwise available to them.  It was furthermore submitted that whereas  those who continue hereditary occupations had been sought to be protected,  the State made an attempt to modify the same by bringing in those categories  of persons whose fore-fathers were carrying on such occupations regardless  of the fact as to what occupations they have been carrying out now.              

Mr. T.L.V. Iyer, learned senior counsel appearing on behalf of the  State of Kerala, on the other hand, would submit that the Society represents  the members of the forward classes and even if the recommendations of the  Narendran Commission are set aside, the same would not make much  difference as the rights of the members of the Society would not be affected.   It was submitted that the society is not in any way concerned with the  correctness or otherwise of the report submitted by Narendran Commission  or the order issued by the State on 27.5.2000 inasmuch as it is not the case of  the petitioner-Society that their members would become entitled to the  benefit of reservation in terms of Article 16(4) of the Constitution of India. Our attention has been drawn to the notification dated 12.6.2000  wherein guidelines were issued, which, inter alia, are on the following  terms: "7.     The rule of exclusion made mention in the  schedule attached to these guidelines will not apply to  persons working as artisans or engaged in hereditary  occupations, calling and included in Annexure ’B’  appended herewith and person/group of persons coming  within the definition of the expression "Fishermen  Community" in Annexure C appended to these  guidelines."

It was submitted that such guidelines have been issued by the Central  Government as would appear from the office memorandum issued by the  Government of India, as was noticed in Ashoka Kumar Thakur vs. State  of Bihar & Ors. [(1995) 5 SCC 403] which is on the same terms.

Our attention was further drawn to Annexure B to the said guidelines  wherein seven categories of hereditary occupations/calling, which had been  excluded from the category of ’creamy layer’, have been identified.  It was

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urged that it would not be correct to contend that even where the persons  concerned have left their hereditary occupation, still they would be entitled  to the benefit of the reservation inasmuch as such benefit is to be granted so  long as they are engaged in such occupations.  As regards the quantum of  income, it was submitted that limit thereof  is not static and even in Ashoka  Kumar Thakur (supra), this Court pointed out that the income criteria in  terms of the report was required to be modified taking into account the  change of per capita annual income and having regard to report of the  Narendran Commission constituted in the year 2003.  Recommendations of  the Narendran Commission in regard to the annual income being Rs. 3 lakhs,  thus, Mr. Iyer submitted, should not be interfered with.  While excluding  salary and agricultural income, it was contended, that the Central  Government office memorandum had been taken into consideration, which  would apply only to people falling in category VI.  It was furthermore  submitted that as regards gross annual income, reasons have been assigned  by the Commission.  The learned counsel would contend that this Court  should not interfere with the policy decision of the Government and it is  presumed to be aware of the requirements of the people and having regard to  the change in social and economic conditions of people in each State, no  accurate assessment is possible.  It was urged that for the purpose of  consideration of the criteria in regard to the persons who should be included  in the group of creamy layer, the question which is required to be posed and  answered is as to whether they have reached the status of the people  belonging to the general category.  It was argued that jurisdiction of the court  in this behalf is to find out if there is any evidence in the matter and if there  is some evidence, it may not exercise its jurisdiction.  Furthermore, the State  had made changes only in regard to occupation and merely added one  community in Schedule B, i.e., Kudumbi community.  Mr. L.  Nageshwara  Rao, learned senior counsel appearing on behalf of the impleaded party  would adopt the submissions of Mr. Iyer and furthermore submit that the  reference is not bad in law warranting interference by this Court.

It stands admitted that the income limit in terms of the Joseph  Committee Report, which was published in the year 1996, was Rs.1.5 lakhs;  whereas the same according to the Narendran Commission Report, which  was published in the year 2000, should be raised to Rs.3 lakhs.  In the year  2004 the Central Government opined that the income limit should be fixed at  Rs.2.5 lakhs.  The Commission received a vast majority of representations,  including one from the petitioner-Society.  The purport and object of the said  report sought for is stated in paragraph 10.4 thereof.  According to the  Commission, the only question was as to what criteria should be adopted for  identifying the ’creamy layer’.  It criticized the Joseph Committee Report in  paragraph 11.3 of its Report observing that the former did not assign any  reason nor was there any justification for making the provision stricter in the  matter of exclusion from ’creamy layer’ of backward classes.   

It also advocated the change of age from 40 to 35.  Although, it  noticed that a few representations have been submitted by the forward  classes, the same have not been dealt with at all.  While identifying the  backward classes in several categories, i.e. category Nos. I, II, III, V and VA,  the exclusion was recorded only on the basis of status and not on the basis of  annual income.  However, in addition to category No.VI it was stated that in  calculating the annual income, the salary income or income from agriculture  would not be taken into account.  No reason, however, has been assigned as  to why salary income or income from agriculture would not be included for  determining the category of ’creamy layer’.  The intention of the State  Government as revealed from the terms of reference, i.e., "giving maximum  protection" has been taken note of in paragraph 15.1 of the report.  The  Committee recommended:

"1.     Term (b) of the terms of reference: Only persons of a backward class traditionally engaged  in the hereditary occupation of that backward class will  be excluded from Creamy Layer.  There will not be any  endblock exclusion of any backward class on the basis of

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the hereditary occupation of that backward class. 2.      Terms of reference (a) & (c) of the terms of  reference : The gross annual income for exclusion of backward  classes as creamy layer is fixed as Rs.3 lakhs or above.   The scheme of criteria for exclusion as creamy layer is  that under categories I,II,III and VA, the exclusion is on  the basis of status and not in terms of gross annual  income.  In the case of a category for which the gross  annual income as mentioned in category VI is the  criterion income from salary or income from agricultural  holdings should not be taken into account. On the ground of social backwardness persons  traditionally engaged in the hereditary occupation of all  backward classes are excluded from Creamy layer. On the ground of educational backwardness, all  backward classes who have not successfully completed  Lower Primary education are excluded from Creamy  layer. Recruitments to all posts where the salary is paid from  the consolidated fund of the State will be governed by the  Principles of reservation for backward classes. When there are persons, in the rank list or supplementary  list waiting for appointment nobody temporarily recruited  should be allowed to continue to work. Clear instructions regarding the criteria for exclusion of  Creamy Layer should be issued to the Revenue  Authorities.  At any rate a Creamy Layer certificate will  have to be issued or refused within ten days of the receipt  of application for the same."

The State, as indicated hereinbefore, by and large accepted the said  report and issued a Government order dated 27.5.2000.  However, the  recommendations had not been accepted in toto, but certain modifications  have been made therein.   It is in the aforementioned context the correctness  of the report of the Narendran Commission is required to be considered.

At the outset, we may mention that it is not possible for us to dismiss  the writ petition summarily on the ground of lack of locus standi on the part  of the petitioners.  It is not disputed that in terms of Kerala State and  Subordinate Services Rules, 1958, although, reservation for backward  classes under the scheme is to be carried out in the following years, even if  thereafter no backward candidates are available, such posts are left unfilled.   Ultimately, the selection would be made on merit.  Furthermore, the writ  petition has been filed in public interest.  As noticed hereinbefore, the  petitioner-Society has raised this question again and again and had been  taking part in the proceedings before the Narendran Commission.  In any  view of the matter, when the question of such grave importance has been  brought to the notice of this Court, having regard to the principle underlying  the purport and object for which the ’creamy layer’ was sought to be  excluded, this Court cannot shut its eyes and refuse to determine the  question.

It is not in dispute that the Central Government had issued an office  memorandum on 9.3.2004.  It is furthermore not in dispute that Joseph  Committee in its report included the income from agricultural income and  salary, whereas in Narendran Commission it excluded the same.  It is    furthermore not in dispute that before this Court the State of Kerala did not  raise any objection thereto.

The concept of identification of ’creamy layer’ came up for  consideration in Indra Sawhney-I and this Court has issued certain  directions in this behalf.   Criteria were adopted by the States so as to avoid  implementation of this Court’s judgments and thus in Ashoka Kumar

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Thakur (supra), the criteria laid down by the State of Bihar and U.P. have  been struck down by this Court being violative of Articles 14 and 16(4) of  the Constitution of India.  The State of Kerala did not follow the said  direction as a result whereof it was found to be guilty of contempt of this  Court.    A stern action thereupon was proposed to be taken up against the  State of Kerala in view of its contemptuous conduct, as is evident from the  order of this Court in Indra Sawhney vs. Union of India & Ors., reported  in (1995) 5 SCC 429.  It was in the afore-mentioned backdrop, the  legislation passed by the legislature of Kerala was not only struck down  during the pendency of the proceedings by this Court, a Committee was also  directed to be constituted. We have noticed hereinbefore that the  recommendations of the Joseph Committee were accepted in toto.  We have  furthermore noticed that the State, without any demur, accepted the  recommendations thereof with modification by addition of one caste or sub- caste.  It is, therefore, difficult for us to appreciate as to on what basis  Narendran Commission was appointed.  

It is, furthermore, difficult for us to comprehend as to on what basis,  while appointing Narendran Commission, in the terms of reference, the State  of Kerala could say that the maximum benefit should be given to a particular  section of people.  In view of the decision of this Court in Rama Krishna  Dalmia & Ors. vs. Shri Justice S.R. Tendolkar & Ors. [(1959) SCR 279],  it is no longer res integra that the terms of reference while appointing a  commission may be subject to judicial review.  We may also notice the  following observations made in Indra Sawhney-I:  

"\005The very concept of a class denotes a number of  persons having certain common traits which distinguish  them from the others.  In a backward class under clause  (4) of Article 16, if the connecting link is the social  backwardness, it should broadly be the same in a given  class.  If some of the members are far too advanced  socially (which in the context, necessarily means  economically and, may also mean educationally) the  connecting thread between them and the remaining class  snaps.  They would be misfits in the class.  After  excluding them alone, would the class be a compact  class..."  

The observations aforementioned are not to be read in isolation.  For  the purpose of construing a judgment, it is well-known that the same must be  read in its entirety.  The validity of the terms of reference of the Narendran  Commission and the report submitted by it would, thus, fall for our  consideration not only on the anvil of the aforementioned observations of  this Court but also on reading the judgment in its entirety as also the criteria  laid down in the subsequent judgments.  The judgment of this Court in Indra  Sawhney-I clearly lays down that what is necessary is identification of a  class which had never been backward or ceased to be backward during the  passage of time, but it would give rise to a question as to whether in making  such identification the class should be equated with other socially and  economically forward classes.  The Central Government or the State  Government, evidently, had not laid down any criteria from that angle.  It is,  however, beyond any cavil of doubt that Indra Sawhney-I categorically  states that identification of such a class should be done on a realistic basis.

       Maximum protection to the backward classes, in our opinion, was not  contemplated in Indra Sawhney \026 I,  Only because observations to the  following effect had been made therein:

"while drawing the line, it should be ensured that it  does not result in taking away with one hand what  is given by the other"

It is also relevant to notice that in Indra Sawhney-I this Court

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directed both the Central Government as also the States that where  reservation in favour of all the backward classes was already in operation,  they should evolve a suitable criteria within a period of six months and apply  the same to the socially advanced persons/sections from the designated other  backward classes.  This Court did not say that maximum protection was to  be granted to the backward classes.

It was expected that the endeavour of the State should have been to  evolve a criterion in tune with the underlying constitutional scheme that the  protection is required to be given only to those who remain socially and  educationally backward and not to those who have ceased to be.  Those who  are no longer members of the socially and educationally backward class are  not to be permitted to obtain the benefit of the reservation.  Thus, while  laying down the criteria, the State was required to give effect to the  underlying principles envisaged in the constitutional scheme as interpreted in  Indra Sawhney-I.

It would be useful to notice a converse case which came up for  consideration before a Constitution Bench of this Court in E.V. Chinnaiah  etc. vs. State of A.P. & Ors. [(2005) 1 SCC 394].  The question therein was  as to whether in view of the provisions of Article 341 of the Constitution of  India and the Constitution (Scheduled Castes) Order, 1950, it was  permissible in law to identify groups amongst Scheduled Castes which itself  constitutes a group within the meaning thereof.  This Court negatived such a  classification holding:

"\005It is also difficult to agree with the High Court that  for the purpose of identifying backwardness, a further  inquiry can be made by appointing a commission as to  who amongst the members of the Scheduled Castes is  more backward. If benefits of reservation are not  percolating to them equitably, measures should be taken  to see that they are given such adequate or additional  training so as to enable them to compete with the others  but the same would not mean that in the process of  rationalising the reservation to the Scheduled Castes the  constitutional mandate of Articles 14, 15 and 16 could be  violated."

Therein, noticing Indra Sawhney-I, it was observed:

       "Jeevan Reddy, J. incidentally who wrote the  majority judgment in Indra Sawhney made a reference to  his judgment in V. Narayana Rao v. State of A.P wherein  the learned Judge opined: (AIR pp.95-96, para 94) "94. ... Article 15(4) or Article 16(4) are not  designed to achieve abolition of caste system much  less to remove the meanness or other evils in the  society. They are designed to provide opportunities  in education, services and other fields to raise the  educational, social and economic levels of those  lagging behind, and once this is achieved, these  articles must be deemed to have served their  purpose. If so, excluding those who have already  attained such economic well-being (interlinked as  it is with social and educational advancement)  from the special benefits provided under these  clauses cannot be called unreasonable or  discriminatory or arbitrary much less contrary to  the intention of the Founding Fathers. It can be  reasonably presumed that these people have ceased  to be socially if not educationally backward and  hence do not require the preferential treatment  contemplated by Articles 15(4) and 16(4).

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Moreover, in the face of the repeated  pronouncements of the Supreme Court referred to  above, these arguments cannot be countenanced.  Not only it does not amount to creating a class  within a class, it is a proper delineation of classes."  Those observations were confined to backward  classes and not SCs and STs. The learned Judge in  Indra Sawhney also stuck to the said view.         The impugned Act as also the judgment of the  High Court are premised on the observations in Indra  Sawhney that there is no constitutional or legal bar for a  State in categorising the backward classes as backward  and more backward class. This Court, however, while  referring to Article 16(4) of the Constitution stated that it  recognised only one class viz. backward class of citizens  in the following terms: (SCC p. 716, para 781) "781. At the outset, we may state that for the  purpose of this discussion, we keep aside the  Scheduled Tribes and Scheduled Castes (since they  are admittedly included within the backward  classes), except to remark that backward classes  contemplated by Article 16(4) do comprise some  castes \027 for it cannot be denied that Scheduled  Castes include quite a few castes."            

It is trite that those, who have reached the status of general category,  cannot be permitted to defeat the purport and object of the concept of  ’creamy layer’ as the idea of creamy layer was conceptualized on that  philosophy.  It is also trite that the State can also lay down a legislative  policy as regards the extent of reservation to be made for different members  of the backward class, provided they remain as such.

       Even legislations based on equity must answer the tests of the equality  clauses contained in Articles 14 and 16 of the Constitution of India.  Article  14 of the Constitution of India enjoins upon the State not to deny to any  person ’equality before law’ or ’equal protection of laws’ within the territory  of India.  The two expressions although do not lead to the same conclusion,  we may notice that Section 1 of the XIV Amendment to the U.S.  Constitution uses only the latter expression whereas the Irish Constitution  (1937) and the West German Constitution (1949) use the expression "equal  before law" alone.  Both these expressions are used together in the Universal  Declaration of Human Rights, 1948, Article 7 whereof says "All are equal  before the law and are entitled without any discrimination to equal protection  of the law."  The said expressions are of great significance.  Equality before  law is a dynamic concept having many facets.  Despite Article 38 of the  Constitution of India, the courts are bound to interpret a law which seeks to  achieve the said purpose not only on the anvil of the Articles 14 and 16 but  also having regard to the international law.  We, however, do not mean to  say that international law shall ipso facto be applied for interpretation of our  domestic laws but then relevance thereof, we reiterate, in a grey area, cannot  be lost sight of.   It was, thus, imperative on the part of the State to evolve such  guidelines which would be commensurate with the following observations of  this Court in Ashoka Kumar Thakur’s case (supra) :

"\005It is difficult to accept that in India where the per  capita national income is Rs.6929 (1993-94), a person  who is a member of the IAS and a professional who is  earning less than Rs.10 lakhs per annum is socially and  educationally backward.  We are of the view that the  criteria laid down by the States of Bihar and Uttar  Pradesh for identifying the "creamy layer" on the face of  it is arbitrary and has to be rejected."  

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The terms of reference in the afore-mentioned premise, in our  considered opinion, should be held to be bad in law.   

We have noticed hereinbefore that in the impugned Government  Order, categories of persons to whom the rule of inclusion would apply on  the basis that they form part of the ’creamy layer’ among the backward  classes, are said to be as under:

Category I:      Constitutional  Posts Sons and daughters of persons holding constitutional posts  such as President, Vice President, Judges of the Supreme  Court and the High Courts, Chairman and Members of  UPSC, State Public Service Commissions, etc.

Category II:  Service  Category Sons and daughters of parents, either or both of whom are  Class I officers (e.g., IAS officers) or Class II officers or  officers of public sector undertakings subject to certain  exceptions including cases where one or both of the parents  die or suffer permanent incapacity.   

Category III:  Armed or  Paramilitary  Forces

Sons and daughters of parents in the rank of Colonel or  equivalent in the Army, Navy, Air Force, Paramilitary  Forces, again subject to certain exceptions. Category IV:  Professionals  & those  engaged in  Trade and  Industry

Subject to the income limit specified in Category VI: Includes doctors, lawyers, chartered accountants, etc., as  well as those engaged in trade, business and industry.  Category V:  Property  Owners Includes agricultural holdings, plantations and vacant land  and/or buildings in urban areas.  In the case of plantations  and urban areas.  In the case of plantations and urban land,  the income limit specified in Category VI will apply.   Category VI:  Income/Wealth  test Sons and daughters of persons having gross annual income  over Rs.1 lakh or possessing wealth above the exemption  limit as prescribed in the Wealth Tax Act.

Categories I, II and III afore-mentioned are excluded on the basis of  the status held by the persons concerned.  Category IV is subject to the  income limit specified in Category VI.  We may, at this stage, however, state  that we do not find any merit in the submission of Mr. Venugopal that

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bringing down the age limit from 40 to 35, vis-‘-vis, the Office  Memorandum issued by the Central Government fixing age limit as 40 is bad  in law in view of the fact that age of superannuation of the employees in the  State of Kerala is 55, as compared to the age of superannuation of the  Central Government employee is 60.   

So far as the income/wealth test is concerned, the same has been  considered in Indra Sawhney-II.  We would refer to the findings of this  Court a little later, but indisputably, it is of some importance.  In the Joseph  Committee report the actual increases in the Consumer Price Index was  considered in a scientific manner and it was noticed from the "Economic  Review 1996" published by the Government that the Central Government  has specified the income limit in its Office Memorandum from Rs.1 lakh in  1993 to Rs.1.50 lakhs in 1997.  We have hereinbefore noticed how  Narendran Commission sat in appeal over the Joseph Committee report  despite the fact that the same has been accepted in toto by this Court.  It did  not assign any reason to justify its stand as to on what basis the income limit  of Rs.1.5 lakhs fixed by the Joseph Committee in 1997 was doubled to Rs.3  lakhs within a period of three years; particularly, in view of the fact that even  the Central Government, having regard to the rate of inflation prevailing  throughout the country in 2004, came to the conclusion that the income limit  should be raised upto 2.5 lakhs.  

In Indra Sawhney-I, while applying the "means-test" and "creamy- layer test", it was opined:

"’Means-test’ in this discussion signifies imposition of an  income limit, for the purpose of excluding persons (from  the backward class) whose income is above the said  limit. This submission is very often referred to as the  "creamy layer" argument. Petitioners submit that some  members of the designated backward classes are highly  advanced socially as well as economically and  educationally. It is submitted that they constitute the  forward section of that particular backward class \027 as  forward as any other forward class member \027 and that  they are lapping up all the benefits of reservations meant  for that class, without allowing the benefits to reach the  truly backward members of that class. These persons are  by no means backward and with them a class cannot be  treated as backward. It is pointed out that since Jayasree  [K.S. Jayasree vs. State of Kerala (1976) 3 SCC 730]  almost every decision has accepted the validity of this  submission.

On the other hand, the learned counsel for the  States of Bihar, Tamil Nadu, Kerala and other  counsel for respondents strongly oppose any such  distinction. It is submitted that once a class is  identified as a backward class after applying the  relevant criteria including the economic one, it is  not permissible to apply the economic criteria once  again and sub-divide a backward class into two  sub-categories. Counsel for the State of Tamil  Nadu submitted further that at one stage (in July  1979) the State of Tamil Nadu did indeed prescribe  such an income limit but had to delete it in view of  the practical difficulties encountered and also in  view of the representations received. In this behalf,  the learned counsel invited our attention to Chapter  7-H (pages 60 to 62) of the Ambashankar  Commission (Tamil Nadu Second Backward  Classes Commission) Report. According to the  respondents the argument of ’creamy layer’ is but  a mere ruse, a trick, to deprive the backward

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classes of the benefit of reservations. It is  submitted that no member of backward class has  come forward with this plea and that it ill becomes  the members of forward classes to raise this point."  

       Referring to K.C. Vasanth Kumar vs. State of Karnataka  [(1985) Supp. SCC 714], it was opined :

"In our opinion, it is not a question of  permissibility or desirability of such test but one of  proper and more appropriate identification of a class \027 a  backward class. The very concept of a class denotes a  number of persons having certain common traits which  distinguish them from the others. In a backward class  under clause (4) of Article 16, if the connecting link is  the social backwardness, it should broadly be the same in  a given class. If some of the members are far too  advanced socially (which in the context, necessarily  means economically and, may also mean educationally)  the connecting thread between them and the remaining  class snaps. They would be misfits in the class. After  excluding them alone, would the class be a compact  class. In fact, such exclusion benefits the truly backward.  Difficulty, however, really lies in drawing the line \027  how and where to draw the line? For, while drawing the  line, it should be ensured that it does not result in taking  away with one hand what is given by the other. The basis  of exclusion should not merely be economic, unless, of  course, the economic advancement is so high that it  necessarily means social advancement. Let us illustrate  the point. A member of backward class, say a member of  carpenter caste, goes to Middle East and works there as a  carpenter. If you take his annual income in rupees, it  would be fairly high from the Indian standard. Is he to be  excluded from the Backward Class? Are his children in  India to be deprived of the benefit of Article 16(4)?  Situation may, however, be different, if he rises so high  economically as to become \027 say a factory owner  himself. In such a situation, his social status also rises.  He himself would be in a position to provide employment  to others. In such a case, his income is merely a measure  of his social status. Even otherwise there are several  practical difficulties too in imposing an income ceiling.  For example, annual income of Rs. 36,000 may not count  for much in a city like Bombay, Delhi or Calcutta  whereas it may be a handsome income in rural India  anywhere. The line to be drawn must be a realistic one.  Another question would be, should such a line be  uniform for the entire country or a given State or should  it differ from rural to urban areas and so on. Further,  income from agriculture may be difficult to assess and,  therefore, in the case of agriculturists, the line may have  to be drawn with reference to the extent of holding.  While the income of a person can be taken as a measure  of his social advancement, the limit to be prescribed  should not be such as to result in taking away with one  hand what is given with the other. The income limit must  be such as to mean and signify social advancement. At  the same time, it must be recognised that there are certain  positions, the occupants of which can be treated as  socially advanced without any further enquiry. For  example, if a member of a designated backward class  becomes a member of IAS or IPS or any other All India  Service, his status is society (social status) rises; he is no  longer socially disadvantaged. His children get full

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opportunity to realise their potential. They are in no way  handicapped in the race of life. His salary is also such  that he is above want. It is but logical that in such a  situation, his children are not given the benefit of  reservation. For by giving them the benefit of  reservation, other disadvantaged members of that  backward class may be deprived of that benefit. It is then  argued for the respondents that ’one swallow doesn’t  make the summer’, and that merely because a few  members of a caste or class become socially advanced,  the class/caste as such does not cease to be backward. It  is pointed out that clause (4) of Article 16 aims at group  backwardness and not individual backwardness. While  we agree that clause (4) aims at group backwardness, we  feel that exclusion of such socially advanced members  will make the ’class’ a truly backward class and would  more appropriately serve the purpose and object of clause  (4). (This discussion is confined to Other Backward  Classes only and has no relevance in the case of  Scheduled Tribes and Scheduled Castes).

       Keeping in mind all these considerations, we direct  the Government of India to specify the basis of exclusion  \027 whether on the basis of income, extent of holding or  otherwise \027 of ’creamy layer’. This shall be done as  early as possible, but not exceeding four months. On such  specification persons falling within the net of  exclusionary rule shall cease to be the members of the  Other Backward Classes (covered by the expression  ’backward class of citizens’) for the purpose of Article  16(4). The impugned Office Memorandums dated August  13, 1990 and September 25, 1991 shall be implemented  subject only to such specification and exclusion of  socially advanced persons from the backward classes  contemplated by the said O.M. In other words, after the  expiry of four months from today, the implementation of  the said O.M. shall be subject to the exclusion of the  ’creamy layer’ in accordance with the criteria to be  specified by the Government of India and not otherwise."

In Indra Sawhney-II, it was further observed:  

"As appears from the judgments of six out of the eight  Judges, viz. Jeevan Reddy (for himself and three others),  Sawant and Sahai, JJ. \026 (i.e. six learned Judges out of  nine), - they specifically refer to those in higher services  like IAS, IPS and All India Services or near about as  persons who have reached a higher level of social  advancement and economic status and therefore as a  matter of law, such persons are declared not entitled to be  treated as backward.  They are to be treated as creamy  layer "without further inquiry".  Likewise, persons living  in sufficient affluence who are able to provide  employment to others are to be treated as having reached  a higher social status on account of their affluence, and  therefore outside the backward class.  Those holding  higher levels of agricultural landholdings or getting  income from property, beyond a limit, have to be  excluded from the backward classes.  This, in our  opinion, is a judicial "declaration" made by this Court."

[See also W.B. Freedom Fighters’ Organisation vs. Union of India (2004)  7 SCC 716, at 721 (para 16)]

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In Indra Sawhney-II , "Means test" and "creamy-layer test" were  held to be beyond the domain of the State but evidently in relation to the  backward classes, the same is applicable.

Keeping in view the legal history, as also the directions made by this  Court in a series of judgments referred to hereinbefore, it was obligatory on  the part of the Narendran Commission to consider seriously that aspect of the  matter.  In any event the same could not have been ignored.      While fixing the income limit, although a State is entitled to take into  consideration the level of literacy, the village income, the rise of living index  and other relevant factors into consideration, it should not have accepted a  report of the Committee which did not proceed scientifically, particularly,  having regard to the constitutional scheme as explained by the Court in the  judgments referred to hereinbefore.

We, therefore, do not find any justification for fixing the income limit  at Rs.3 lakhs.  We may furthermore place on record our displeasure as to the  manner in which Joseph Committee report received severe criticism by the  Narendran Committee, most of which were wholly unwarranted.  The tests  adopted by the Joseph Committee could not have been given a complete go- by the Narendran Commission.   The findings of a Commission in respect of  a matter of such grave significance and importance should have been based  on scientific data as also evidence of experts.  If Government tends to  consider without adequate data and inquiry, a stage would come when the  whole system of reservation will become farcical and negation of  constitutional provisions.  Hence, before arriving at the final conclusion, it  should have noticed the rate of inflation and other relevant factors.   Economic growth of a country, as a result of the village income of citizens of  India, keep on changing, although while determining an issue as to whether  persons who have attained economic sufficiency so as not to furthermore  describe them as economically backward, is required to be taken into  consideration.   

So far as exclusion of salary and agricultural income is concerned, it is  true that the Central Government has accepted the same and the sanction of  the Central Government has also been accepted by this Court, but we should  also notice that the report of the Joseph Committee had also been accepted  by this Court.  It is not for us, at this stage, to render our final opinion in this  matter as to whether preference should be given to Joseph Committee or  Narendran Commission, but there is no reason as to why a successor  committee, without any just and cogent reason, ignored the  recommendations of the former committee.   

Equality clauses contained in Articles 14, 15 and 16 of the  Constitution of India may in certain situations constitute the heart and soul of  the Constitution of India.  When a law is patently arbitrary, such  infringement of the equality clause contained in Article 14 or Article 16  would be violative of the equality clause of the Constitution.   {See  Waman  Rao vs. Union of India  [(1981) 2 SCC 362], Maharao Saheb Shri Bhim  Singhji, etc. vs. Union of India & Ors. [AIR 1981 SC 234] and Minerva  Mills Ltd. & Ors. vs. Union of India & Ors. [(1980) 3 SCC 625].}  It is  interesting to note that in Mithu v. State of Punjab [AIR 1983 SC 473]  Section 303 of the Indian Penal Code was struck down as unconstitutional  invoking the equality clause contained in Article 14 of the Constitution of  India.  A statute professing division amongst citizens, subject to Articles 15  and 16 of the Constitution of India may be considered to be a suspect  legislation.  A suspect legislation must pass the test of strict scrutiny.   Articles 15(4) and Article 16(4) profess to bring the socially and  educationally backward people to the forefront.  Only for the purpose of  invoking equality clause, the makers of the Constitution thought of  protective discrimination and affirmative action.  Such recourse to protective  discrimination and affirmative action had been thought of to do away with  social disparities.  So long as social disparities among groups of people are  patent and one class of citizens in spite of best efforts cannot effectively

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avail equality of opportunity due to social and economic handicaps, the  policy of affirmative action must receive the approval of the constitutional  courts.  For the said purpose, however, the conditions precedent laid down  therefor in the Constitution must be held to be sine qua non.  Thus,  affirmative action in essence and spirit involves classification of people as  backward class of citizens and those who are not backward class of citizens.   A group of persons although are not as such backward or have by passage of  time ceased to backward would come within the purview of the creamy layer  doctrine evolved by this court.  The court by evolving said doctrine intended  to lay a law that in terms of our constitutional scheme no group of persons  should be held to be more equal than the other group.  In relation to the  minorities, a 11-Judge Bench of this Court in T.M.A. Pai Foundation vs.  State of Karnataka [(2002) 8 SCC 481] categorically held that protection is  required to be given to the minority so as to apply the equality clauses to  them vis-‘-vis the majority.  In Islamic Academy of Education vs. State of  Karnataka [(2003) 6 SCC 697], it was opined that the minority have more  rights than the majority.  To the said extent  Islamic Academy of Education  (supra) was overruled by a 7-Judge Bench of this Court in P.A. Inamdar vs.  State of Maharashtra [(2005) 6 SCC 537]. An executive action or a  legislative Act should be commensurate, in our opinion, with the  aforementioned dicta laid down by this Court in Indra Sawhney-I (supra)  and followed in Ashoka Kumar Thakur (supra) and Indra Sawhney-II  (supra).     

In Secretary, State of Karnataka & Ors. vs. Umadevi (3) & Ors.  [(2006) 4 SCC 1], a Constitution Bench of this Court has stated the law in  the following terms : "11. In addition to the equality clause represented by  Article 14 of the Constitution, Article 16 has specifically  provided for equality of opportunity in matters of public  employment. Buttressing these fundamental rights,  Article 309 provides that subject to the provisions of the  Constitution, Acts of the legislature may regulate the  recruitment and conditions of service of persons  appointed to public services and posts in connection with  the affairs of the Union or of a State. In view of the  interpretation placed on Article 12 of the Constitution by  this Court, obviously, these principles also govern the  instrumentalities that come within the purview of Article  12 of the Constitution. With a view to make the  procedure for selection fair, the Constitution by Article  315 has also created a Public Service Commission for the  Union and the Public Service Commissions for the  States. Article 320 deals with the functions of the Public  Service Commissions and mandates consultation with the  Commission on all matters relating to methods of  recruitment to civil services and for civil posts and other  related matters. As a part of the affirmative action  recognised by Article 16 of the Constitution, Article 335  provides for special consideration in the matter of claims  of the members of the Scheduled Castes and Scheduled  Tribes for employment. The States have made Acts, rules  or regulations for implementing the above constitutional  guarantees and any recruitment to the service in the State  or in the Union is governed by such Acts, rules and  regulations. The Constitution does not envisage any  employment outside this constitutional scheme and  without following the requirements set down therein. It was furthermore held : "43. Thus, it is clear that adherence to the rule of equality  in public employment is a basic feature of our  Constitution and since the rule of law is the core of our  Constitution, a court would certainly be disabled from  passing an order upholding a violation of Article 14 or in  ordering the overlooking of the need to comply with the

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requirements of Article 14 read with Article 16 of the  Constitution\005"

Yet again it was stated : "\005The rule of law compels the State to make  appointments as envisaged by the Constitution and in the  manner we have indicated earlier. In most of these cases,  no doubt, the employees had worked for some length of  time but this has also been brought about by the  pendency of proceedings in tribunals and courts initiated  at the instance of the employees. Moreover, accepting an  argument of this nature would mean that the State would  be permitted to perpetuate an illegality in the matter of  public employment and that would be a negation of the  constitutional scheme adopted by us, the people of India.  It is therefore not possible to accept the argument that  there must be a direction to make permanent all the  persons employed on daily wages. When the court is  approached for relief by way of a writ, the court has  necessarily to ask itself whether the person before it had  any legal right to be enforced. Considered in the light of  the very clear constitutional scheme, it cannot be said  that the employees have been able to establish a legal  right to be made permanent even though they have never  been appointed in terms of the relevant rules or in  adherence of Articles 14 and 16 of the Constitution."

       Recently, a Constitution Bench of this Court in M.Nagaraj and Ors. v.  Union of India and Ors. [(2006) 8 SCC 212] has reaffirmed the importance  of the creamy layer principle in the scheme of equality under the  constitution. This Court held that the creamy layer principle was on of the  important limits on state power under the Equality Clause enshrined under  Articles 14 and 16 and any violation or dilution of the same would render the  state action invalid. More precisely this Court held:  

"As stated above, the boundaries of the width of  the power, namely, the ceiling-limit of 50% (the  numerical benchmark), the principle of creamy  layer, the compelling reasons, namely,  backwardness, inadequacy of representation and  the overall administrative efficiency are not  obliterated by the impugned amendments. At the  appropriate time, we have to consider the law as  enacted by various States providing for reservation  if challenged. At that time we have to see whether  limitations on the exercise of power are violated.  The State is free to exercise its discretion of  providing for reservation subject to limitation,  namely, that there must exist compelling reasons  of backwardness, inadequacy of representation in a  class of post(s) keeping in mind the overall  administrative efficiency. It is made clear that even  if the State has reasons to make reservation, as  stated above, if the impugned law violates any of  the above substantive limits on the width of the  power the same would be liable to be set aside."           This Court reiterated the limit on state power imposed by the creamy  layer rule and the invalidity of any state action in violation of the same by  concluding as follows:  

"We reiterate that the ceiling-limit of 50%, the  concept of creamy layer and the compelling  reasons, namely, backwardness, inadequacy of  representation and overall administrative

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efficiency are all constitutional requirements  without which the structure of equality of  opportunity in Article 16 would collapse.  However, in this case, as stated, the main issue  concerns the "extent of reservation". In this regard  the concerned State will have to show in each case  the existence of the compelling reasons, namely,  backwardness, inadequacy of representation and  overall administrative efficiency before making  provision for reservation. As stated above, the  impugned provision is an enabling provision. The  State is not bound to make reservation for SC/ST  in matter of promotions. However if they wish to  exercise their discretion and make such provision,  the State has to collect quantifiable data showing  backwardness of the class and inadequacy of  representation of that class in public employment  in addition to compliance of Article 335. It is made  clear that even if the State has compelling reasons,  as stated above, the State will have to see that its  reservation provision does not lead to  excessiveness so as to breach the ceiling-limit of  50% or obliterate the creamy layer or extend the  reservation indefinitely."              This Court rationalized the creamy layer rule as a necessary bargain  between the competing ends of caste based reservations and the principle of  secularism. The Court opined:  

"In Indra Sawhney this Court has, therefore,  accepted caste as determinant of backwardness and  yet it has struck a balance with the principle of  secularism which is the basic feature of the  Constitution by bringing in the concept of creamy  layer."

This Court, thus, has categorically laid down the law that  determination of creamy layer is a part of the constitutional scheme.

Constitutional provisions are required to be construed harmoniously.   

It is difficult for us to accept the submission of Mr. Iyer that this Court  should not exercise its power of judicial review.  What should be the criteria  for achieving the constitutional goal set out by the founding fathers, not only  involves interpretation of constitutional provisions, but being the subject  matter of decisions by this Court, it will be improper for us to refuse to  undertake judicial exercise in such matters.  The level of scrutiny would be  more intrinsic than the doctrine of Wednesbury unreasonableness.  In terms  of Article 141 of the Constitution of India, the declaration of law made by  this Court is binding on all courts, a’ fortiori such directions would also be  binding on all authorities.  Article 142 empowers this Court to pass such  order as is necessary to do complete justice to any cause or matter pending  before it and Article 144 enjoins all authorities, civil and judicial, to act in  aid of the Supreme Court.   

Interpretation and application of constitutional law particularly, in  regard to the equality clause contained in Article 14 to Article 16 of the  Constitution, have never been limited by this Court.  If a measure tends to  perpetuate inequality and makes the goal of equality a mirage, such measure  should not receive the approval of the Court.  {See Islamic Academy of  Education (supra)}   Directions have been issued by this Court in a number  of cases where the question involves greater public interest or public good,  including enforcement of fundamental rights.  The Court never hesitates to

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express its opinion on the interpretation of the Constitution despite political  thicket.  {See Anil Kumar Jha vs. Union of India & Ors. reported in  (2005) 3 SCC 150, Rameshwar Prasad (IV) & Ors. vs. Union of India &  Anr. reported in (2005) 7 SCC 157, W.B. Freedom Fighters’ Organisation  (supra) and Bombay Dyeing & Mfg. Co. Ltd. vs. Bombay Environmental  Action Group & Ors. reported in 2006 (3) SCC 434].}

This Court has repeatedly held that under Article 144, the state was  bound to act strictly in terms of the decisions of this Court and even, it has  reservation about some of its directions, it could approach this Court and  could not have acted otherwise.

However, the question, which arise for consideration is as to what  relief could be granted by this Court.   

Nothing has been brought on record to show that the paragraph 2(1)(c)  of G.O. dated 27th May, 2000 had been given a go-by.

The State did not accept even the Narendran Commission report in its  entirety.   Although, as noticed hereinbefore, Mr. Iyer submitted that the  benefit would be granted only to those persons who are engaged in  hereditary occupation and not to them who are not so engaged, the State,  however, states that there would be no restriction as proposed by the  Commission for exclusion from the ’creamy layer’ of backward class with  hereditary occupations, i.e, black smiths and gold smiths should be engaged  in such occupations.  If the State has not made any amendment, it is  eminently fit and proper that an amendment or clarification should be issued  in this behalf inasmuch as even if a person is otherwise excluded by reason  of holding a constitutional post or otherwise, he may still claim the benefit  being a descendent of a person whose predecessors, being a member of the  backward class, had hereditary occupation like black smith or gold smith etc.    Accordingly, notification dated 27th May, 2000 being merely for notification  of general public and the guidelines issued for the concerned officers, it is  necessary that the State should amend the guidelines also.   

In this view of the matter, although while setting aside the report of  the Narendran Commission, we direct the State to appoint a fresh  Commission who should go into all these aspects of the matter and submit its  report.   

The writ petition is allowed with the aforementioned directions and  observations.  We, however, for the present do not intend to pass any order  on the contempt petitions.  They shall remain pending.

No costs.