INDIRA SA WHNEY A

v.

UNION OF INDIA AND ORS.

DECEMBER 13, 1999

[M.

JAGANNADHA

RAO, D.P. WADHWA AND M.B. SHAH, JJ.] B

Constitution of India

Articles

14, 16( 1) & 16( 4)-Reservation-Backward Classes-'Creamy C

layer '-Identification and exclusion of from the purview of reservation­

Directions issued by Supreme Court

in Indira Sawhney case-State of Kerala­

Failure to identify 'creamy layer '-State Legislature passing a law for

continuing the existing system

of reservation by declaring non-existence of

'creamy layer' in Backward Classess and inadequate representation of

Backward Classes in services under the State-Validity of-Held; 'creamy D

layer' in a caste is not economically and socially backward-Conferring the

benefit

of reservation without excluding creamy layer will amount to treating

unequals as equals and equals as unequals-Thus, violative

of equality

principle enshrined

in Articles 14 and 16(1)-Declarations in the Act not in

conformity with the judicial declaration of Supreme Court in Indira Sawhney 's

case and Ashok Kumar Thakur 's case-Thus, provision of the Act E

unconstitutional and violative of Articles 14 and 16-Kerala

State Backward

Classes (Reservation

of Appointments

or Posts in the Service under the State)

Act, 1995-Ss. 3, 4 and 6.

Articles 14, 16(4), 16(1) and 16(2)-Reservation-Backward Classes-F

Identification-Caste-Criteria-Held, caste cannot be the only basis for

reservation-Inclusion

of castes in the list

qf backward Classes cannot be

done mechanically-'Creamy layer' in a caste

is on par with forward classes

and therefore

has to be excluded from the benefit of reservation.

Articles 14 and 16(1)-Principle of equality-Violation of-G

Reservation-Backward Classes-Non-exclusion of 'creamy layer '-Effect of­

Held, amounts to treating unequals as equals and equals as unequals-Thus,

violative

of principle of equality enshrined in Articles 14 and 16(1) which

is the basic feature

of Constitution-Executive or legislative action violating

basic fea:ure

is unconstitutional.

229

H

230 SUPREME COURT REPORTS [1999) SUPP. 5 S.C.R.

A Articles 14, 16, 32 and 226-Judicial review-Scope of Legislative

declaration-State

of Kera/a passing an Act declaring that in view of 'known

facts' there

is no 'creamy layer' in Backward Classes having capacity to

compete with Forward Classes-Held, amenable

to judicial review-Kera/a

State backward Classes (Reservation

of Appointments or Posts in

the Service)

B Act, /995-S.3(a)(b).

Articles 14, 16(/), 16(2), 16(4) and 335-Reservation-Backward

Classes-Need for maintenance of efficiency of administration-Specific

provision regarding Scheduled Castes/Scheduled Tribes-No provision

regarding Backward Classes-Held, such principle deducible from Articles

C 14 and 16-Maintenance of efficiency of administration applicable to

Backward Classes

also.

Articles 14 and 16(/

)-Reservation-'-Backward Classses-Creamy

layer-Exclusion

of-Inadequate represeniation of Backward Classes in

service under the State-Whether a valid ground for extending the benefit

of

D reservation? Held, No-Kera/a State Backward Classes (Reservation of

Appointments or Posts in the Services under the State) Act,

/995-S.3(b).

Articles 14, 16(/) and 245-Validating enactment-Reservation­

Backward Classes-Creamy layer-Exclusion of-Directions of Supreme

Court. in Indira Sawhney

case-Siate legislation enacting law with

E retrospective validation without removing the defects-validity of-Held,

amounts to overruling the judgment of Supreme

Court~ontrary to doctrine

of separation of powers-Violative of Articles 14 and 16(/)-Kerala State

Backward Classes (Reservation

of Appointments or Posts in the Services

under the State) Act,

1995-S.6.

F

Articles 14, 16(/) and 16(4)-Kerala State Backward Classes

(Reservation

of Appointments or Posts in the Services under the State) Act, I995-Ss.3, 4 and 6-Constitutional validity of-Held, unconstitutional.

In Indira Sawhney's case this Court issued directions to the Central

G Government and State Governments to identify the 'creamy layer' within the

Backward Classes and exclude them from the category

of reservation under

Article 16(4)

of the Constitution. However, State of Kerala instead of

implementing the said directions, passed the Kerala State Backward Classes

(Reservation

of Appointments or Posts in the

~ervices under the State) Act,

1995 for continuing the existing system of reservation declaring that

in view

H of 'known facts' in existence in the State there were no socially advanced

-

INDIRA SAWHNEYv. U.O.I. 231

sections in Backward Classes having capacity to compete with Forward A

Classes and the Backward Classes in the State were not adequately

represented in the services under the State. In the meantime, as the State

Government failed to identify the 'creamy layer' in the State, the Chief Justice

of Kerala High Court, on this Court's request appointed a Commission headed

by Justice K.C. Joseph. The said Commission submitted its report identifying B

'creamy layer' in the State. The present interlocutory applications and writ

petitions were filed for declaring

the Kerala Act as unconstitutional and

violative of Articles 14 & 16 of the Constitution.

Disposing of the interlocutory applications and writ petitions, the

Court

HELD : 1.1. Caste only cannot be the basis for reservation. Reservation C

can be for a backward class citizen of a particular caste. But creamy layer of

that caste are not socially and economically Backward Classes and thus they

are to be excluded from the benefit of reservation. Inclusion of castes in the

list

of Backward Classes cannot be mechanical and cannot be done without

adequate relevant data. Nor can it be done for extraneous reasons. Care should

D

be taken that the Forward Castes do not get included in the backward castes

list.

If Forward Classes are mechanincally included in the list of Backward

Classes

or if the creamy layer among Backward Classes is not excluded, then

the benefits

of reservation will not reach the really

backward· among the

Backward Classes. Most of the benefits will then be knocked away by the

forward castes and the creamy layer.

That will leave the truly backward, E

backward for ever. Thus in Indira Sawhney 's case on the question of exclusion

of 'creamy layer' from the Backward Classes, there was agreement amongst

majority

of Judges of this Court. [239-C, F;

240-B; 241-C]

Indira Sawhney v. Union of India, [1992) Suppl. 3 SCC 217, followed. p

1.2. In Indira Sawhney 's case a specific declaration of law was made to

the effect

that 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, as a matter of

law, such persons should be

declared not entitled to be treated as backward. They are to be treated as G

·

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 level of

agricultural land holdings or getting income from property, beyond a

limi~

have to be excluded from the backward classes. Further, pursuant to Indira H

232 SUPREME COURT REPORTS (1999] SUPP. 5 S.C.R.

A Sawhney 's case, Government issued a notification dated 8.9.93 identifying

certain broad categories

of persons viz. constitutional functionaries, service

personnel, professionals, persons in industry

and trade, persons holding

agricultural

or urban land as creamy layer which was accepted by this Court

in Ashok Kumar Thakur 's case. Thus, a declaration of law was made by this

B Court in Indira Sawhney 's case and Ashok Kumar Thakur 's case in relation

to identification and exclusion

of creamy

layer.

(244-F, G; 245-B, E, H; 246-A]

Indira Sawhney v. Union of India, (1992] Suppl. 3 SCC 217, followed.

C Ashok Kumar Thakur v. State of Bihar and Ors., (1995] 5 SCC 403,

relied on.

2. 'Creamy layer' in the Backward Class is to be treated "on par" with

the Forward Classes and is not entitled to benefits of reservation. If the

'creamy layer' is not excluded, there will be discrimination and violation of

D Articles 14 and 16(1) of the Constitution oflndia since unequals (the creamy

layer) cannot be treated as equals

that is to say, equal to the rest of the

Backward Class. Thus, any executive or legislative action refusing to exclude

the creamy layer from the benefits

of reservation will be violative of Articles

14 and 16(1)

and also of Article 16(4). (246-C, D, E, F]

E 3.1. The provisions of

Ss.3, 4 and 6 of the Kerala State Backward

Classes (reservation

of Appointments or Posts in the Services under the State)

Act, 1995

are unconstitutional and violative of Articles 14, 16(1) and 16(4) of

the Constitution and the law laid down by this Court.

(260-F]

3.2 The declaration in Sub-clause 3 of the Act providing that according

F to 'known facts' there is no socially advanced sections in any backward

Classes having the capacity to compete with forward classes has no factual

basis

in spite of the use of the words 'known facts'. If the Kerala Government

and the Kerala Legislature meant in their declaration in sub-clause(a) of

section 3 that there was, in effect, no 'creamy layer' in the

State of Kerala,

G among the notified backward Classes, then they must go to the length of

stating that there was none from backward classes who had so far been

recruited to

the services of

IAS, JPS etc. or none had come within broad

categories listed in the Central Government's O.M. dated 8.9.93, in the Kerala

State. But it was not the case

of the

State of Kerala that the above categories

of persons were non-existent in the State. Further the broad categories and

H norms are valid not merely for the present but for the future also. Thus, the

_,.

·-

INDIRA SAWHNEYv. U.0.1. 233

declaration in S.3(a) is a mere cloak and is unrelated to facts in existence. It A

· is also contrary to the principles laid down by this Court in Indira Sawhney

and in Ashok Kumar .Thakur. It is, therefore, violative of Articles 14 and 16(1)

of the Constitution of India. Sub-clause (a) of S.3 is, therefore, declared

unconstitutional. (253-C, 255-B, C,

D, F; 256-B, CJ

Indira Sawhney v.

Union of India, (1992) Suppl. 3 SCC 217, followed. B

Ashok Kumar Thakur v. State of Bihar and Ors., (1995) 5 SCC 403,

relied on.

3.3. The mere inadequate representation

of a particular Backward Class

.in public services.flowing as a consequence of exclusion of creamy layer is C

not legally sufficient to provide or continue reservation to the creamy layer.

Reservation even for Backward Classes can be made only if it will not

undermine the efficiency

of the administration in the particular department.

Though

there is no specific constitutional provision in relation to the need

for maintenance

of 'efficiency of administration' so far as Backward Classes

are concerned (such as the special provisions in Article 335 in the case of D

Schedule Castes and Schedule Tribes). But such a principle of efficiency of

administration is, equally paramount and is implied in Articles 14 and 16 of

the Constitution even so far as Backward Classes are concerned. The

Constitution has not envisaged that inadequately represented backward

classes

are to be placed on a more favourable footing than inadequately E

represented Schedule Castesffribes for that would offend Article 14 as

between two sets

of Backward Classes-namely the Scheduled Castes and the

other Backward Classes. The qualifications, standard and talent necessary

for Backward Classes cannot

be relaxed or reduced to a level which may affect

the efficiency of administration. The constitutional principle that equals cannot

be treated unequally and unequals cannot be treated equally based on Articles F

14 and 16(1) overrides other considerations. Thus, even assuming that, when

creamy layer

is excluded, there will be inadequate representation of certain

Backward Classes

in services, that cannot be a valid reason for the continued

inclusion

of the creamy layer in the Backward Class, after

Indira Sawhney.

Thus, sub-clause (b) of section 3 does not provide any valid answer for not G

eliminating the creamy layer and must also be held to be unconstitutional

and violative

of Articles 14, 16(1) and 16(4) of the Constitution. .

[257-F, G; 258-B, C,

D, F, G, H; 259-A)

Ajit Singh II v. State of

Punjab, (1999) 7 SCC 209, referred to.

3.4. The non-obstante clause in S.4

of the Act cannot override the H

' 234 SUPREME COURT REPORTS [1999) SUPP. 5 S.C.R.

A judgments of this Court based on Articles 14, 16(1) and 16(4) ifthe defect is

not removed by the legislation. Neither Parliament nor the State Legislature

can make any law to continue reservation to the creamy layer inasmuch as

the judgments

of this Court are based on Articles 14 and 16(1) of the

Constitution

of India, and no law can obviously be made to override the

B provisions of Articles 14 and 16(1). (259-G, H; 260-A)

3.5.

It is true that whenever legislative or executive action is declared

as being violative

of the provisions of Part III of the Constitution, it will be

permissible for the Executive

or Legislature to remove the defect which is

the cause for discrimination prospectively and which defect has been pointed

C out by the Court. The defect can be removed retrospectively too by legislative

action and the previous actions can also be validated. But where there

is mere

validation with retrospective effect, without the defect being legislatively

removed with retrospective effect, the legislative action will amount to

overruling the

judgment of the courts by way of legislative fiat and will be

invalid as being contrary to the doctrine of separation

of powers.

D [246-G, H; 247-B]

3.6.

If the legislature of any State does not take steps to remove the

defect

or to effectively and realistically remove the defect to exclude the

'creamy layer' from the backward classes then the benefits

of reservations

which

are invalidly continued in favour of the 'creamy layer' cannot be

E declared retrospectively valid merely be a legislative declaration that such

creamy layer

is absent as done by Section 3 of the Kerala Act. Nor can it be

done by means

of the validating provision contained in section 6 of that Act.

Further Section 6 cannot stand alone once Sections 3 and 4 are declared

unconstitutional.

As long as the

crea~y layer is not excluded and the defect

F continues, any validation -without elimination of the defect which is the basic

cause

of unconstitutionality -will be ineffective and will be invalid.

(247-A,

B, CJ

4. Equality was one of the basic features referred to in the Preamble to

our Constitution. Parliament and the legislatures in this country cannot

G transgress the basic feature of the Constitution, namely, the principle of

equality enshrined in Article 14 of which Article 16(1) is a facet. Whether

creamy layer is not excluded or whether forward castes get included in the

list of backward classes, the position

will be the same namely, that there will

be a breach not only

of Article 14 but of the basic structure of the Constitution.

The non-exclusion

of the creamy layer or the inclusion of Forward Castes in

H the list of backward classes will, therefore, be totally illegal. Such an illegality

INDIRA SA WHNEY v. U.0.1. 235

offending the root of the Constitution of India cannot be allowed to be A

perpetuated even by Constitutional amendment. [260-H; 261-C, D, E)

Keshavananda Bharati v. State of Kera/a, [1973) 4 SCC 225, relied on.

5.

The Report submitted by Justice Joseph Committee is accepted in

toto

subject to the addition of communities and sub-castes as pointed out in B

the affidavit of the

State of Kerala dated 16.1.98. Adopting the principle of

prospective overruling, the exclusion of creamy layer as stated in that Report

shall be applicable from the date of this Judgment. However, State ofKerala

is permitted to make provision for exclusion of creamy layer among the

Backward Classes in the State in accordance with Constitution and law laid

down in Indira Sawhney and Ashok Kumar Thakur and in accordance with

the principles laid down now.

Once the

State Government itself identifies the

creamy layer, the recommendations of Justice Joseph Committee will cease

to apply. [266-D; 268-B-D)

c

6. The unreasonable delay on the part of the Kerala Government and D

the discriminatory law made by the Kerala Legislature have been in virtual

defiance of the Rule of Law and also an indefensible breach of the equality

principle which is a basic feature of the Constitution. They are also in open

violation

of the Judgments of this Court which.are binding under Article 141

and the fundamental concept of separation of powers which has also been held

to be a basic feature of the Constitution. Attitude and action of the

State of E

Kerala has unfortunately resulted in allowing 'creamy layer' among backward

Classes in the State to continue to grab the posts in the services in

Government, public sector etc. even after Indira Sawhney 's case and get away

with the same. The result is that really backward among the Backward

Classes have been deliberately deprived by the State of their legitimate rights F

because they have no voice in the decision making process.

[268-G, H; 269-A)

Akhil Bhartiya

Soshit Karamchari Sangh v. Union of India, [1981) 1

sec 246, referred to.

CIVIL ORIGINAL JURISDICTION : I.A. Nos. 35-36.

IN

Writ Petition No. 930 of 1990 Etc.

(Under Article 32 of the Constitution of India.)

G

H

A

236 SUPREME COURT REPORTS [1999] SUPP. 5 S.C.R.

WITH

W.P. (C) No. 699/95 and W.P. (C) No. 727/95, I.A. No. 2/99, IAS. 8 and

9 in W.P. (C) No. 699195.

K.N. Rawal, Addl. Solicitor General (Gopal Subramanium) (A.C.),

B P. Krishnamoorthy, K.K. Venugopal, Dayan Krishnan, (Ms. Indra Sawhney)

(IN-Person) (NP), Ms. V.M. Rahana, G. Prakash, (S.W.A. Quadri) for

S.N. Terdol, T.C. Sharma, Ms. Neelam Sharma for Ms. Sushma Suri,

Ms. A. Subhashini, Ajay Kumar Yadav, K.V. Mohan, S.R. Setia, *(A.N. Rajan

Babu, Shakil Ahmad Syed), E.M.S. Anam,

Ms. Lilly Thomas,

Sri Justus Nadar,

C Dr. Rajiv Dhawan, Roy Abraham, (Rajan Babu) for Ms. Baby Krishnan,

V.J. Francis, P.I. Jose and M.T. George for the appearing parties.

D

*(AN. Rajan Babu and Shakil Ahmad Syed) for Interver in I.A. No. 21

99 and for R. No. 3-4 in W.P. (C) No. 699195.

The Judgment of the Court was delivered by

M. JAGANNADHA RAO, J. The cases in this batch raise common

issues relating to the identification

of 'creamy layer' among the Backward

Classes in the State ofKerala and the implementation

of the law declared and

directions issued in Indira Sawhney

v. Union of India, [ l 992] (Suppl) 3,

SCC

217). The State of Kerala took time for implementation of the directions in

E Indira Sawhney for appointment of a Commission for the purpose of identifying

the creamy layer

in the State but it failed to appoint a Commission or to

proceed with the implementation. Indira

Sawhn~ was decided in 1992. For

more than three years the State

of Kerala did not implement the judgment.

This Court by its order dated

10.7.1995 held (in IAs. 35, 36 filed by the State

p for extension of time etc.) that the State of Kerala, represented by its Chief

Secretary was guilty

of contempt but gave a further opportunity to the state

to purge the contempt and adjourned the matter to 11.9.1995.

It was made.

clear that

if the directions of this

Court were not complied with, the Chief

Secretary would 'run the risk of being sentenced'. Having sought time for

years to appoint a Commission, the Kerala Legislature then suddenly came

G forward with the Kerala State Backward Classes ( Reservation of Appointments

or

Posts in the Services under the State) Act, 1995 which, in section 3

declared that "having regard to known facts in existence in the State of

Kerala, that there are no socially advanced sections in any Backward Classes

who have acquired capacity to compete with forward classes" and that the

H Backward classes in the State were not "adequately represented" in the

INDIRA SAWHNEY v. U.0.1. [M. JAGANNADHA RAO, J.] ~.37

services under the State and they would continue to be entitled to reservation A

under Clause ( 4) of Article 16 of the Constitution. The provisions of Section

4 continued the existing system

of reservation which was in force as per Rules

made

in 1958 and Section 6 was incorporated as a validating section with

retrospective effect.

On the ground that the provisions of this Act of 1995

were discriminatory and violative

of Articles 14 and 16 of the Constitution,

WP. 699of1995 was filed by the Nair Service Society, Kerala while

W.P. 727 B

of 1995 was filed by one K. Ramaswamy, belonging to the Elavami Community

of Kerala (a Backward Community) to declare the provisions of the Act as

unconstitutional and violative

of Articles 14 and 16 of the Constitution of

India. Some IAs were filed by interveners to support one or other of the rival

groups. The Act was passed on 2.9.95 but was given retrospective effect from

C

2.10.1992.

..

As the State Government failed to appoint a Commission as directed

in Indira Sawhney, this Court, by an elaborate order dated 4.11.96 deemed it

necessary to appoint a High Level Committee to gather the necessary

information regarding 'creamy layer' and requested the Chief Justice, Kerala

High Court, to appoint a retired Judge

of the High Court to be the Chairman D

of the High Level Committee. The Chairman of the Committee, it was held,

could induct not more than 4 persons as members from various walks

of life

"to identify the creamy layer among the designated backward classes" in the

State

of Kerala in the light of the ruling of this Court in Indira Sawhney and

forward its report to the Supreme

Courf within three months. This Court E

directed the State Government to extend .:o-operation to the above Committee.

This Court also directed that the O.M. of the Government oflndia dated 8.9.93

( Ministry

of

Personnel Public Grievances and Pensions) where the Central

Government laid down guidelines for identification

of the creamy layer, be

placed before the High Level Committee

"for use and guidance" in identifying

the 'creamy layer' among the other Backward Classes

in the State of Kerala.

p

Accordingly, the Chief Justice of the High Court of Kerala nominated

Sri Justice K.J. Joseph, as Chairman of the High Level Committee. The other

members

of the Committee were Sri

O.C. Vincent, IAS, Sri K.P. Mohammed,

Adv. Sri K. Aravindaksha Menon, Retd. District and Sessions Judge and Sri

· K. Asokan, Retd. Director of Public Relations. The said Committee, after a G

public notification, received evidence and gave opportunity of hearing to

various individuals, communities etc. and submitted its report dated 4.8.97 to

this Court identifying the "creamy layer" in the Backward Classes of Kerala

State. Thereafter, objections were filed in this Court by various parties to the

said report and that

is how the matter has come before us.

H

238 SUPREME COURT REPORTS [1999] SUPP. 5 S.C.R.

A We do not propose just now to decide the further course of action in

B

the suo motu contempt proceedings in which the State of Kerala represented

by its Chief Secretary was held guilty

of contempt and was given time to

purge the contempt.

We make it clear that that issue is kept pending and

matter

will be processed later, on the basis of the judgment in this case and

the directions which we propose to issue at the end

of this judgment.

We have heard arguments of

Sri Gopal Subramaniam, learned senior

counsel as

Amicus Curiae and of

Sri K.K. Venugopal, learned senior counsel

who contended that the Kerala Act 16/95 was unconstitutional a11d violative

of Articles 14, 16(1) and 16(4). We heard Sri P.Krishna Moorthi, learned senior

counsel for the State of Kerala and Sri Rajeev Dhawan, learned senior counsel

C for the SNDP Yoghm, Sri A.N. Rajan Babu, Sri EMS Anam, Ms. Lilly Thomas

and Sri V.J. Francis and others who contended that the Act was a valid piece

of legislation. Sri K.N. Raval, Additional Solicitor General stated that the

Central Government stood by the O.M. already issued.

D

E

F

G

H

The issues which presently arise before this Court are, as follows:

(I) What is the law declared and what are the directions given in

•

Indira Sawhney in regard to "creamy layer" in the context of Articles

14 and 16?

(2) Can the declaration of law in regard to "creamy layer" in the

context

of Articles 14 and 16 in Indira Sawhney and in other rulings

be undone by the Kerala Legislature by a retrospective validating law

containing a statutory declaration whose effect

is to say that no

"creamy layer" exists in the State of Kerala ?

(3) Are the provisions

of sections 3, 4 and 6 of the Kerala

State

Backward Classes ( Reservation of Appointments or Posts in the

Services) Act ( Act No.16/95) violative

of Articles 14 and 16 of the

Constitution

of India ?

(4) Whether the violation

of Article 14(and Article 16) amounts to

violation

of the basic structure of the Constitution of India?

(5)

If the provisions of sections 3, 4 and 6 of the Kerala Act 16/95 are

to be struck down,

is the Report of High Level Committee headed by

Justice K.J. Joseph to be accepted and are there any valid objections

to the report ?

( 6)

If sections 3, 4 and 6 of the Kerala Act 16/95 are to be struck down

and the High Level Committee Report

of Justice K.J. Joseph is accepted,

what further directions are to be issued to the

State of Kerala ?

--

INDIRA SA WHNEY v. U.0.1. [M. JAGANNADHA RAO, J.] 239

POINT/:

Our Constitution is wedded to the concept of equality and equality is

a basic feature. Under Article 15(2), there is a prohibition that State shall not

discriminate against any citizen on the grounds only

of religion, race, caste,

A

sex and place of birth or any of them. It is equally true that ours is a caste­

ridden society. Still, it

is a constitutional mandate not to discriminate on the B

basis of caste alone.

Provisions can be made for the upliftment of socially and

educationally backward classes, scheduled castes or scheduled tribes or for

women and children. Article 16(4) empowers the States for making any provision

for reservation

in appointments or posts in favour of any backward class of

citizens which, in the opinion of the State, is not adequately represented in

the services under the State. Reservation is permissible (i) in favour of any C

backward class of citizens; and (ii) if it is not adequately represented in

services under the State.

Caste only cannot be the basis for reservation. Reservation can be for

a backward class citizen

of a particular caste. Therefore,from that caste,

creamy layer and non-backward class

of citizens are to be excluded. If the D

caste is to be taken into consideration then for finding out socially and

economically backward class, creamy layer

of the caste is to be eliminated for

granting benefit

of reservation, because that creamy layer cannot be termed

as socially and economically backward. These questions are exhaustively

dealt with

by a nine Judge Bench of this Court in Indira

Sawhney v. Union

of India, [ 1992] Suppl. 3 sec 217, and it has been spedally held that 'only E

caste' cannot be the basis for reservation.

Inclusion

of castes in the list of Backward classes cannot be mechanical

and cannot

be done without adequate relevant data. Nor can it be done for

extraneous reasons. Care should be taken that the forward castes do not get

included

in the backward castes list. In Indira Sawhney,

Pandian, J. observed F

(para 174 SCC) that before a conclusion is drawn that a caste is backward or

is inadequately represented in the services, "the existence of circumstances

relevant to the formation

of opinions is a sine qua non. If the opinion suffers

from the vice

of non-application of mind or formulation of collateral grounds

or beyond the scope

of the statute, or irrelevant and extraneous material, then G

the opinion is

challengeable". Sawant, J. (see para 539 of SCC) too pointed

out the need for proper application

of mind to the facts and circumstances,

the field, the post and the extent

of existing representation and the need to

balance representation.

On behalf of himself and three others, Jeevan Reddy

J. pointed out (para 798 SCC) that opinion in regard to backwardness and

inadequate representation must be based on relevant material. The scope

of H

240 SUPREME COURT REPORTS (1999] SUPP. S S.C.R.

A judicial scrutiny even with regard to matters relating to subjective satisfaction

are governed by the principles stated

in Barium Chemicals v. Company Law

Board, [

1966]

Supple. SCR 311. Likewise, periodic examination of a Backward

class could lead to its exclusion

if it ceases to be socially backward or if it

is adequately represented in the services. Once backward, always backward

is not acceptable.

In any case, the 'creamy layer' has no place in the reservation

B system.

If forward classes are mechanically included in the list of backward

classes

or if the creamy layer among backward classes is not excluded, then

the benefits

of reservation will not reach the really backward among the

backward classes. Most

of the benefits will then be knocked away by the

C forward castes and the creamy layer. That will

leave the truly backward,

backward for ever. Jeevan Reddy,

J. while delivering the majority judgment,

interalia, held as under:

"If the real object is to discover and locate backwardness, and if such

backwardness is found in a caste, it can be treated as backward;

if it

D is found in any other group, section or class, they too can be treated

as backward.

(See Page 717 para 783 ). Reservation is not being made

under clause (4) in favour

of a 'caste' but a backward class. Once a

caste satisfies the criteria

of backwardness, it

b(';comes a backward

class for the purposes

of Article

16(4)." [See Page 718 Para 784].

E In paragraph 796, Jeevan Reddy, J. has summarised the discussion

F

G

H

under Question No.3 and, inter alia, as under:

"A caste can be and quite often is a social class in India. If it is

backward socially, it would be a backward class for the purposes

of

Article 16(4).

Identification

of the backward classes can certainly be done witli

reference to castes among, and alongwith, other groups, classes and

sections

of people.

One can start process with the castes, wherever

they are found, apply the criteria (evolved for determining

backwardness) and find out whether it satisfies the criteria. If it does

-what emerges is a "backward class of citizens" within the meaning

of and for the purposes of Article 16(4). Similar process can be

adopted in the case

of other occupational groups, communities and

classes, so as to cover the entire populace. The central idea and

overall objective should be to consider all available groups, sections

and classes in society.

Since caste represents an existing, identifiable

social group class encompassing an overwhelming majority

of the

...

INDIRA SAWHNEY v. U.0.1. [M. JAGANNADHA RAO, J.] 241

country's population, one can well begin with it and then go to other A

groups, sections and classes."

Court further considered in Paragraph 800 and held as under:

" ..... while answering Question 3(b), we said that identification of

backward classes can be done with reference to castes along with B

other occupational groups, communities and classes. We did not say

that that

is the only permissible method. Indeed, there may be some

groups

or classes in whose case caste may not be relevant to all. For

example, agricultural labourers, rickshaw-pullers/drivers, street-hawkers

etc. may well qualify for being designated as Backward

Classes."

We shall next proceed to the question relating to 'creamy layer'.

c

In Indira Sawhney, on the question of exclusion of· creamy layer' from

the Backward Classes, there was agreement among eight out

of the nine

learned Judges

of this Court. There were five separate Judgments in this

behalf which required the

"creamy layer" to be identified and excluded. D

The judgment of Jeevan Reddy, J. was rendered for himself and on

behalf

of three other learned Judges, Kania, CJ and M.N. Venkatachaliah,

A.M. Ahmadi, JJ. (as they then were). The said judgment laid emphasis on

the relevance

of caste and also stated that upon a member of the backward

class reaching an

"advanced social level or status", he would no longer E

belong to the backward class and would have to be weeded out. Similar views

were expressed by Sawant, Thommen, Kuldip Singh, and Sahai, JJ.

in their

separate judgments.

It will be necessary to refer

to and summarise briefly the principles laid F

down in these five separate judgments for that would provide the basis for

decision on points 2 to

5.

While considering the concept of'means-test' or 'creamy layer', which

signifies imposition

of an income limit, for the purpose of excluding the

persons (from the backward class) whose income is above the said limit,

in G

paragraph 791, the Court has noted that counsel for the States ofBihar, Tamil

Nadu, Kerala and other counsel for respondents strongly opposed any such

distinction and submitted that once a class is identified as a backward class

after applying the relevant criteria including the economic one, it

is not

pennissible to apply the economic criteria once again and sub-divide a backward

class into two sub-categories. The Court negatived the said contention by

H

242 SUPREME COURT REPORTS (1999] SUPP. 5 S.C.R.

A holding that exclusion of such (creamy layer) socially advanced members will

make the 'class' a truly backward class and would more appropriately serve

the purpose and object

of clause (4).

Jeevan Reddy,

J. dealt with the 'creamy layer' under question 3(d)

(paras

790, 792, 793 of SCC) and under question 10 (paras 843, 844). This is

B what the learned Judge declared: There are sections among the backward

classes who are

highly advanced, socially and educationally and they

constitute the forward section

of that community. These advanced sections

do not belong to the true backward class. They are

"as forward as any other

forward class member" (para 790). "If some of the members are far too advanced

C 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" (para 792). The learned Judge

said:

"After excluding them alone, would the class be a compact class. In

D fact, such exclusion benefits the truly backward"

A line has to be drawn, said the learned Judge, between the forward

in the backward and the rest of the backward but it is to be ensured that what

is given with one hand is not taken away by the other. The basis of exclusion

of the "creamy layer" must not be merely economic, unless economic

E advancement is so high that it necessarily means social advancement, such

as where a member becomes owner of a factory and is himself able to give

employment to others. In such a case, his income

is a measure of his social

status. In the case

of agriculturists, the line is to be drawn with reference to

the agricultural land holding. While fixing income as a measure, the limit

is

not to be such as to result in taking away with one hand what is given with

F the other. The income limit must be such as to mean and signify social

advancement. There are again some offices

in various walks of life -the

occupants

of which can be treated as socially advanced,

"without further

inquiry", such as IAS and IPS officers or others in All India Services. In the

case

of these persons, their social status in society rises quite high and the

G person is no longer socially disadvantaged. Their children get full opportunity

to realise their potential. They are

in no way handicapped in the race of life.

Their income is also such that they are above want. It

is but logical that

,

children of such persons are not given the benefits of reservation. If the

categories

or sections above mentioned are not excluded, the truly

disadvantaged members

of the backward class to which they belong will be

H deprived of the benefits of reservation. The Central Government is, therefore,

I

I

'

._

INDIRA SA WHNEY v. U.0.!. [M. JAGANNADHA RAO, J.] 243

directed (para 793) to identify and notify the "creamy layer" within four A

months and after such notification, ·the 'creamy layer' within the backward

class shall "cease" to be covered by the reservations under Article 16(4).

Jeevan Reddy,

J. finally directed (see question I

0) that the exclusion of the

creamy layer must be on the basis

of social advancement and not on the basis

of economic interest alone. Income or the extent of property holding of a B

person is to be taken as a measure of social advancement -and on that basis

-the 'creamy layer' within a given caste, community

or occupational group

is to be excluded to arrive at the true backward class. There is to be constituted

a body which can go into these questions (para 847) as follows:

"We direct that such a body be constituted both at Central level and C

at the level of the State within four months from today ........ There

should be a periodic revision

of these lists to exclude those who have

ceased to be backward

or for inclusion of new classes, as the case

may

be."

The creamy layer (see para 859, sub para 3_(d)) can be, and must be excluded. D

Creamy layer has to be excluded and 'economic criteria' are to be adopted as

an indicium or measure

of social advancement.

(Para 860, sub para 5). The

socially advanced persons must

be excluded. (para 861 (b)). That is how

Jeevan Reddy,

J. summarised the position.

Sawant,

J. too accepted (para 553 of SCC) that

"atleast some individuals E

and families in the backward classes,-however small in number -gain sufficient

means to develop "capacities to compete" with others in every field. That is

an undeniable fact. Social advancement is to be judged by the 'capacity to

compete' with forward castes, achieved by the members or sections

of the

backward classes. Legally, therefore, these persons or sections who reached

F

that level are not entitled any longer to be called as part of the backward class

whatever their original birthmark. Taking out these

"forwards" from the

"backwards" is 'obligatory' as these persons have crossed the Rubicon (para

553-554). On the crucial question as to what is meant by "capacity to compete",

the learned Judge explained (para 522) that if a person moves from Class IV

service to Class III, that is no indication that he has reached such a stage G

of social advancement but if the person has successfully competed for "higher

level posts" or atleast "near those levels", he has reached such a state.

Thomrnen,

J. (paras 287, 295, 296, 323) observed that if some members

in a backward class acquire the necessary financial strength to raise

themselves, the Constitution does not extend to them the protection

of H

244 SUPREME COURT REPORTS [1999] SUPP. 5 S.C.R.

A reservation. The creamy layer has to be "weeded out" and excluded, if it has ·

attained a "certain pre-determined e.conomic level".

Kuldip Singh, J. (para 385) referred to the "affluent" section of the

backward class. Comparatively "such persons" in the backward class -though

they may not have acquired a higher level

of education -are able to move

B in the society without being discriminated

socially". These persons practice

'discrimination against others

in that group who are comparatively less rich.

It must be ensured that these persons do not

"chew up" the benefits meant

for the true backward cfass. "Economic ceiling" is to be fixed to cut off these

persons from the benefits

of reservation. In the result, the

"means test" is

C imperative to skim off the "affluent" sections of backward classes.

Sahai, J. (para 629) observed that the individuals among the collectivity

or the group who may have achieved a "social status" or "economic affluence",

are disentitled to claim reservation. Candidates who apply for selection must

be made to disclose the annual income

of their parents which if it is beyond

D a level, they cannot be allowed to claim to be part of the backward class.

E

What is to be the limit must be decided by the

State. Income apart, provision

is to be made that wards

of those backward classes of persons who have

achieved a particular

status in society be it political or economic or if their

parents are

in higher services then such individuals must be precluded from

availing the benefits of reservation. Exclusion of

"creamy layer" achieves a

social purpose. Any legislative or executive action to remove such persons

individually or collectively cannot be constitutionally invalid.

As appears from the judgments of six out of the eight Judges, viz.

Jeevan Reddy

(for himself and three others),

Sawant and Sahai JJ.-(i.e. six

F 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 advapcement 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

G 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 land holdings 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.

H The submission of Sri Rajeev Dhawan for the S.N.D.P. Yogam that the

INDIRA SAWHNEY v. U.0.1. (M. JAGANNADHA RAO, J.) 245

above separate judgments contain mere illustrations and do not contain any A

declaration of law cannot, in our opinion, be accepted. Counsel also relied

upon observations

in the judgment of Jeevan Reddy, J. to the effect that in

such a big country as ours, norms may differ from State to State or from

region

to. region. In our view, those observations do not detract from the

declaration

of law that the above sections belong to the creamy layer and B

hence are to be kept outside the backward class. We may add that some more

categories

of persons who can be said to have gone outside the creamy layer

are those

"broad categories" enumerated in the notification of the Central

Government dated 8.9.93 pursuant to

Indira Sawhney and the said broad

categQrisation has been accepted by this Court

in Ashok Kumar Thakur v.

State of Bihar and Ors., [1995] 5 SCC

403 as valid. With respect, we are in C

entire agreement with the principles laid down in Ashok Kumar Thakur.

We may point out that the identification of creamy layer in every

backward class

is in fact based upon horizontal division of every section of

the backward class into creamy layer or non-creamy layer. For example, ifthere

are a dozen named backward classes and each have particular percentage

of D

quota in the reservation, they can be arranged in a vertical distribution one

after the other (see para 812

of Indira Sawhney referring to vertical and

horizontal divisions), and the separate and the aggregate quota meant for

them can be spelled out. But

in each of these named backward classes listed

one below the other, it

is not difficult to make horizontal divisions of those E

belonging to (i) constitutional offices (ii) particular services, (iii) professions

(iv) industry and trade (v) particular income level and (vi) particular holding

of property etc. to segregate the creamy and non-creamy layers in each

vertical sub-classification

of backward class and say that the children of such

persons

in these horizontal sub-divisions of the backward classes will be

creamy layer and therefore outside the backward classes. This

is not a difficult F

exercise. It is also important to notice that such a horizontal division based

on such norms will be applicable not only to those

in the Backward Classes

presently falling under the norm but the norms or limits

so set would also be

applicable to those reaching that level in the future. May be,

as stated in the

notification

of the Central

Governn_ient dated 8.9.93 issued pursuant to Indira G

Sawhney, the income levels may have to be reasonably upgraded periodically

to set off inflation. Subject to such a reasonable revision in the norms, if any,

periodically, the norms whether laid down by the Central Government or the

State Governments must apply not only for the immediate present but also

for the future. This,

in our view, was the declaration of law made in Indira

Sawhney

and in Ashok Kumar Thakur in relation to identification and exclusion H

246 SUPREME COURT REPORTS [1999) SUPP. 5 S.C.R.

A of creamy layer.

B

So far as the directions in Indira Sawhney are concerned, they are that

the Central and State Governments are obliged to create separate bodies

which will identify the creamy layer

in the backward classes within a time

frame. Point l

is decided accordingly. POINT 2 and 3:

These two points are crucial to the case. Under these points, we shall

now deal with the validity

of the Kerala Act (Act 16/95).

C (i) Equals and unequals, twin aspects:

As the 'creamy layer' in the backward class is to be treated

"on par"

with the forward classes and is not entitled to benefits of reservation, it is

obvious that ifthe 'creamy layer'

is not excluded, there will be discrimination

and violation

of Articles 14 and 16(1) inasmuch as equals (forwards and

D creamy layer of backward classes) cannot be treated unequally. Again,

non­

exclusion of creamy layer will also be violative of Articles 14, 16(1) and 16(4)

of the Constitution of India since unequals (the creamy layer) cannot be

treated

as equals that is to say, equal to the rest of the backward class. These

twin aspects

of discrimination are specifically elucidated in the judgment of

E

Sawant J, where the learned Judge stated as follows: (para 520)

F

" ........ to continue to confer upon-such advanced sections .... special

benefits, would amount to treating equals unequally .... Secondly, to

rank them with the rest

of the backward classes would ... amount to

treating unequals

equally".

Thus, any executive or legislative action refusing to exclude the creamy layer

from the benefits

of reservation will be violative of Articles 14 and 16( l) and

also

of Article 16(4). We shall examine the validity of sections 3, 4 and 6 in

the light of the above principle.

G (ii)

Validation:

The question of validation arises in the context of Section 6 of the Act.

It is true that whenever legislative or executive action is declared as being

violative

of the provisions of

Part III of the Constitution, it will be permissible

for the Executive or Legislature to remove the defect which is the cause for

H discrimination prospectively and which defect has been pointed out by the

INDIRA SAWHNEY v. U.0.1. (M. JAGANNADHA RAO, J.] 247

Court. The defect can be removed retrospectively too by legislative action A

and the previous actions can also be validated. But where there is a mere

validation with retrospective effect, without the defect being legislatively

removed with retrospective effect, the legislative action will amount to

overruling the judgment

of the courts by way of legislative fiat and will be

invalid as being contrary to the doctrine

of separation of powers.

In the context

of the law laid down in Indira Sawhney and in Ashok

Kumar Thakur

if the legislature of any State does not take steps to remove

B

the defect or to effectively and realistically remove the defect to exclude the

'creamy layer' from the backward classes then the benefits

of reservations

which are invalidly continued

in favour of the 'creamy layer' cannot be C

declared retrospectively valid merely by a legislative declaration that such

creamy layer

is absent as done by section 3 of the Kerala Act. Nor can it be

done by means

of the validating provision contained in section 6 of that Act.

The creamy layer principle laid down in Indira Sawhney, cannot be ignored

as done by Section 6

of the said Act. We shall elaborate these aspects later.

If under the guise of elimination of the 'creamy layer', the legislature makes D

a law which is not indeed a true elimination but is se.en by the Court to be

a mere cloak, then the Court will necessarily strike down such a law as

violative

of principle of separation of powers and of Articles 14, 16(1) and

Article 16(4).

(iii} Ashok Kumar Thakur-a case of unrealistic elimination but Central

Government's O.M dated 8.9.93 approved:

Such a case of unrealistic elimination of creamy layer came up before

E

this Court from Bihar and Uttar Pradesh and we shall refer to the same. This

happened

in Ashok Kumar Thakur v. State of Bihar and

Ors., (1995] 5 SCC p

403, already referred to. There the position was that unrealistically high levels

of income or holding or other conditions were prescribed by the Legislatures

of Bihar and Uttar Pradesh under the Bihar Reservation of vacancies in Posts

and Services (Amendment) Ordinance, 1995 ( 5 of 1995) and Schedule II read

with Section 3(b)

of the

U.P. Public Services Reservation for Schedules Castes

and Scheduled Tribes and other Backward Classes Act, 1994 ( Act 4

of 1994) G

respectively. In that case, so far as Bihar was concerned, Schedule III (except

clause I),

of the Bihar Ordinance and so far as

UP was concerned, Schedule

II read with Section 3(b) of the U.P. Act were therefore quashed by this Court,

.

on the ground of discrimination.

While dealing with these Acts, this Court referred to the fact that H

248 SUPREME COURT REPORTS [1999] SUPP. 5 S.C.R.

A pursuant to Indira Sawhney the Government of India had appointed a

Commission presided over by a retired Judge

of the High Court of

Patna and

on the basis

of the Report of the Commission, it had issued an office

Memorandum dated 8.9.93 designating (A) Children

of holders of

Constitutional posts like (a) President of India (b)

Vice President oflndia, (c)

Judges

of the Supreme Court and High Courts, (d) Chairman and Members

B of

UPSC and State Public Service Commission, Chief Election Commissioner,

Comptroller and Auditor-General

oflndia, (e)

Persons holding constitutional

positions

of like nature, (B) Service category: children of (a) parents, Group

A/Class I officers

of All India Central Services and State Services ( direct

recruits) where both or one

of the parents are Class I officers, subject to

C certain conditions; children of Group B/Class II officers of the Central and

State Services ( direct recruitment), subject

to certain conditions; children of

employees of

Public Sector Undertakings, Banks, Insurance Organisations,

Universities etc., and in comparable posts and positions under private

employment; children

of members of Armed Forces and Para-Military Forces;

•

(C) Professional Category: children of those in professional class or those

D engaged in Trade and Industry beyond a particular income limit; (D) Property

owners

(agricultural holdings), Plantations,

Vacant land or buildings in Urban

areas or urban agglomerations holding property beyond a particular extent -

as being outside the Backward Classes. In respect of the above, Para VI of

the Schedule to the O.M. dated 8.9.93 gave the gross annual income limits

E of rupees l lakh and above, subject to upward modification of the limits every

3 years etc. Various other conditions were also imposed. Care was taken by

the O.M to see that none from the creamy layer could escape the net of

exclusion from the Backward Classes. This Court, in Ashok Kumar Thakur

after referring to the above guidelines, observed that the criteria fixed in the

O.M. were "in conformity with the law laid down by this Court in Manda/

F case" and that the Court had no hesitation in approving the said criteria as

being reasonable. In the light of the criteria so approved, this Court considered

the validity

of the Biharand

U.P. Legislations and held that the unreasonably

high limits or other norms fixed by the Bihar and U.P. Legislatures were

"contrary to the guidelines laid down by this Court in Man .. dal Case" as they

G would not result in the elimination of the creamy layer. It was pointed out that

the conditions laid down by the States ofBihar and U.P:had no "nexus" with

the object sought to be achieved. Since the conditions were not severable,

the criteria laid down

in each of the legislations as a whole were struck down.

The Court held: ( see para 17)

H

"The Backward class under Article 16(4) means the class which

INDIRA SAWHNEY v. U.0.1. [M. JAGANNADHA RAO, J.) 249

has no element

of 'creamy layer' in it.

It is mandatory under Article A ·

16(4) -as interpreted by this Court -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."

The Court observed that the States

of Bihar and

Uttar Pradesh had acted in B

a wholly arbitrary· fashion and in utter violation of the law laid down in.

Manda/ case. However, the principle of prospective overruling was invoked.

The States were directed to lay down fresh criteria and till then it was

directed that the criteria laid down in the Central Government's O.M. dated

8.9.93 were to apply in Bihar and Uttar Pradesh. We are in entire agreement C.

with the views expressed in Ashok Kumar Thakur.

(iv) The Validity of the Kera/a Act:

We shall now take up the question as to the validity of the law enacted

by the Kerala Legislature. It will be seen that the Kerala Legislature followed D

a somewhat different route to allow the creamy layer to continue to unlawfully

enjoy the benefits

of reservation meant for backward classes. We shall refer

initially to the provisions contained in the six sections

of the Kerala Act 16/

95.

"(I) Short title, extent and commencemenl-

(i) This Act may be called the Kerala State Backward Classes

(Reservation

of Appointments or Posts in the Service

Under the

State) Act, 1995.

(u) It extends to the

whole of the State of Kerala.

• (w) Section 5 of this Act shall be deemed to have come into force

·.on the 12th day of March, 1993 and the remaining provisions of

. __ , this Act shall be deemed to have come into force on the 2nd day

of October, 1992.

E

F

(2) Definitions:-ln this Act, unless the context otherwise requires, - G

(a) Commission means the Kerala State Commission for Baclcward

Classes constituted under Section 3 of the Kerala State

Commission for Backward Classes Act, 1993 (11of1993).

•

(b) Backward Classes means such Backward Classes of citizens H .

150

A

B'

SUPREME COURT·REPORTS (1999] SUPP. S S.C.R.

(other than Scheduled castes.and Scheduled tribes), as specified

' . .

by the. Government from time to time, and included in List III of.

the. Schedule to Part I 'of the Kerala State and Subordinate

·' Services Rules, 1958 frariied under Article 309 of the Constitution ..

(c) ·· Government's means the Government of Kerala.

(d) 'State' means the State

of Kerala.

(3)

Decldration:-11 is hereby declared, having regard to known facts

iri existence in the State-

(a) thatthere are no socially advanced sections in any Backward

C Classes who have acquired capacity to compete with forward

classes; and

(b)

~at the Backward Classes in the State are. still not adequately

represented

in the services

under the State· and they continue

to be entitled to reservation under clause ( 4)

of Article 16 of the

D . Constitution.

E

I

(4} Reservatio~ _of appoin_tments or posts in the services under the

State: ·

, .

Notwithstanding anything contained in. any law or in any judgment,

decree or order

of any court or other authority having regard to the

social and educational

backw'ardness of the Backward Classes of.

citizens, the system of reservations as· in force on the date of . . .

commencement of this Act, as laid down in rules 14 to I 7 of Part II

of the Kerala State· and Subordinate Services Rules, 1958, in

appointments and posts in the services under the State for the

. ,F Backward Classes of ciiizens shall continue as such, for the present.

_ . (5)Additionalfunction of the Commission: The Commission shall, in

" · ad.dition to the ·functions already conferred unde~·the. Kerala State

Commission for Backward Classes Act, 1993 ( 11of1993) evaluate

---from time to time the degree of backwardness of the Backward Classes,

G / and shall submit periodical reports t6 the Legislative Assembly of the

H

State.·

· (6) Validation-Notwithslal1ding anything contained in any judgment,

decree or order

of any court or other authority the reservation of

appointments or posts in

the services under the State for the Backward

· Classes of citizens made, on the basis of the system of reservation as

•

..

INDIRA SAWHNEY v. U.0.1. [M. JAGANNADHA RAO, J.] 251

laid down in rules 14 to 17 of Part II of the Kerala State and Subordinate A

Services Rules, 1958, shall, for all purpose, be deemed to be and to

have always been validly made, in accordance with law, as if this Act

had been force at all material times when such reservations had been

made" .

(v) Events leading to the passing of the Kera/a Act of 1995:

B

It will be useful to note the background of events which led to the

passing

of the above Act. (Some of these events are set out in the long Preamble to the Act) On account of the inaction of the State of Kerala -in

spite of extensions of time in implementing Indira Sawhney -in appoiriting C

a Commission to identify the creamy layer, this Court felt "vexed" and issued

contempt notice on 20.3.95. Pursuant to that notice on 10.7.95, the State of

Kerala filed an affidavit stating that it had already passed the Kerala Act l l/

93 on 17.4.93 appointing a Commission which could go into this issue but that

the said Commission stated that it had no jurisdiction to go into the question

of 'creamy layer' as per the provisions in that Act of 1993. The affidavit then D

stated that the matter was referred again to the Commission on 13.10.93, a

meeting took place on I 0.5.94, that the Commission again refused to identify

the creamy layer, that a Bill was then contemplated to amend Kerala Act 11/

93 to confer powers on the said Commission to go into this issue as well, that

in the meantime, the State constituted the Justice Khalid Committee on 8.7.95. E

In our opinion, these events were set out in the above affidavit filed by

the Chief Secretary only to ward

off any penal action for contempt of this

Court. The above explanation was naturally found to be wholly unsatisfactory

and this Court held,

in its order dated

10.7.95, that the State of Kerala

represented by its Chief Secretary had acted

in

"wilful disobedience" of the F

orders of this Court and that it had committed contempt of Court. This Court

granted time till 11.9.95 to the State

of Kerala to purge itself of the contempt.

It appears that there was then a Cabinet meeting on 13.7.95, that thereafter

it was decided on 14.7.95 that a Standing Committee should go into the

question but that instead, it was suddenly decided on 27.7.95 that the

"existing G

system be continued'. Then Act 16/95 was passed on 31.8.95 to give effect

to that decision. The Act received the assent

of the Governor on 2.9.95 and

became effective retrospectively from

2.10.1992, thus allowing existing

reservations to continue with full

force. In effect no creamy layer was identified.

As per sub-clause (a) of Section 3 of the Act it was declared that in view of "known facts", the Legislature was of the view that "no section of any H

252 SUPREME COURT REPORTS [1999] SUPP. 5 S.C.R.

A backward class in the State of Kerala who had acquired capacity "to compete

with forward classes". As per clause (b), it was stated that Backward Classes

were not still adequately represented

in the public services of the

State.

Section 4, therefore, continued the 1958 scenario of Backward Classes without

excluding the creamy layer and section 6 spoke

of retrospective validation.

B (vi) Legislative declaration of facts is amenable to scrutiny by Court:

c

Before we go into the validity of sub-clause (a) and (b) of section 3, it

is necessary to find out if the legislative declaration of

"known facts" in

section 3

of the Act is amenable to judicial scrutiny.

It is now fairly well settled, that legislative declarations

of facts are not

beyond judicial scrutiny

in the Constitutional context of Articles 14 and 16.

In

Keshavananda Bharativ. State of Kera/a, (1973] 4

SCC 225, the question

arose -in the context

of legislative declarations made for purposes of Article

31-C -whether the court was precluded from lifting the veil, examining the

D facts and holding such legislative declarations as invalid. The said issue was

·

dealt with in various judgments in that case, e.g., Judgments of Ray, J. ( as

he then was), Palekar, Khanna, Mathew, Dwivedi, JJ, and Beg, J.

and

Chandrachud, J. (as they then were) (see summary at pp.

304-L to 0 in SCC).

The learned Judges held that the Courts could lift the veil and examine the

position in spite

of a legislative declaration. Ray, J. (as he then was) observed:

E "The Court can tear the veil to decide the real nature of the statute

ifthe facts and circumstances warrant such a course" ..... "a conclusive

declaration would not be permissible so

as to defeat a fundamental right".

F Palekar, J. said that ifthe legislation was merely a pretence and the object was

discrimination, the validity

of the statute could be examined by the Court

notwithstanding the declaration made by the Legislature and the learned

Judge referred to

Charles Russell v. The Queen, (1882) 7 AC 829 and to

Attorney General v. Queen Inswane Co., (1878) 3 AC

1090 Khanna, J. held

G that the declaration could not preclude judicial scrutiny. Mathew, J. held that

declarations were r.menable to judicial scrutiny. If the law was passed only

'ostensibly' but was in truth and substance, one for accomplishing an

unauthorised object, the Court, it was held, would be entitled to tear the veil.

Beg,

J. (as he then was) held that the declaration by the legislature would not

preclude a judicial examination. Dwivedi, J. said that the Courts retain the

H power in spite of Article 31-C to determine the correctness of the declaration.

•'

-

INDIRA SAWHNEY v. U.0.1. [M. JAGANNADHA RAO, J.) 253

Chandrachud, J. (as he then was) held that the declaration could not be

A

utilised as

a cloak to evade the law and the declaration would not preclude

the jurisdiction

of the Courts to examine the facts.

This being the legal position, this Court could certainly examine whether

the so called

"known facts" referred to in section 3 were indeed non-existent.

(vii) Sub-clause (a) of Section 3: Did the Kera/a Legislature have any

facts before it to say in effect that there was no creamy layer?

B

Sub-clause (a) of section 3 states that according to

"known facts" the

backward classes in the State were not having the capacity to compete with'

forward classes i.e., in effect, there is no creamy layer in the Kerala State.

C

'

But Aldous Huxley said:

'

"Facts do not cease to exist because they are ignored"

(A Note on Dogmas)

, D

!

The words in sub-clause (a) of section 3 are obviously drawn from the

judgment

of Sawant, J. in Indira

Sawhney which refers io "capacity to

compete with forward classes".

We shall, there.fore, have to examine whether. the legislative declaration

in section 3 of the Act that there is, in effect, no creamy layer in the State E

of Kerala is one made by ignoring facts which do exist. We shall now refer

to V3!ious facts and circumstances as they exist to disprove the. statement

made in section 3 of the Act: ·

(a) The Kerala State initially requested this Court for extension of F.

time to appoint a Commission to identify the creamy layer. It, in fact,

c~eated a statutory Commission by Kerala Act 11 of 1993 arid asked

·. the said Commission constituted under that Act to go into the above

question. The Commission,' it is true, refused to go into this question

stating that it had

no jurisdictiop to go into the said question _under

that Act. G

(b) Again, even as late as 8.7.95, the State ofKerala did feel the need

to identify the 'creamy layer' and it appointed

J.ustice Khalid Committee.

But within three weeks. suddenly on 27.7.95, there

.was a volte face

and it was decided "to continue the existing system" of reservations

4

with full force without excluding the creamy layer. It is obvious and H

254 SUPREME COURT REPORTS (1999] SUPP. 5 S.C.R.

A is not denied that between 8.7.95 and 27.7.95, the State gathered no

fresh material to compel the State to abandon the idea and to suddenly

tum around and declare that there was,

in effect, no 'creamy layer' in

the

State of Kerala.

(c) Further, in the affidavit dated 16.7.1995 filed by the Chief Secretary

B of Kerala in this Court - a few days before the Act was passed on

31.8.1995 -it was more

or

less admitted that there was a "creamy

layer" among the backward classes in the State of Kerala. The following

paragraph from that affidavit

is significant:

"Reservation in appointments for the public service for socially and

c e9ucationally backward classes has been in operation in this State for

the last about 40 years, and all members of the other Backward

Classes, irrespective

of the fact whether individuals among them are

socially advanced or not,

are enjoying the

benefit."

The underlined words, in our view, contain an adm!ssion as to the existence

D of a creamy layer, to the knowledge of the State Government.

(d) In addition, the doubts,

if any, in this behalf are set at rest by the

findings contained

in the Report of the High

Level Committee headed

by Justice K.J. Joseph (to which we shall refer

in detail under points

E

4 and 5). That Report shows that there is a creamy layer in the

Backward Classes

of the

State of Kerala and it is not difficult to

identify the same.

(e) We may again point out that, as a matter

of

law, it is clear that six

out

of nine Judges in Indira Sawhney made a judicial declaration as

F

stated under Point I, as to the class of persons who

would belong

to the creamy layer. This declaration

of

law made by this Court is

clearly applicable to the State of Kerala also. The Kerala Legislature

cannot, in our opinion, refuse to accept this declaration

of

law nor can

it declare anything to the contrary.

G

In the judgment of six learned Judges in Indira Sawhney, as stated

earlier, there is a specific declaration

of

law that the children of IAS, JPS and

other All India Services

in the Backward Classes are creamy

layer and this

is true "without further inquiry". These persons are to be deemed, in law and,

in fact, to have reached such a level of social advancement that they cease

to belong to the backward class. The judgment also refers to a classification

H of "affluent" sections identified by way of income or property holding.

•·

..

..-

INDIRA SA WHNEY v. U.O.L [M. JAGANNADHA RAO, J.] 255

(f) Further, in Ashok Kumar Thakur it was held as a matter of law that A

certain broad categories mentioned in the O.M. of the Central Govt.

dated 8.9.93 belong to the creamy layer. There was no answer

from the

State

of Keraia as to

why the same categories as mentioned in Indira

Sawhney

or those mentioned in the

O.M., as approved in Ashok

Kumar Thakur

could not be declared as creamy layer, subject to any

realistic modification

of the income or holding levels, ifneed be. It was B

not the case of the

State before us that these categories, which form

the vertical divisions of the backward classes, (as pointed out under

point I) were non-existent so far as Kerala State was concerned. It

was not also its case that such a class of persons would not be

existent

in future in the Backward Classes of the State. C

If the Kerala Government and the Kerala Legislature meant in their

declaration

in sub-clause (a) of section 3 that there was, in effect, no 'creamy

layer' in the State

of Kerala, among the notified Backward classes, then they

must go to the length

of stating that there was none who had so far been

recruited to the aforementioned services

of

IAS, IPS etc., or none had come D

within broad categories listed in the Central Government's O.M. dated 8.9.93

(i.e., constitutional functionaries, service personnel, professions, men in

business and industry or holding agriculture or urban land

of those levels or

near about),

in the Kerala State. In fact when this question was specifically

put across to the learned senior counsel for the State and to learned senior

E

counsel for the

SNDP Yogam and others, there was no answer and they could

not deny the existence

of the above horizontal divisions among the backward

classes in Kerala.

(g) Further, the broad categories and norms

(of parents belonging to

the All India Services etc., or reaching a level

of income or holding), F

referred to above, are valid not merely for the present but for the

future also. As and when, any particular member of the Backward

Classes gets entry to

IAS or IPS etc., or reaches the prescribed

reasonable level

of income of holding, their children will have to be

treated as

belongin_g to creamy layer. ·May be, certain income levels

have to be periodically upgraded to keep pace with inflation.

G

Surely, the Kerala Legislature cannot prophesy that none from the

Backward Classes in the State will ever enter these services or reach these

economic levels,

in the near or distant future.

It appears to us, therefore, from what we have stated above in sub paras H

256 SUPREME COURT REPORTS [1999) SUPP. 5 S.C.R.

A (a) to (g) that the Kerala Act had shut its eyes to realities and facts and it

came forward with a declaration in sub-clause (a) of Section 3 which, perhaps,

it was mistakenly believed was not amenable to judicial scrutiny. Unfortunately,

the law

is otherwise.

In view

of the facts and circumstances, referred to above, we hold that

B

. the declaration in sub-clause (a) of section 3 made by the legislature has no

factual basis in spite

of the use of the words 'known facts'. The facts and

circumstances, on the other hand, indicate to the contrary.

In our opinion, the

declaration

is a mere cloak and is unrelated to facts in existence. The declaration

in section 3 (a) is, in addition, contrary to the principles laid down by this

C Court in Indira Sawhney and in Ashok Kumar Thakur. It is, therefore, violative

of Articles 14 and 16(1) of the Constitution oflndia.

Sub-clause (a) of section

3 is, therefore, declared unconstitutional.

D

(viii)

Sub-clause (b) of section 3: Inadequate representation: Section

3(b) mixes up two different concepts:

Sub-clause (b) of section 3 states that there is no adequate represeritation

of the backward classes in the services of the State of Kerala. This is given

as a reason for not excluding the creamy layer.

In our view, the Kerala Act has mixed

up two different concepts in this

E sub-clause (b) of section 3. Article 16(4), it will be seen, is an enabling

provision which permits the

State to provide reservation for Backward Classes

if,

in the opinion of the

State, such reservation is felt necessary and if there

is inadequate representation. Ajit Singh II v. State of Punjab, [1999] 7 SCC

209. Lack of adequate representation of a particular backward class may be

F a factor for consideration by the State for providing reservation. But, the said

factor cannot be the sole ground for continuance

of the creamy layer in that

backward class. The first step no doubt is the identification

of the backward

class which

is inadequately represented. But there is a second step also and

that

is the elimination of the creamy layer from the Backward Class. The

second step cannot be mixed up with the first step nor can

it be forgotten.

G

An argument was advanced by

Sri Rajeev Dhawan that once the

Backward Class was identified by taking into account the economic criteria,

it was not permissible to take that factor into account again a second time

for purpose

of identifying the creamy layer. This contention, in our view, is

no longer open as it was specifically rejected by Jeevan Reddy, J. in Indira

H

Sawhney (see para 791 of SCC) and was accepted by the majority. -

INDIRA SAWHNEY v. U.0.1. [M. JAGANNADHA RAO, J.] 257

(ix) Inadequate representation of Backward Classes and efficiency of A

administration:

The more important submission of Sri Rajeev Dhawan and other counsel,

however is, that it may happen that

if the creamy layer is eliminated at the

second stage mentioned

abovt:, there may be practically no representation for

a particular backward class

in the public services because the remaining B

members i.e., the non-creamy layer, may not have risen to the level or standard

necessary to qualify for entrance into the service, even within the reservation

quota.

We are unable to agree with this contention. Now if the creamy layer C

in such a class has

reach~d a very large percentage so as to leave only a small

part

of the non-creamy layer of the concerned backward class to avail the

benefit

of reservation, then the situation may indeed be one where the backward

class concerned may itself have to be denotified. Assuming that the percentage

of creamy layer is not large enough in such a backward class but is small,

and

if it is the case that after elimination of the creamy layer, the standard of D

the non-creamy layer is not sufficient to enable its members to enter public

services even within the reservation quota, then a larger and more fundamental

issue arises.

The question

is whether assuming that once the creamy layer is excluded E

from backward classes the non-creamy layer in that backward class is not able

to secure adequate representation even within the quota,

in public services

because its members are not reaching the prescribed level

of qualification or

standards for recruitment, -can that be a ground for non-exclusion

of the

creamy layer as contended by the State?

It is true there is no specific constitutional provision in relation to the

need for maintenance

of 'efficiency of administration' so far as backward

classes are concerned (such as the special provision

in Article 335 in the case

of Schedule castes and Schedule Tribes). But such a principle of efficiency

F

of administration is, in our opinion, equally paramount and is implied in G

Articles 14 and 16 of the Constitution even so far as backward classes are

concerned. In

Indira Sawhney, Sawant J pointed out ( para 434 of SCC) that

while Article 16(4)

is an enabling provision, Article 335 is in mandatory

language. Further though there

is no specific provision in regard to Backward

Classes, the same principle underlying Article 335

is applicable to Backward

Classes. Sawant,

J. stated (para 434 of SCC): H

258

A

SUPREME COURT REPORTS [1999] SUPP. 5 S.C.R.

"It cannot, however, be doubted that the same considerations

will have to prevail

while making provisions for reservations in favour

of backward classes under Article 16(4). To

hold otherwise would not

only be irrational but discriminatory between two classes of backward

citizens"

B -i.e., Scheduled Castes/Scheduled Tribes and other Backward Classes. The

mere inadequate representation

of a particular backward class in public services

flowing as a consequence

of exclusion of creamy layer is not legally sufficient

to provide or continue reservation to the creamy layer. Reservation even for

Backward Classes can be made only

if it will not undermine the efficiency of

C the administration in the particular department. In our view, the Constitution

has not envisaged that inadequately represented backward classes are to be

placed on a more favourable footing than inadequately represented

Schedule

Castes!fribes for that would offend Article 14 as between two sets of Backward

Classes -namely the Scheduled Castes and the Other Backward Classes as

pointed out by .Sawant J. In our opinion, the qualifications, standard and

D talent necessary for Backward Classes cannot be relaxed or reduced to a level

which may affect the efficiency

of administration.

In

Ajit

Singh II v. State of Punjab, (1999] 7 SCC 209, it was decided

recently by the Constitution Bench as follows: (p.233):

E

"It is necessary to see that the rule of adequate representation in

F

G

H

Article 16(4) for the Backward Classes ....... do not adversely affect the

efficiency administration ...... Thus,

in the matter of due representation

in services for Backward Classes, ....... , maintenance

of efficiency in

administration is of paramount

importance."

The constitutional principle that equals cannot be treated unequally

and unequals cannot be treated equally based on Articles

14 and 16(1)

overrides other considerations. In fact,

in Indira

Sawhney, the Supreme Court

itself declared that in certain departments, there is to

be no reservation

whatever

even for backward classes.

Thus, assuming that, when creamy layer is excluded, there will

be

inadequate representation of certain Backward classes in services, that cannot

be a valid reason for the continued inclusion of the creamy layer in the

Backward

Class, after Indira Sawhney.

For all the aforesaid reasons, sub-clause (b) of Section 3 does not

,

-

;

..

...

,.

'

'

INDIRA SA WHNEY v. U.0.1. [M. JAGANNADHA RAO, J.] 259

provide any valid answer for not eliminating the creamy layer and must also A

· be held to be unconstitutional and violative of Articles 14, 16(1) and 16(4) of

the _Constitution.

Thus, sub-clause (a) and (b) of section 3 are both declared

unconstitutional.

(x) Section 4:

B

We next come to section 4 of the Act. The non-obstante clause in Section 4 is obviously intended to get over Indira Sawhney and Ashok

Kumar

Thakur. The crucial words of the section are:

"having regard to the

social and educational backwardness

of the backward

classes" in the State C

of Kerala -as in force on the date of the commencement of the Act ( i.e.

2.10.1992).

Now, "backward classes" have been defined in the Act as those referred

to

in section 2(b) of the Act. That definition in its tum takes us to the D

enumeration of Backward Classes made in 1958 in List III of

Schedule to part

I

of the Kerala

State and Subordinate Services Rules, 1958 framed under the

proviso to Article 309 of the Constitution. In other words, section 4 provides

for the continuance

of reservation for the Backward Classes as they stood

in 1958 ignoring the directives of this Court in 1992 in Indira Sawhney for

exclusion

of 'creamy layer' . E

If indeed such continuance, as specified in section 4, of these Backward

Classes together with the creamy layer as was

in existence in 1958 is based

upon the Legislative declaration

in section 3, -then once section 3 is declared

unconstitutional, section 4 too falls to the ground.

If, on the other hand, we

assume that section 3 is not the basis of section 4, then the continuance of F

the 1958 scenario or the pre-Indira Sawhney position, even as late as 1995

when

Section 4 was enacted, -wi~I amount to ignoring the subsequent

judgments

of this Court in Indira Sawhney rendered in 1992 and Ashok

Kumar Thakur

in 1995 to the effect that creamy layer is necessarily to be

eliminated.

G

The non-obstante clause in section 4 too cannot come to the rescue of

the

State. As already stated, the said clause cannot override the judgments

of this court based on Articles 14, 16(1) and 16(4) ifthe defect is not removed

by the legislation. Neither Parliament nor the State Legislature can make any

law to continue reservation to the creamy layer inasmuch

as the above H

260 SUPREME COURT REPORTS [1999) SUPP. 5 S.C.R.

A judgments of this Court are based on Articles 14 and 16(1) of the Constitution

of India, and no law can obviously be made to override the provisions of

Articles 14 and 16(1).

Thus, for the aforesaid reasons, secti<?n 4 of the Act along with the non­

obstante clause

is declared unconstitutional and violative of the judgments

B of this Court and also violative of Articles 14, 16(1) and 16(4) of the Constitution

of India.

(xi) Section 6:

. We then come to section 6 of the Act which deals with retrospective

C validation. This section again starts with a non-obstante clause. Obviously,

the Kerala Legislature

is having Indira Sawhney and Ashok Kumar Thakur

in its mind, when it inserted the non-obstante clause.

Once section 3 of the

Act is held unconstitutional, the position

is that the legislative declaration as

to non-existence

of creamy layer goes and the existence of creamy layer

D becomes a staring reality. That will mean that under the Act of 1995, the

Legislature has not eliminated the defect. Nor can section 4 in this connection

be of any help because that provision has also been declared as

unco.nstitutional. Section 6

cannot" stand alone once sections 3 and 4 are

declared unconstitutional.

As long as the creamy layer is not excluded and

the defect continues, any validation -without elimination

of the defect which

E is the basic cause of unconstitutionality - is, as already stated, ineffective and

will be invalid. Thus, section 6 is also unconstitutional.

For the aforesaid reasons,

we declare under Points 2 and 3 that the

provisions

of sections 3, 4 and 6 of the Act are

un~onstitutionaLand violative

of Articles 14, 16(1) and 16(4) and of the law laid down by this Court. But

F with a view to relieve any hardship, we propose to issue cerlain directions

under Point 4 and

5.

Our decision on points 2 and 3 will be subject to what

we propose to direct under point

5 and 6.

G

Points 2 and 3 are decided accordingly.

Point 4:

Article J4:(and Article 16 which is a facet of it) is part of the basic

structure

of the Constitution of India:

The preamble to the Constitution of India emphasises the principle of

H equality as basic to our constitution. In Keshavananda Bharati v. State of

-

(

"-

f,

INDIRA SA WHNEY v. U.O.l. [M. JAGANNADHA RAO, J.] 261

Kera/a, [1973] 4 SCC 225, it was ruled that even constitutional amendments A

which offended the basic structure of the Constitution would be ultra vires

the basic structure. Sikri, CJ. laid stress on the basic features enumerated in

the preamble to the Constitution and said that there were other basic features

too which could be gathered from the Constitutional scheme (para 506 A of

SCC). Equality was one of the basic features referred to in the Preamble to

our Constitution

.. Shelat and Grover, JJ. also referred to the basic rights B

referred to in the Preamble. They specifically referred to equality (paras

520

and 535A of SCC). Hegde & Shelat, JJ. also referred to the Preamble (paras

648, 652). Ray,

J. (as he then was) also did so (para 886). Jaganmohan Reddy,

J. too referred to the Preamble and the equality doctrine {para 1159). Khanna,

J. accepted this position (para 1471). Mathew, J. referred to equality as a basic C

feature(para 1621). Dwivedi, J. (paras 1882, 1883) and Chandrachud, J.(as he

then was) (see para

2086) accepted this position.

What we mean

to say is that Parliament and the legislatures in this

Country cannot transgress the basic feature

of the Constitution, namely, the

principle

of equality enshrined in Article 14 of which Article 16(1) is a facet. D

Whether creamy layer is not excluded or whether forward castes get included

in the list of backward

classes, the position will be the same, namely, that

there will be a breach not only

of Article 14 but of the basic structure of the

Constitution. The

non-exclusion of the creamy layer or the inclusion of

forward castes in the list of backward classes will, therefore, be totally illegal. E

Such an illegality offending the root of the Constitution of India cannot be

allowed to be perpetuated even by Constitutional amendment. The Kerala

Legislature is, therefore, least competent to perpetuate such an illegal

discrimination. What even Parliament cannot do, the Kerala Legislature cannot

achieve. ·

F

Unfortunately, in the decision making process which enables the forwards

to get into the list

of backward classes or which enables the creamy layer to

grab the benefits

of reservation, it appears to us that the voice of the really

backwards, namely, the voice

of the non-creamy layer, is nowhere heard. Else

there

is no reason why the State should decide not to exclude the 'creamy G

layer'.

Point 4 is decided accordingly.

Points 5 and 6:·

We have already referred to the circumstances under which this Court

was compelled to appoint a High Level Committee presided over by Justice

H

262 SUPREME COURT REPORTS [1999] SUPP. 5 S.C.R.

A K.J. Joseph, for the purpose of identifying the 'creamy layer, in the Backward

Classes

in the

State of Kerala. The Report is a detailed one and runs into 114

pages. The Committee invited suggestions and representations from the public

as well as from the organisations representing the Backward Classes by

newspaper publications in December 1996, in English and Malayalam. The

B Committee also gave personal hearing to various individuals, bodies and

organisations.

It received 596 representations

I suggestions till 15.1.97 by the

due date and

177 representations after the due date. Most of the parties

before us had represented before the said Committee. The

State of Kerala did

not file any representation before the High Level Committee, though a request

was made on 13.1.97 to permit it to give suggestions. The State Government

C placed the report of the subject's Committee before the High Level Committee

and the said Committee went into the provisions

of the Bill which led to the

1995 Act. The Subjects-Committee

of the Legislature and other Committees

and the organisations which contended that there was

no creamy layer in the

Backward Classes in the

State relied mostly upon section 3 of the 1995 Act.

Organisations which contended that there was a creamy layer pointed out

D that the declaration made in section 3 of the Act was contrary to existing facts

and that the Government and the Legislature had no material before them to

declare that there was no creamy layer in the

State of Kerala nor to say that

"no section of any Backward Classes reached a successful level of competition

with forward classes".

E

We shall initially refer to part I of the report briefly. The High Level

Committee summarised

Indira Sawhney in detail in para 22 and 22A (i) and

22(A)(ii) which summary, we may state, correctly reflects the legal position.

The facts relating to representation

of

OBCs in various departments were

considered in para 22 B(i) to para 22 B(ii). In para 22B(xiii) it was stated that

F from the ranked lists

published by the Kerala Public Service Commission it

was clear that:

G

"there are sufficient qualified candidates applied for appointment in

Public Services and included in the ranked lists from among the Other

Backward Communities in the State".

It was noticed from the records of the Public Service Commission that

the statutory quota

of

40 per cent for OBCs -out of a total number of 68, 893

advised by Public Service Commission during 1991-96, -came to 27, 557, while

the actual number

of Backward Class candidates advised was more that

40

H per cent i.e., 29, 346. The High Level Committee referred to the Economic

.·

INDIRA SAWHNEY v. U.O.I. [M. JAGANNADHA RAO, J.] 263

Review, published by the Ker;lla Government. It then held that:

"even if the statutory reservation in favour of any backward class

is not satisfied or there is over representation, the same will not be

a justification for giving the benefit ofreservation under Article 16(4)

in favour of the affluent part of the Other Backward Classes".

This view of the Committee is in full conformity with what we have

stated under Points 2 and 3 iii relation to validity of sub-clause (b) of section

3. Para 22C

(i) to (ix) deals with various facts and contentions and concludes

by saying that the apprehension that

if creamy layer is excluded, there will

not be adequate representation,

is not factually correct.

In para 22(D) (iii), this was reiterated, having regard to the fact that in

1991, literacy in Kerala was 91 %. In 1996, it was almost 100%. There were 6728

Lower Primary Schools, 2964

Upper Primary Schools and 2573 High Schools.

In 1995-96 21.98 lakh students enrolled

in Lower Primary Sections, 18.12 lakh

A

B

c

in

Upper Primary Sections and 16.16 lakhs in High Schools Sections - in all D

56.27 lakhs. During this period, 17 ,250 were in vocational schools in 1995-96.

There were again,

211 colleges in Kerala in 1996. In 1996, 92,304 boys and 1.17

Jakh

girls were studying in pre-degree and 48,635 boys and 79,638 girls in

degree classes and 2954 boys and 8206 girls in P.G. classes. According to the

High Level Committee all these groups

in schools and colleges contained

backward classes candidates. Statistics

in Engineering and Medical Colleges E

and Nursing were also given.

Thereafter, the Committee referred to the Central Government's

O.M.

dated 8.9.93 in para 22F (i) and to Ashok Kumar Thakur. In para 22F (v), it

was said that

as in the said

O.M, so in Kerala, the rule of exclusion of creamy

layer was not to be applied to Artisans or those engaged in hereditary

F

occupations, callings like potters, washermen, barbers etc. The list of such

occupations prepared by the Kerala Artisans Development Corporation Ltd.

was accepted. Persons traditionally engaged

in fishing operations were also

excluded

in para 22F (vii). The. Committee referred in para 28 to various

principles settled

in Indira Sawhney. G

The Committee considered the

O.M. dated 8.9.93 as directed by this

Court

in its order. The Committee held that increase in cost of living index

between 1992 when

Indira Sawhney was decided and the position in 1996

was to be kept

in mind. There was an increase of 39.06% in the index it was

stated. The increase

in consumer price index was also considered and it was H

264 SUPREME COURT REPORTS {1999] SUPP. 5 S.C.R.

A held in paras 30, 31, 32 that the income level set in the Central Government's

O.M. of 8.9.93 was to be modified upwards from one lakh to Rs.1.50 lakhs

gross income. Para

33 dealt with the minimum scale of Rs.

3000-5000 of group

A officers/Grade I and

of Rs.

2500-4000 of Group B. It was observed that the

minimum in Central and State Governments in the All India Services category

B was Rs. 2200-4000. The revision proposed in the 5th Pay Commission was far

above these scales. Paras 3, 4 and 5 dealt with agricultural income

and

productivity. The Committee computed these figures on the basis of data

furnished. Para 36 dealt with professionals, those

in Trade and Business and

Industry.

On that basis, the criteria were fixed following the method adopted

by the Central Government

in its O.M. Annexure IX(a), IX(d), IX(e), IX(f),

C IX(g)

of the Report give data relating to the over-representation of Ezhava/

Thiyya, Nadar, Converted Christians, Viswakarma and Dheevan Communities

in various Government Departments. Annexure IX(i) deals with departments

where there is over-representation

of some of the

Back-ward Classes. Other

Annexures deal with departments where there is under representation.

D We finally come to Part II of the Report which is important and it deals

with the criteria fixed for identifying the 'creamy layer' in the Backward

classes. This runs into 17 pages. Pages 1 to 4 deal with guidelines, Annexure

A deals with list

of OBC, Annexures B and C to Artisan/persons of hereditary

occupations excluded from creamy layer. Annexure D deals with fishermen

E Community similarly excluded. Annexure E prescribes the certificate. Schedule

at pages 13-17 deals with the prescribed norms.

So far as the guidelines are concerned, reference is made to the list

of

OBCs in the 1958

Service Rules, and to the 40%, reservation for OBCs. It was

stated rightly that those OBCs coming up

on merit basis

were to be excluded

F from 40%. The exclusion of creamy layer was to apply in Government and

public sector, Government companies and autonomous bodies etc.

In the Schedule at Pages 13-17, which is the crucial provision, the

method adopted is similar to that in the Central Governments O.M. dated

G 8.9.93. First, Constitutional posts are referred to. These include among others

Judges

of the High Court,

Supreme Court, Chief Ministers, Council of Ministers

etc., Former

Chief Ministers and former Council of Ministers as well. These

in all, are in 19 categories. Then comes the

Service category, and the Central

pattern is followed, referring to

"Parents both or either" being in Group I and ·

Group B posts; reference is made to those in Armed forces and Para Military

H forces at various higher levels; Professional Classes and Trade and Industry

INDIRA SA WHNEY v. U.0.1. [M. JAGANNADHA RAO, J.] 265

were then referred to as follows:

"persons coming within wealth/means/income group prescribed in

category VI, apart from their social status as prescribed in the

respective professions".

A

and contain sub-categories in paras (i) to (vi). Income level is fixed at Rs.1.50 B

lakhs gross for individuals and Rs. 20 lakhs for company and trusts in an year.

Societies and Chief Executives/Chair persons of Cooperative Societies are

also included, income

of society fixed at Rs.

20 lakhs per annum. Category

5 deals with property owners -(A) Agriculture holding of 5 hectares or more

for cardamom

or coconut plantation/cultivation and 4 hectares for persons/

family having rubber or coffee plantation (B) refer to vacant land as in

C

category

VI. 'Family' includes husband and wife and minor children. Buildings

could be residential, industrial or commercial in use etc. Para VI deals with

wealth

or income from as follows:

"person/persons having gross annual income of Rs.1.50 lakhs or

above or possessing wealth above the exemption limit as prescribed D

in the Wealth Tax Act for a period of 3 consecutive years;

Explanation: The income criteria in terms of rupee will be modified/

amended suitably taking into account the change in the value

of

money,every three

years".

We are of the view that these guidelines and criteria are on the same lines

as those in the Central Government's O.M. dated 8.9.93 which were accepted

in Ashok Kumar Thakur as reasonable. In fact, there is now an upward

increase

of income to Rs. l

.50 lakhs. Having regard to Ashok Kumar Thakur,

E

we are clearly of the view that the above guidelines and criteria fixed by the F

Justice Joseph Committee are reasonable so far as the State of Kerala is

concerned.

In fact, in the affidavit dated 16.1.1998 filed by the Kerala State through

its Chief Secretary, it was stated merely that there were a few mistakes, namely,

that there was an omission

of 5 communities viz., Kumbarans, Muslim, Thachar, G

Boyan of Malabar District, Malayan -throughout the

State, except Malabar

and

of l

0 Sub-castes viz., Peroorkada Chetties, Sadu Chetties, Manai Chetties

(Chetty Community), Valan, Nulayan, Paniakkal, Mukaya, Bobi Mukayan,

Mukaveeran

& Valinjiar (Dheevara Community), in the

list prepared by the

Committee.

In our view, these would have to be included in the list of

Backward Classes in addition to those mentioned in the Report of the High H

266 SUPREME COURT REPORTS [1999) SUPP. 5 S.C.R.

A Level Committee. The guidelines & criteria fixed by the Committee would be

applicable to these communities and sub-castes also.

We direct accordingly.

We have heard submissions on behalf of the various communities/

interveners and looked into their objections to the Committee's Report.

Our -

attention was not invited during arguments to anything

in particular on law/

B facts which would fault the Committee's Report. Counsel virtually conceded

that no material was placed

in any of the objections filed in this Court to the

guidelines/norms

in the Report except to say that the Kerala Act of I 995 was

a complete answer to the points raised

in the Report in favour of identification

of the creamy layer. Some have raised points which are already covered by

C what we have said under

Points I, 2 and 3. In fact, we may make it very clear

that no objection

of any substance was placed before us by any counsel to

contend that the guidelines

or norms fixed by the High Level Committee were

wrong. Arguments

of a very general nature saying that creamy layer ought

not be excluded, were advanced. We, therefore, hold that there

is nothing in

the objections filed by the parties which requires to be specifically dealt with.

D

E

In the result, we accept the Justice Joseph Committee's Report in toto

subject to the addition

of communities and sub-castes as pointed out in the

affidavit

of the State dated 16. 1.98, referred to above.

The next question

is as to the further directions that we have to.give:

When the State was found guilty

of deliberately violating orders of this

court and the order was kept

in abeyance and subsequently, legislation was

passed by-passing all norms

of reasonableness, should we allow the State to

go scot-free or should we punish the perhaps innocent candidates who

between the date

of judgment in Indira Sawhney and today had got

F appointments even though they belonged to the creamy layer? Is there no

way

of punishing those who are guilty of wilful disobedience -apart from the

.

Chief Secretary? For the present, we do not wish to go into this question.

It will be seen that this Court has stated, as long back as in I 992 that

G it is imperative to exclude the creamy layer in the Backward classes from the

benefits

of reservation. The Kerala Government has been already found to

have deliberately violated the directions

of this Court in that judgment and

held guilty

of contempt of Court. The question of imposing sentence and, if

so, on whom was pending when the impugned legislation was passed in I 995

·

by the State of Kerala. The legislation unfortunately served dual purposes -

H one to ward off tempor!!:ily any sentence being passed in the contempt

·-

I

INDIRA SA WHNEY v. U.0.1. [M. JAGANNADHA RAO, J.] 267

proceedings and the other for deliberately putting off the exclusion of creamy A

layer till this Court could deal with the validity of the Act. Now that the

provisions

of sections 3, 4 and 6 of the Act have been struck down, it is no

longer permissible to allow the

State of Kerala to continue to violate the

mandate

of this Court nor can this Court allow the

State to help the creamy

layer to reap the benefits

of its non-exclusion. Is it not necessary to see that B

the benefits trickle down atleast now to the non-creamy layer of the Backward

classes

in that

State at least from today?

We, therefore propose to adopt the principle

of prospective overruling

and we think it appropriate to put the recommendations

in the Report dated

4.8.97

of the High Level Committee presided over by Justice K. J. Joseph (with C

the addition of the communities and sub-castes mentioned in the affidavit of

the Chief Secretary dated 16.1.1998) into immediate operation from today

prospectively, as stated below. We apply the principle of prospective overruling,

as done

in Ashok Kumar Thakur 's case, keeping the suo motu contempt case

-pending.

We, therefore, direct as follows:

(1) We direct that the exclusion of creamy layer as stated in that Report

shall be applicable

from today, to all cases where appointment orders have

D

not been issued to the members of the Backward classes and for all future

selections in public service as stated in the Report. (The five communities

E

referred to in the affidavit of the Chief Secretary dated 16.1.98 shall also be

treated as Backward subject to the guidelines and norms fixed by the

Committee). It will be obligatory to implement the Report, as so modified,

in

the Government Departments of Kerala

I Organisations/ Institutions/Public

Sector Undertakings/Government owned Companies/Co-operative Societies/

F

Autonomous Bodies , as stated in the Report, wherever the principles of

reservation embodied in Article 16( 4) or Rules 14 to 17 of

Part II of the Kerala

State and subordinate Service Rules, 1958 are applicable. It shall be necessary

for the candidates belonging to the Backward Classes to file the certificates

as envisaged in the Report and satisfy the employer that he or she does not

belong to the creamy layer. The income limits and property holdings as

G

mentioned in the

Schedule to the said Report will be applicable from today.

The exclusion of certain occupations/communities etc., shall however be as

. specified in the Report. Any violation

of this direction will make the

' appointment or selection made on or after this day, unconstitutional.

It is made clear that any infraction of this direction will be treated H

268 SUPREME COURT REPORTS [1999) SUPP. 5 S.C.R.

A seriously and this Court will also not hesitate to take further fresh action for

contempt

of Court, if need

be·.

(2) We are of the view that it will be appropriate to allow the State of

Kerala one more chance to conform to the Rule of law.

B We, therefore, permit the State of Kerala to make such provision as it

may deem fit for exclusion

of creamy layer among the Backward Classes in

the

State of Kerala, in accordance with law and in a manner consistent with

the Constitution, the basic structure

of the Constitution, Articles 14

and 16

and the judgment in Indira Sawhney and in Ashok Kumar Thakur and in

C accordance with the principles laid down in the judgment now rendered by

us.

(3) Once such provision is made and published in accordance with law,

it shall come into force and the recommendations

of the Justice K.J. Joseph

Committee as accepted by this Court shall cease to apply. But as

long as the

D State of Kerala does not bring about any such alternative provisions to

exclude the creamy layer, the recommendation

of the Justice K.J. Joseph

Committee shall operate

from today subject to any further directions which

this Court might give in that behalf. Any fresh alternative provision that may

be made by the State

of Kerala, it is needless to say, will be subject to the

such further decision

of this Court, in case the

validity thereof is questioned ..

E

(4) In the event of alternative provisions being made by the State of

Kerala either by executive order or by legislative measures or by way of Rules,

no Court shall entertain any challenge thereto, and all proceedings

in relation

thereto shall have to be taken out

only in this Court.

F Before parting with the case, we may state that the unreasonable delay

on the part

of the Kerala Government and the discriminatory law made by the

Kerala Legislature have been in virtual defiance

of the rule of law and

also

an indefensible breach of the equality principle which is a basic feature of the

Constitution. They are also

in open violation of the judgments of this Court

G which are binding under Article 141 and the fundamental concept of separation

of powers which has also been held to be a basic feature of the Constitution.

The

State has already been held guilty of contempt.

This attitude and action

of the

State of Kerala has unfortunately resulted

in allowing the 'creamy layer' among the backward classes in the State

of

H Kerala to continue to grab the posts in the services iri government, public

INDIRA SAWHNEY v. U.O.l. (M. JAGANNADHA RAO, J.) 269

sector etc., even after Indira Sawhney and get away with the same. The result A

is that the really backward among the backward classes have been deliberately

deprived by the State, -of their legitimate right to these posts which would

have otherwise obviously gone to them. To

us it appears to be rather anomalous

that while the Governments declare endlessly that they will see to it that

benefits

of reservations really reach the needy among the backwards-the very

action

of the Governments both on the executive side

aod on the legislative B

side, deliberately refusing to exclude the creamy layer and in indiscriminately

including more castes

in the backward classes list are leading to a serious

erosion

of the reservation programme. The sudden Cabinet decision of the

State of Kerala not to appoint a Commission to identify the creamy layer as

promised but to pass the impugned law was nothing but an attempt to

C

perpetuate the creamy layer and allow it to knock away the benefits of . reservation. Such a decision appears to us to have been taken because the

real backwards obviously have no voice in that decision making process.

Unfortunately today, as a matter of political expediency, Governments

tend to knowingly violate the Rule

of law and the Constitution and pass on D

the buck to the courts to strike down the unconstitutional provisions. It

would then become easy for the Government to blame the Courts for striking

down the unconstitutional provisions. The case on hand

is a typical illustration

of such an attitude.

In this context, the words of

Sir Anthony Mason, Chief Justice of E

Australia (quoted in para 684 of Indira Sawhney by Jeevan Reddy, J.) are

extremely appropriate:

"There are other reasons, of course -that cause governments to .

leave decisions to be made by Courts. They are

of expedient political F

character. The community may be so divided on a particular issue that

a government

feels safe course for it to pursue is to leave the issue

to be resolved by the Courts, thereby diminishing

the risk it will

alienate significant sections

of the Community.

and concluded:

" .... my own feeling is that the people accept the Courts as the

appropriate means

of resolving disputes when governments decide

not to attempt to solve the disputes by the political process

".

G

In the present case, the State of Kerala did not care if its Chief Secretary H

270 SUPREME COURT REPORTS [1999] SUPP. 5 S.C.R.

A was to go behind bars. It did not care if the real backwards were left in the

lurch. It then took to legislation inasmuch as

it would then be difficult for this

Court to hold the legislature

in contempt. It is difficult for us to think that the

Kerala Government really believed

in the validity of its legislation. It appears

to us that it thought it better

to· leave it to the Courts strike down the Act.

B Years would role by and in the interregnum the creamy layer could continue

to reap the benefits of reservation.

When Governments unreasonably refuse to eliminate creamy layers

from the backward classes or when governments tend to include more and

more castes

in the list of Backward Classes without adequate data and

C inquiry, a stage will be reached soon when the whole system of reservation

.will become farcical and a negation

of the constitutional provisions relating

to reservations. The resistance

of the creamy layer to get out of

the lists is

as bad as the clamour for entry into the quota system of various castes whose

social status does not conform to the law decided by this Court.

We earnestly

hope that Constitutional provisions will not be converted into citadels for

D unjustified patronage.

Krishna Iyer,

i. warned in Akhil Bhartiya Soshit Karamchari Sangh v.

Union of India, [I 98 I] I SCC 246 (at 264, para 22):

" ...... to politicise this provision (i.e., Article 16(4) for communal support

E and Party ends is to subvert the solemn undertaking of Article 16(1)."

F

The IAs 35, 36 in W.P. 930/199.0 are disposed of accordingly. W.P.(C)

Nos. 699195 and 727/95 are allowed to the extent indicated above. IAs 8 and

9

in

W.P.(C) No. 69911995 also stand disposed of. However, the suo moto

contempt case started earlier shall be listed after a period of three months.

We thank the learned Amicus Curiae Sri Gopal Subramaniam for his

valuable assistance.

S.V.K I.As and Petitions disposed of.