### Legal Headline Salary income cannot be the sole criterion for determining OBC Creamy Layer status absent post-equivalence.

The Appellants challenged judgments from the Madras, Delhi, and Kerala High Courts which had ruled in favor of candidates from the Other Backward Classes (OBC) category.

These candidates, whose parents were employees of Public Sector Undertakings (PSUs) or State/Central Governments in Group C/D cadres, were denied "Non-Creamy Layer" (NCL) status by the Department of Personnel and Training (DoPT).

The DoPT applied a "clarificatory" Letter dated 14.10.2004, which stipulated that where "equivalence" of PSU posts to Government posts had not been established, parental salary and "income from other sources" would be assessed separately; if either exceeded the prescribed limit, the candidate was treated as "Creamy Layer".

The Respondents argued this contradicted the foundation Office Memorandum (OM) of 08.09.1993, which excluded salary and agricultural income from the Income/Wealth Test.

1. Whether the clarificatory letter dated 14.10.2004 can have any overriding or superseding effect over the Office Memorandum dated 08.09.1993 regarding the criteria for identifying the "creamy layer"?

2. Whether there can be hostile discrimination between employees of the Government and those working in Public or Private Sector Undertakings when both occupy posts of the same grade or class?

The Court applied the constitutional mandate of Article 16(4) as interpreted in Indra Sawhney v. Union of India, which established that the "creamy layer" must be excluded to ensure substantive equality.

It relied on the Office Memorandum dated 08.09.1993, which provides status-based exclusion for Groups A and B and an Income/Wealth Test (Category VI) that expressly excludes "income from salaries and income from agricultural land" from the "gross annual income" calculation.

It further applied the principle that executive letters cannot override or alter the substantive framework of a preceding Office Memorandum or policy.

It also applied the Article 14 doctrine prohibiting "hostile discrimination" among equals.

The Court reasoned that the 1993 OM, issued after expert committee recommendations, intended for exclusion to be primarily "status-based" for higher-level officers (Groups A & B) and "income-based" (excluding salary) for others.

The 2004 Letter's Paragraph 9 impermissibly introduced a new criterion by making salary the sole determinant for PSU employees simply because the Government failed to conduct an "equivalence" exercise.

This created a "hostile discrimination" because children of Government employees in Groups C and D remain eligible for NCL status regardless of salary increases, whereas similarly situated PSU employees were excluded based on salary alone.

The Court noted that an executive clarification cannot travel beyond explanation to alter rights or introduce substantive conditions not present in the parent policy.

It also highlighted findings from a Parliamentary Committee suggesting the 2004 Letter lacked a proper administrative record and caused interpretative confusion.

It held that the 2004 Letter cannot override the 1993 OM and that determining creamy layer status solely on salary brackets without reference to post-status is unsustainable.

The Court directed the Appellants to consider the claims of the Respondents and Intervenors as "Non-Creamy Layer" candidates and ordered the creation of supernumerary posts to accommodate them within six months.