Holding

Sections 3, 4 and 6 of the Kerala State Backward Classes (Reservation) Act, 1995 are unconstitutional as they fail to exclude the creamy layer and contravene Articles 14, 16(1) and 16(4) of the Constitution.

Summary

The Supreme Court examined the Kerala State Backward Classes (Reservation of Appointments or Posts in the Services under the State) Act, 1995, which sought to continue reservation for backward classes without excluding the "creamy layer" and claimed that no socially advanced sections existed in the state. The Court held that the Act's declarations were factually unfounded, violated the principles of equality under Articles 14 and 16(1) and the mandatory requirement to exclude the creamy layer as laid down in Indira Sawhney (1992) and Ashok Kumar Thakur (1995). Consequently, sections 3, 4 and 6 of the Kerala Act were declared unconstitutional and struck down. The Court accepted the report of the High‑Level Committee headed by Justice K.J. Joseph for identifying the creamy layer and directed its prospective implementation. It also gave the State of Kerala a further opportunity to frame a law consistent with the constitutional mandate, while disposing of the writ petitions and interlocutory applications.

Issues considered

What is the constitutional validity of sections 3, 4 and 6 of the Kerala State Backward Classes (Reservation) Act, 1995?
Can a State legislature override the Supreme Court's directions on exclusion of the creamy layer by a retrospective validation provision?
Does the failure to exclude the creamy layer violate Articles 14, 16(1) and 16(4) and the basic structure of the Constitution?
Is inadequate representation of backward classes a sufficient ground to retain the creamy layer in reservation?
Should the recommendations of the Justice K.J. Joseph Committee be given prospective effect?

Subjects

reservationcreamy layerbackward classesArticle 14Article 16(1)Article 16(4)basic structure doctrinejudicial reviewnon‑obstante clausecontempt of courtKerala Act 1995identification of creamy layer

Judgment

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 ofKerala-
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 ofSupreme 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. H
229
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 ofAppointments 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

E
14 and 16(1) and also of Article 16(4). (246-C, D, E, F]

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 ofIndia, (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 ' 5 S.C.R.
SUPREME COURT REPORTS [1999) SUPP.

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
c
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)

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

IN

Writ Petition No. 930 of 1990 Etc.

(Under Article 32 of the Constitution of India.) H
236 SUPREME COURT REPORTS [1999] SUPP. 5 S.C.R.

A 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.

*(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
D
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 aCommission 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
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.
B
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.

The issues which presently arise before this Court are, as follows:
D (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
E 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
F 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
G 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,
H 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/: A
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,
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
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).
F 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
G 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
H 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."
c
We shall next proceed to the question relating to 'creamy layer'.

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. I
I
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,
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.
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
E 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.
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.
B
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)

" ........ 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".
F
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.
B
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
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).
E
(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
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- E
(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.
F
• (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.

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

A (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.
B' (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.
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
E 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 ofthe 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
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
H · 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".

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

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:
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.
c 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).

E
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:

"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
a
utilised as 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.
B
(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?

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

E
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
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
stated under Point I, as to the class of persons who would belong
F 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.

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

(viii) Sub-clause (b) of section 3: Inadequate representation: Section
3(b) mixes up two different concepts:
D
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

H
no longer open as it was specifically rejected by Jeevan Reddy, J. in Indira
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?
F
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
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 SUPREME COURT REPORTS [1999] SUPP. 5 S.C.R.

A "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
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."
F 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.
G
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.

H 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.
B
(x) Section 4:

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
KumarThakur. 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).

B
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
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 f,
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.

Points 2 and 3 are decided accordingly.
G 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
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:

"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".
G
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: A
"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".
B
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.
c
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
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: A
"persons coming within wealth/means/income group prescribed in
category VI, apart from their social status as prescribed in the
respective professions".

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".
E
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,
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
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:
E
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.
D
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
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: G
" .... 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 ".

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)."

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.
F
We thank the learned Amicus Curiae Sri Gopal Subramaniam for his
valuable assistance.

S.V.K I.As and Petitions disposed of.